Investing for long-term capital growth

Investing for long-term capital growth - November 2020

November 2020: Corolab Investment Guide. Investing in long-term capital growth

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Investing for long-term capital growth with Coronation

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Coronation Insights

Coronation Insights

People invest for the long term for different reasons. It may be for discretionary purposes, such as a child’s education in five to 10 years’ time, or for retirement, which may be multiple decades (30 to 40 years) in the future. Depending on your specific goal (and investment horizon), we offer a range of funds aimed at meeting the needs of investors who want to achieve long-term capital growth.

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Regardless of your chosen investment approach (balanced fund or DIY portfolio), your underlying investment portfolio needs to comply with Regulation 28 of the Pension Funds Act, which allows you to invest up to 75% in equities and a maximum of 30% in international assets. We do believe that the majority of investors are better off investing in a multi-asset fund with a strong track record, such as Coronation Balanced Plus (see table below).

TABLE

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Single-asset class


We offer two equity (single-asset class) portfolios that pursue market-beating returns over the long term for investors that are able to withstand short-term market turbulence. These funds are not suited to investors who are concerned about short-term capital losses or who want to generate consistent income.

The Coronation Top 20 Fund is a concentrated portfolio that consists of no more than 20 of our best SA equity ideas. The fund celebrated its 20th birthday in 2020 and from inception in 2000 to end of September 2020, it had doubled the returns of its index (after fees). It is a good example of how alpha can accumulate over time, adding meaningfully to an investor’s long-term wealth creation.

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Due to Top 20’s concentrated nature, the fund is not suitable for those who seek an equity investment that tracks the returns of the market. Coronation Equity is less concentrated than Coronation Top 20, making it more suitable for investors holding only one equity fund. The fund may underperform the market in the short term in pursuit of superior long-term gains.

Multi-asset class


We also offer two worldwide multi-asset portfolios for investors looking to build up capital outside of a retirement fund, but who prefer to leave the asset allocation decision-making to the skilled portfolio manager. In the case of Market Plus, investors gain access to our best views across all asset classes limited to a maximum offshore investment of 40%. In the case of Optimum Growth, investors look to access Coronation’s best long-term views without any geographical constraints, allowing Coronation the discretion to invest up to 100% of the portfolio offshore.

Like Top 20, Optimum Growth also celebrated a milestone birthday in 2020, as it turned 21. Since inception in 1999 to end September 2020, Optimum Growth more than doubled the returns of the MSCI World Index, again showing the power of active management over time with alpha accumulating to the benefit of investors who stayed the course in the fund since launch.

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