Math skills keep fund perfectly balanced
Taqanta largest black-owned asset manager
South Africa’s largest passively managed fund is managed by SA’s largest black-owned asset manager, known for its fixed income and quants investment strategies.
To support transformation in SA’s asset management sector, Sowetan Money continues its monthly series on easily accessible and affordable unit trust funds managed by black asset managers. The fifth part of our series focuses on Taquanta, known for its fixed income and quants skills, and in particular the low-cost balanced fund it manages for Nedgroup.
South Africa’s largest passively managed fund is managed by SA’s largest black-owned asset manager, known for its fixed income and quants – or mathematically driven – investment strategies.
Taquanta Asset Management manages in excess of R168-billion, making it the largest black-owned asset manager, according to 27Four’s latest BEE.conomics survey.
The manager which grew out of a number of Nedbank, Syfrets and other businesses, moved out of the Nedbank stable in 2007 when it was bought out by Taquanta Investment Holdings.
Taquanta is particularly skilled at managing low-risk, cash-like investments that can do better than money in the bank and managing investments with mathematical models intended to outperform the market.
Much of the money it manages is for big investors like medical schemes and retirement funds, but as an ordinary investor, you can access Taquanta’s skills in some of the unit trust funds that Nedgroup offers.
“Our focus is predominantly SA, specifically the money market and fixed income space. However, our multi-asset funds do provide some offshore exposure,” Taquanta managing director Stephen Rogers says.
Nedgroup Investments does not have its own fund managers, but outsources the management of its funds to managers it regards as the best in their field.
It’s Nedgroup Core Diversified Fund is a multi-asset fund, which means it invests across shares, bonds, cash and listed property. This fund is suitable for investors who are saving for retirement in an employer-sponsored retirement fund or a retirement annuity (it complies with the investment guidelines in regulation 28 of the Pension Funds Act).
The fund just recently celebrated its 10-year anniversary and after recording 44% growth in investments in the last year, it now has R11.5-billion under management, making it South Africa’s largest passively managed fund.
In a passively managed fund, the manager tracks the investments in an index rather than actively selecting the best shares, bonds, listed property or cash investments. But while that may seem like an easy thing to do, the key is in choosing good indices to track and in how you combine them in a multi-asset fund to deliver good returns.
And the fund’s performance over the past ten years proves it is doing just that – it has returned on average 10.46% a year over the decade. This return puts it among the top 10 multi-asset or balanced funds in SA over this period and ranks the fund above similar funds from popular managers like Allan Gray and Coronation.
It’s performance target is to return five percent more than the inflation rate over every five-year period.
The fund is available to invest in for a lump sum of R10,000 or monthly instalments of R500, offering investors with a 3 to 5-year investment horizon moderate capital growth with low cost exposure to various local and global asset classes.
The fund has total investment charges of 0.58%, much lower than that of many actively managed funds. The total investment charge shows you all investment costs of the fund – including the fund manager’s fee and the costs of trading shares, as a percentage of the fund.
Currently about 65% of the fund is invested in local and foreign shares with the balance invested in local and foreign bonds and listed property as well as about 10.6% in local and foreign cash investments.
The funds top 10 shareholdings making up about 21% of the fund includes Naspers, Standard Bank, FirstRand, MTN, Anglo American, Sasol, British American Tobacco, Sanlam, Absa and a government bond.
The Core Diversified Fund is significantly affected by the South African share market due to its relatively high exposure to local shares. Despite this, the fund’s lowest annual return has been a loss of 5.7% and its biggest loss from high to low has been around 8% as the fund benefits from diversification across a number of asset classes.
“The volatility of the fund is low relative to the volatility of most of the underlying asset classes due to the benefits of diversification,” Rogers says.
Taquanta’s fixed interest team also manages Nedgroup’s Money Market Fund and its Core Bond Fund.