Published July 2021

CHOOSING THE RIGHT FUND

Investment specialist Christo Lineveldt and head of Personal Investments Pieter Koekemoer helps you to identify the multi-asset fund most suited to your long-term capital growth needs in international markets.

The quick take:

• Coronation was founded on managing multi-asset portfolios for South African investors and we’ve been doing that on behalf of millions of investors for close to three decades.
• We offer three multi-asset funds in our international fund range, two of which are suited to those seeking long-term capital growth in international markets.
• The benefit of considering a multi-asset fund is that your fund manager decides on your behalf where and how to invest across a wide variety of investment opportunities.

At Coronation, we have simplified our international fund offering to the three most popular funds in the range being Coronation Global Optimum Growth Growth [ZAR] Feeder, Coronation Global Managed and Coronation Global Capital Plus. All three share the key feature of being multi-asset funds. The big benefit of a multi-asset portfolio is that you, the investor, gives us as your fund manager the mandate to invest across a wide variety of investment opportunities on your behalf. Because we have this much wider universe to select from, it means that these funds are robust, and that an investment in them can be sustained over very long periods of time because we can adapt the portfolio as circumstances change.

The following discussion aims to help investors seeking long-term capital growth in international markets decide on the most appropriate fund for their needs.

Q: Investors seeking long-term capital growth in international markets, can consider investing in the Coronation Global Managed or Coronation Optimum Growth fund? What are the key differences between the two funds?

Coronation Global Managed has a classic moderate allocation fund positioning. It has a 60% equity/40% fixed income benchmark and we expect the fund to have an average equity exposure in the low 60% over time, typically between 55% and 65%.

Coronation Global Optimum Growth [ZAR] Feeder Fund is a classic aggressive allocation fund, where we would expect equity exposure to be in the 65% – 85% equity range. Over time, the historical average has been just below 80% equity exposure. So it’s a classic aggressive allocation type portfolio.

Q: What makes Optimum Growth different from other aggressive allocation funds available to investors?

We think a key point of difference is the fact that Coronation Global Optimum Growth [ZAR] Feeder can be expected to structurally have somewhat higher global emerging markets equity exposure than what you would typically find in a global aggressive allocation fund in the industry. 

Allocating to emerging market equities is a core competency of Coronation. We have one of the world’s best emerging markets teams, with an exceptional emerging markets track record. We think that gives us a competitive advantage to extract good returns for investors from the emerging market opportunity set. 

Q: How does emerging market exposure in Coronation Optimum Growth compare to that of Coronation Global Managed?

If you look at Coronation Global Managed versus Coronation Global Optimum Growth [ZAR] Feeder, you’ll find that the developed market equity exposure levels will be broadly similar in both funds over time, representing around 50% of the total portfolio value. Given that emerging markets exposure will make up the balance of the total equity exposure in both funds, Coronation Global Optimum Growth [ZAR] Feeder is likely to have double the level of emerging markets exposure compared to that of Coronation Global Managed.

Furthermore, if you look at the portfolio management teams primarily responsible for the two portfolios, Coronation Global Managed is run by Neil Padoa and our Global Developed Markets team, whereas Coronation Global Optimum Growth [ZAR] Feeder is spearheaded by Gavin Joubert with portfolio managers from our Global Emerging Markets team. 

Q: If Coronation Optimum Growth is an aggressive allocation fund and structurally has more emerging markets exposure within its equity component, how should investors think about Global Managed and whether it is suited to them?

Coronation Global Managed its undoubtedly a long-term investment vehicle and has meaningful exposure to assets that can give you inflation-beating returns over time. But because the expected non-equity component of the portfolio is larger, you will find more sophisticated thinking going into how we allocate that residual 40% of the portfolio, with the objective of creating a smoother return path through better diversification.

So you’ll find a more diversified, and therefore expected smoother return type portfolio. Because you have less equity exposure in Coronation Global Managed, you will also expect a somewhat lower return.

Coronation is an authorised financial services provider.