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Learn more about the asset managers’ underlying strategies.

Click over the strategy for a definition and to identify which of the featured asset managers run such funds.

A balanced fund combines equities, fixed income (bonds) and sometimes a money market component into a single portfolio. These hybrid funds typically stick to a traditional mix of stocks and bonds (70/30) that maintain a moderate (higher equity component), or a conservative (higher fixed-income) position.

Managers with this strategy:

Laurium, Truffle, Novare, Sasfin.

A dividend income strategy considers the distribution of earnings to shareholders in cash, equity, or property. Unit trust dividends are usually paid out quartterly from interest generated by the fund’s investments.

Managers with this strategy:

Gryphon.

An exchange traded fund (ETF) is a regulated security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike a unit trust, an ETF trades like any normal stock on an exchange and their prices fluctuate during the day as they are also affected by supply and demand.

Managers with this strategy:

ABSA.

Fixed income investors act as lenders of capital, issuing credit, using bonds (federal governments, local municipalities and major corporations), for which real return rates or periodic income are received at regular intervals and at reasonably predictable levels. Commonly used in some traditional investments to manage risk and at times a very efficient financial instrument.

Managers with this strategy:

Terebinth, Truffle, Sasfin.

As the name implies, a flexible fund is a pooled investment that has broad flexibility for investing in fixed income (bonds), equity, commodity and foreign exchange product markets. With access to a wider universe of investments, the fund can actively allocate investments according to market opportunities and conditions rather than specific investing requirements.

Managers with this strategy:

Laurium, Truffle, 36ONE, Gryphon, Sasfin.

Also referred to as a Long-Only equity strategy, involves taking long positions in equities, that are expected to appreciate in value. This approach will not employ derivatives or gearing for hedging purposes (unlike an equity long / short fund) and is considered very mainstream. This is one of the more common retail products across the unit trusts.

Managers with this strategy:

Terebinth, Laurium, Reitway, Truffle, 36ONE, Catalyst, Gryphon, Novare, Sasfin.

A global macro strategy is a hedge fund strategy that primarily bases holdings, including long and short positions, on macroeconomic principles. These actively managed funds attempt to profit from broad market swings due to political or economic events by using investing in fixed income (bonds), equity, commodity and foreign exchange product markets.

Managers with this strategy:

Reitway, Gryphon, Catalyst, Sasfin.

Indexation is a method of tracking a broad market index or a segment thereof thus replicating the performance of the designated index. Tracker funds are investable, appropriate, transparent and measurable. Two major risks to generating investment returns are emotion and costs; index funds mitigate both these risks.

Managers with this strategy:

Gryphon.

The most common of the hedge fund strategies – representing two thirds of the industry– involves taking long positions in equities that are expected to appreciate in value and short positions in equities that are expected to decline over time. Long and short are not a measure of time, but of the perceived direction of the investment profiting.

Managers with this strategy:

Terebinth, Laurium, Reitway, Truffle, 36ONE, Catalyst, Novare, Westbrooke, Investec.

A common equity long-short strategy that seeks to profit by matching long and short positions in different equities, expecting to avoid risk while able to exploit any momentum in the market. Market-neutral managers may also use other tools such as merger arbitrage, shorting sectors and so on.

Managers with this strategy:

Laurium.

The money market is a highly liquid segment of the financial markets where financial instruments are traded through borrowing and lending for the short term.

Managers with this strategy:

Terebinth, Gryphon.

Multi-asset funds have mandates that afford the fund manager the flexibility to invest in a broad range of asset classes (such as cash, equity or bonds, both domestic and offshore). The objective is to achieve consistent real returns and long-term capital growth through maximum exposure to equities during bull markets, while minimising exposure to equities in secular bear markets.

Managers with this strategy:

Laurium, Truffle, Gryphon.

These are specialists in selecting fund managers and apportioning them into a structure with other fund managers. Structures vary and have different tax implications. The most popular is the fund of funds structures, they are the largest investors in alternatives, accounting for 57% of the local industry allocation into hedge funds and as much as 24% of the global allocations.

Managers with this strategy:

Novare, Catalyst.

As the name implies, this seeks hedged returns through numerous asset classes: long-short, long only (equity), market neutral, event driven, merger arbitrage, fixed income and global macro. Collectively, they seek absolute returns with minimised risk and are typically reserved for the very experienced teams.

Managers with this strategy:

Novare.

Section 12J is an investment tax incentive designed to encourage investment into a range of private companies which meet defined criteria. The incentive gives taxpayers the ability to write off 100% of their investment against their taxable income.

Managers with this strategy:

Westbrooke.

These are typically actively managed funds, investing in listed property shares, also considering REITS, financial instruments (leverage and derivatives), assets in liquid form and at times non-equity securities (bonds).

Managers with this strategy:

Reitway, Catalyst, Novare, Westbrooke.

Global Property  funds are typically actively managed onshore and offshore funds, investing in listed property shares, also considering REITS, financial instruments (leverage and derivatives), assets in liquid form and at times non-equity securities (bonds).

Managers with this strategy:

Reitway, Catalyst.

A structured product is an investment that provides a pre-defined investment outcome over a pre-determined period. Structured products typically provide returns linked to the performance of an equity index or interest rates and are tailored to provide capital growth with some level of capital protection.

Managers with this strategy:

Investec.

360NE
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