The Liberty Stable Growth Fund is a sophisticated investment vehicle designed to deliver long-term growth while mitigating short-term market volatility.
Investment Objective and Strategy
The Liberty Stable Growth Fund is a smoothed-bonus portfolio that aims to provide investors with a balanced approach to growth and protection. The fund’s primary objective is to achieve returns of CPI + 4% per annum before fees over a rolling five-year period. This goal reflects the fund’s focus on delivering real returns while minimizing the impact of short-term market fluctuations.
Key Aspects:
- Smoothed-Bonus Portfolio: The fund uses risk management techniques to smooth returns, reducing the impact of large short-term losses and providing stability.
- Target Returns: CPI + 4% (before fees) over a five-year rolling period.
- Protection Focus: Designed to safeguard against significant capital losses during market instability.
Who Should Invest?
The Liberty Stable Growth Fund is ideal for investors who:
- Seek Protection: Require protection against large short-term losses while aiming for long-term growth.
- Have Medium to Long-Term Horizons: Prefer a multi-asset class portfolio with a focus on achieving returns over a period exceeding five years.
- Are Focused on Absolute Returns: Want to align their investments with absolute return portfolios while mitigating short-term volatility.
Fee Structure
The Liberty Stable Growth Fund offers two primary variants with distinct fee structures:
- CorpSel: Charges a management fee of 0.60% per annum, excluding the investment administration fee.
- Liber: Charges a management fee of 1.00% per annum, with no additional investment administration fees.
Key Points:
- Low-Cost Structure: The fund’s index-tracking component and institutional pricing contribute to a low-cost structure.
- No Performance Fees: There are no performance or guarantee charges, allowing investors to benefit from lower costs and higher net returns.
Asset Allocation
The fund’s diversified approach includes a broad range of asset classes, emphasizing stability and growth. The long-term asset allocation is designed to optimize returns while managing risk.
Current Allocation:
- Local Bonds: 38.80%
- Developed Market Bonds: 10.50%
- Emerging Market Bonds: 3.60%
- Local Equities: 24.60%
- Emerging Market Equities: 14.80%
- Developed Market Equities: 4.70%
- Local Property: 1.50%
- Local Cash: 1.50%
Diversification Strategy:
- Bonds: Make up the largest portion of the fund, contributing to its stability.
- Equities: Represent the second-largest holding, providing growth potential.
- Property and Cash: Small allocations that enhance portfolio diversification.
Performance Review
The performance of the Liberty Stable Growth Fund is assessed against its benchmark of CPI + 4%. Here’s a snapshot of the fund’s performance and volatility:
Performance Metrics:
- Inception Growth (2018-Present): 45.25%
- Benchmark Growth (2018-Present): 53.97%
- Inflation Rate (2018-Present): 26.64%
Annualized Returns:
- Average Annual Return: 90.43%
- Average Monthly Return: 82.64%
Volatility:
- Worst 12-Month Period: 8.23% growth
- Worst Single Month: -15.98% decline
- Best 12-Month Period: 30.47% growth
- Best Single Month: 7.12% increase
Recent Developments:
- Impact of COVID-19: The pandemic led to a negative growth period in early 2020, with the benchmark performing better during this time.
- Recovery: The fund has shown resilience with a year-to-date growth of 5.73%, surpassing the benchmark’s 2.76%.
Key Features
- Smoothing Effect: The fund uses smoothing techniques to manage return volatility, providing stable long-term returns.
- Risk Management: Techniques are employed to protect against large losses while aiming for consistent performance.
- Diversified Asset Classes: Includes a mix of local and international assets to balance growth and stability.
Advantages
- Regulation 28 Compliance: Suitable for retirement savings.
- Stable Long-Term Returns: Aims for returns above inflation.
- Diversification: Reduces risk through a broad asset allocation.
Disadvantages
- No Capital Guarantee: The fund does not offer guarantees on returns.
- Volatility: Short-term volatility may still occur despite smoothing techniques.
How to Access the Fund
The Liberty Stable Growth Fund is available through various investment channels, including:
- Liberty Corporate Selection Umbrella Funds (CSUF)
- Liberty Life Stage Offering (Growth Phase)
- Liberty Corporate’s Complete Portfolio Offering
Additional Information:
- Access Details: For more information, visit Liberty Fund Fact Sheets for the Total Investment Cost (TIC).
Conclusion
The Liberty Stable Growth Fund presents a compelling option for investors seeking long-term growth with reduced short-term volatility. Its diversified approach, combined with risk management techniques, offers a balanced strategy for achieving returns above inflation while protecting against significant losses. With its compliance with Regulation 28 and low-cost structure, the fund is well-suited for both retirement and general investment purposes.
Overall, the Liberty Stable Growth Fund’s combination of stability, growth potential, and cost efficiency makes it an attractive choice for investors aiming to achieve consistent long-term returns.