The FNB Islamic balanced fund is the one and only Islamic unit trust that is administered by FNB. The fund offers investment in a more balanced way by investing in a number of asset classes. Asset classes include those assets that are Shari’ah compliant (Sukuk).
The fund is still new and cannot be measured reliably for long-term investment. However, according to the fund’s investment objectives, the fund is expected not to decrease by more than 15%. Furthermore, the fund is expected to at maximum have an annualised decrease of 9%.
The FNB Islamic balanced fund was launched on January 06, 2021, in an effort to accommodate those that want a Shariah-compliant unit trust. The unit trust has set its benchmark at CPI + 3.5% and the fund has managed to outperform the benchmark for many months since its inception.
Since the fund is only 1 year old, it still has a long way to go. To make sure that the objectives of the fund are met, the fund is managed by two investment managers. The firms involved are very familiar with Islamic banking and investing.
The fund invests in a number of asset classes, however, most of the fund is invested in equities. Local and foreign equities account for 56.23% of the fund. The composition of the fund’s investment makes the fund accessible for investments that are governed by the pension funds act.
The FNB Islamic balanced fund is one of many funds that are offered by FNB. To better understand what the fund aims to achieve and its objectives, read the discussion that follows for a detailed analysis of the fund. The fund is discussed in greater detail below.
FNB Islamic balanced fund summary
The FNB Islamic balanced fund is a unit trust that aims to provide long-term returns for investors. The fund is classified as moderate according to its risk profile. Its risk profile rating is subjected to the benchmark that it follows, which is ambitious and outperforming it will provide better than average returns for investors.
Since its inception, the FNB Islamic balanced fund has managed to outperform the benchmark that it tracks. In its first year, the fund has managed to increase by 10.23%, whereas the set benchmark achieved 9.64% growth during the period. The FNB Islamic balanced fund has, therefore, managed to outperform the benchmark by 0.59%.
Considering that the fund is still young, more is expected from it. The fund has R35.27 million under management and has 20 033 364 participatory interests. Each unit is currently priced at R1.14. The fund’s investment manager is Ashburton Fund Managers. The fund has been allocated to asset managers with expertise in Islamic banking and investing.
Currently, the fund has been allocated to two firms that include: Camissa Asset Management which manages 50% of the fund; and Sentio Capital Management which manages 49% of the fund. The fund invests in the following assets as allocated:
- local equities amounting to 39.56%;
- local cash and Sukuk which amount to 38.67% of the fund;
- foreign equities, which amount to 16.67% of the fund;
- foreign bonds, which amount to 2.57% of the fund;
- local property which amounts to 0.79% of the fund; and
- foreign cash which amounts to 1.74% of the fund
The FNB Islamic balanced fund comes with its own fees for investment and management of the fund. The fees are as follows:
| Fee description | Fee % |
| Annual Management Fee | 1.44% |
| Total Expense Ratio | 1.66% |
| Transaction Costs | 0.24% |
| Total Investment Charges | 1.90% |
How the FNB Islamic balanced fund works
The FNB Islamic balanced fund is for those that want to invest in a fund that has Shari’ah compliance as the key investment strategy. The fund is headed by the FirstRand Shari’ah Advisory Committee. The objective of the fund is to provide steady long-term returns and capital growth by investing in a wide range of domestic and international asset classes in a balanced manner.
Therefore, an investment in the FNB Islamic balanced fund should be for the long term. So far, the fund averages over 10% growth, making it desirable for many types of investors.
Since the fund has less than 75% of local and foreign equity investments, it can be used for pension investment. The fund can be used to invest for the purpose of preserving an existing provident or pension fund, retirement annuities, and other pension-related products.
Those that want to invest using a tax-free savings account or through an ordinary investment vehicle can do so. An investment in the Islamic balanced fund will enjoy the benefits of Shari’ah investing to a certain extent. One doesn’t have to have an Islamic bank account or believe in Islam to use the fund for investment purposes.
The FNB Islamic balanced fund allows unit holders to switch from the fund. However, switching can be done by switching to another FNB fund. Furthermore, withdrawals can also be done at any time, however, this will mainly depend on the investment vehicle used to invest in the fund.
Advantages of the FNB Islamic balanced fund
- The fund allows investments that are subject to Regulation 28 of the Pension Funds Act.
- The fees that are applicable for investing in the fund are low.
- Contributions into the fund depend on how much an investor wants to invest in the fund.
- Withdrawals from the fund are not strict.
- Investors do not need to be Muslims to invest in the fund.
- The fund comes with Islamic investment benefits.
Disadvantages of the FNB Islamic balanced fund
- The fund can be outperformed by its benchmark.
- Capital invested can decrease from time to time.
- There is no capital guarantee when investing in the fund.
Conclusion
The FNB Islamic balanced fund is suitable for those that want to achieve below-average returns on investment while investing in a Shariah-compliant investment. The fund still has a long way to go, and its potential will be clear as the fund grows. However, everything seems to be working well for the fund.
