Top 25 fund aims to help you prosper

Stay invested for at least five years and you’ll reap rewards

Over the past seven years to the end of June this year, the fund has returned 11.12% a year and is ranked 26th out of 186 funds in its category over this period.

Bafana Patrick Mathidi, head of equities at Aluwani Capital Partners.
Bafana Patrick Mathidi, head of equities at Aluwani Capital Partners.

In the fourth article in of our series on easy-to-access unit trust funds in which you can invest and help to drive transformation in South Africa’s asset management sector, Sowetan Money focuses on an equity fund managed by leading black asset manager Aluwani Capital Partners. 

Aluwani means to prosper in Tshivenda and the Aluwani Top 25 fund can help you prosper if you are willing to stay invested for at least five years.

Over the past seven years to the end of June this year, the fund has returned 11.12% a year and is ranked 26th out of 186 funds in its category over this period, according to Morningstar.  

The fund is actively managed - meaning the fund manager picks the shares it believes are, based on its research, most likely to do well and weights them in line with how it expects they will perform. The manager selects 25 shares from the 50 largest shares on the JSE by market capitalisation (the number of shares multiplied by the share price).

Being fund that invests only in equities, you will have to stomach the ups and downs that come with investing in shares, but if you stay invested for five years, you should see a positive return that over five years beats the fund’s benchmark, the of FSTE/JSE SWIX 40 index. This is the index of the top 40 largest shares on the JSE - over time.

The equity market has recently had an unusually bad time, and as result the fund has, after fees, only narrowly beaten its benchmark over the seven-year period. 

The fund’s most recent fact sheet for the end of June shows the top 40 delivered 11.11% a year over the seven years. 

When it comes to picking shares Aluwani’s head of equities, Bafana Patrick Mathidi, says the manager considers three things. The first is the valuation of the shares – or the expected earnings per share relative to the price of the share.

Then the manager will consider if the company is a quality one that had a good business model, s a strong position in the market, good financials and governance. 

Lastly the manager will consider investment themes that could enhance or retard the performance of the share – these could be macro-economic factors such as interest rates or economic growth, Mathidi says.  

He warns that because the portfolio is small – or concentrated - it does come with the risk of more volatile returns relative to the broader market when the stocks in which the fund is invested underperform so you need to be an investor who is able to stomach seeing your investment go down over periods shorter than the recommended investment term of five years. 

Being a unit trust fund you can withdraw your money at any time, but to be sure you will make money you should be able to keep your money invested for at least five years.

Founded in 2015 after the unbundling of a portion of Momentum Asset Management, Aluwani Capital Partners is one of the largest black asset management companies over R62 billon assets under management and its team has 80 years of combined experience managing money in all the different listed asset classes. 

Aluwani’s focus was originally on serving the likes of pension funds and other institutional clients, but it now also offers funds to individual investors, including its Aluwani Top 25 fund which has R428 million invested in it.

It is available for you to invest in for a lump sum or R2,000, or a monthly instalment of R250.

At the end of June more than 40% of the fund invested in shares in the consumer services sector, just under a quarter in financial services and almost 22% in basic materials. It also has assets in consumer goods, telecoms, health care, industrials and a small portion in cash.

The top holdings at the end of June included Naspers with 31%, 8% in Standard bank and a 7% holding in FirstRand. The fund also has large holdings in Sasol, Anglo American, British American Tobacco, Sanlam, BHP Group, MTN Group and Mr Price.

Aluwani may from time to time invest in derivatives or in other unit trust funds. 

The fund has an annual management fee of 1.438% and on top of this you can pay an advice fee – negotiated with your adviser of up to 3.45% on your initial investment and an ongoing fee of up to 1.15% a year.

Would you like to comment on this article or view other readers' comments? Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.