Exploring SA stable funds

Writer: Theo Cloete Wealth manager at PSG Wealth Hermanus

Staying with the theme of South African unit trust funds, in this week’s edition we explore the ASISA (Association for Savings and Investment SA) category: South African Low Equity funds, generally better known as ‘stable funds’.

What type of assets do these fund managers include in their portfolios? What are the costs related to investing? What are the risks involved and what potential earnings can you expect? We will set out some of the basics so you'll be more informed whenever you look at a fund’s fund fact sheet (so-called ‘minimum disclosure document’), or are speaking to an investment adviser.

What is a stable fund? Stable funds can invest in a mix of debt securities, money market instruments, bonds, inflation-linked securities, listed equities and property, preference shares and other high-yielding securities and derivatives. Stable funds may only hold up to a maximum of 40% in listed equities, and operate within the constraints of Regulation 28 of the Pension Funds Act (which makes them suitable for retirement products).

Click below to read more. (The full article can be found on page 20)