Since its inception in 2007, the FNB Multi-Manager Income Fund has demonstrated a consistent performance record, outperforming its benchmark year after year. The fund’s success can largely be attributed to its well-diversified management team and strategic allocation of assets across various classes, both locally and internationally. As of 2024, the fund continues to provide attractive returns for investors, making it one of the largest and most reliable unit trusts managed by FNB.
Fund Overview
The FNB Multi-Manager Income Fund is structured as a unit trust, with a fund size of R1.21 billion as of June 2024. The fund’s benchmark is CPI + 1% over rolling 1-2 year periods, emphasizing its goal of delivering a higher return than traditional money market or pure income funds. The unit price stands at R12.38 per unit, reflecting its solid performance over the years.
The fund is managed by a team of four expert managers: Prescient Investment Management, Ashburton Fund Managers, Abax Investments, and Coronation Fund Managers. Each manager brings a unique set of skills and strategies, contributing to the overall success and resilience of the fund.
Investment Strategy and Objectives
The primary objective of the FNB Multi-Manager Income Fund is to provide a high level of income while maintaining capital stability. This is achieved through a diversified portfolio that includes local bonds, foreign bonds, local and foreign equities, and various other asset classes. The fund’s strategy emphasizes active management and the careful selection of managers who can optimize returns through their specialized knowledge and expertise.
The fund’s exposure to foreign investments, while adding diversification, also introduces currency risk and potential macroeconomic and political risks from various regions. However, these risks are mitigated by the fund’s robust management and diversified approach.
Key Facts
- ASISA Classification: South African – Multi Asset – Income
- Launch Date: 1 November 2007
- Benchmark: CPI + 1% over rolling 1-2 year periods
- Fund Size: R1.21 billion
- Unit Price: R12.38 per unit
- Minimum Investment: R5,000 (R2,000 for additional investments)
- Minimum Debit Order: R500 per month
- Liquidity: Daily
- Distribution Frequency: Quarterly (March, June, September, December)
- Regulation 28 Compliant: Yes
- Fund Manager: FNB Multi Management
- Trustee: Standard Chartered Bank
Asset Allocation
The FNB Multi-Manager Income Fund’s asset allocation as of March 2024 is as follows:
| Asset Type | Portfolio Percentage |
|---|---|
| Local Bonds | 64.95% |
| Local Cash | 22.59% |
| Foreign Bonds | 9.31% |
| Local Equities | 1.86% |
| Foreign Equities | 1.17% |
| Local Property | 1.06% |
| Foreign Property | 0.11% |
| Local Other Investments | 0.17% |
| Foreign Cash Investments | 0.87% |
This diversified allocation allows the fund to achieve its objective of providing a high level of income while maintaining capital stability. The heavy weighting towards local bonds also ensures that the fund remains compliant with Regulation 28, making it suitable for pension purposes.
Performance Analysis
The FNB Multi-Manager Income Fund has consistently outperformed its benchmark, delivering impressive returns across various time horizons. Below is a summary of the fund’s performance as of June 2024:
| Time Period | Fund Return (%) | Benchmark Return (%) |
|---|---|---|
| YTD | 4.48 | 2.80 |
| 1 Month | 1.54 | 0.26 |
| 3 Months | 3.23 | 1.47 |
| 6 Months | 4.48 | 2.80 |
| 1 Year | 10.15 | 6.20 |
| 3 Years | 7.61 | 7.01 |
| 5 Years | 6.82 | 6.04 |
| 10 Years | 7.28 | 6.02 |
The fund’s standard deviation is 2.24%, indicating a relatively low level of volatility compared to its benchmark. Additionally, the Sharpe ratio stands at 0.48, and the Sortino ratio at 0.61, both of which suggest that the fund has effectively managed risk while delivering consistent returns.
How the Fund Works
Investors in the FNB Multi-Manager Income Fund can choose from various investment vehicles, including tax-free savings accounts, endowment funds, retirement annuities, living annuities, and preservation funds. This flexibility allows investors to tailor their investment strategy to their specific financial goals and risk tolerance.
Investments in the fund are made by purchasing units, with the number of units determined by the amount invested and the unit price at the time of purchase. The fund’s performance dictates the interest earned, which is then distributed quarterly to unit holders.
One of the key features of the FNB Multi-Manager Income Fund is the ability to switch between funds, allowing investors to adjust their portfolio as their financial needs evolve. However, it’s important to exercise caution when switching funds, as the type of investment vehicle used can impact the options available for fund switching.
Advantages of the FNB Multi-Manager Income Fund
- Low Minimum Contributions: The fund requires a minimum monthly contribution of just R500, making it accessible to a wide range of investors.
- Proven Track Record: The fund has consistently outperformed its benchmark since its inception, providing investors with confidence in its long-term performance.
- Diverse Management: The multi-manager approach ensures that the fund benefits from the expertise of several top-tier investment managers.
- Regulation 28 Compliant: The fund’s heavy allocation to local bonds ensures compliance with Regulation 28, making it suitable for retirement investments.
- Versatile Investment Options: The fund is suitable for short, medium, and long-term investors, providing flexibility in investment horizons.
Disadvantages of the FNB Multi-Manager Income Fund
- No Capital Guarantee: Like most investment funds, there is no guarantee on the capital invested, meaning that there is a risk of losing money.
- Higher Investment Charges: The fund’s total expense ratio (TER) is 1.15%, which is higher than some other investment options. Investors should consider this when evaluating the potential returns.
Conclusion
The FNB Multi-Manager Income Fund offers a compelling option for investors seeking to generate income through a well-diversified, actively managed portfolio. With a strong track record of outperforming its benchmark, the fund is well-positioned to continue delivering attractive returns in the future. However, investors should be mindful of the risks associated with investing in a multi-manager fund and the potential impact of fees on their returns.
Overall, the FNB Multi-Manager Income Fund remains a solid choice for those looking to invest for the short, medium, or long term, with the added benefit of Regulation 28 compliance for retirement savings. For those interested in exploring this investment opportunity, it is advisable to consult with a financial advisor to ensure it aligns with their financial goals and risk tolerance.