IF YOU want to invest or save in a product that has minimal volatility, smooth bonus funds are the best way to go.
Stock markets around the world have experienced some of the biggest losses in a long time over the last two years.
In March last year many stock markets fell 50percent or more off their 12-month highs.
While many of the markets have recovered there is little consensus among financial experts about whether stocks will remain stale or rise.
Alex Ollewagen of Metropolitan spoke to Sowetan about this product.
"Many individual investors are now nervous about investing directly in the stock market," Ollewagen said.
"There are many options available for investors, but none match the combination of smoothed returns while having exposure to the equity or stock market offered by smooth bonus funds," he said.
The smooth bonus funds are usually offered by insurance companies with underlying investments in assets such as equities, property, bonds and the money market, Ollewagen said.
"They give the individual investor exposure to different asset classes," he said.
"A smooth bonus investment smoothens the ups and downs of the investment market to provide stable growth.
"This is achieved by holding back some of the returns during periods of good market performance to improve returns during periods of market under-performance.
"You can access smooth bonus funds through retirement annuities, endowment policies and other contractual savings products."
In smooth bonus funds the investor does not pay an additional fee to the monthly premium, but there is an asset management fee which is deducted from the fund value on an annual basis.
"From the endowment policy or retirement annuity, the net premium after expense deduction is invested in the smooth bonus fund," he said.
"There is a minimum monthly premium of R130 for a retirement annuity of a 15-year term. A R120 premium applies for an endowment policy for the same period," said Ollewagen.
He said the investor gets the returns at the end of the policy term, when it matures.
The returns of the policy are paid as a lump sum.
"An investor receives annual notification of declared bonuses," he said.
Smooth bonus funds are available at Metropolitan Retail.