STANLIB Fund Focus Funds on year old
Fund Focus Funds, industry pacesetters in the risk-profiled segment of the investment market, have cemented their place in the STANLIB product range thanks to their ability to attract â€˜sticky moneyâ€™ and keep clients in the market.
The product was introduced a year ago by the countryâ€™s largest unit trust company to build on the success of the Fund Focus tool to help investment advisers counsel clients on asset class diversification and the need to align asset mixes and risk profiles.
Five different packages are offered that reflect the quarterly Fund Focus market view. Allocations are made into equities, bonds, cash and property in weightings suitable for conservative, moderately conservative, moderate, moderately aggressive and aggressive investors.
On the first anniversary of Fund Focus Funds, Kim Zietsman, head of STANLIB single-manager unit trusts, saluted the advisers who have driven the success of the market newcomer.
She noted: â€œThese funds have exceeded target by a substantial margin. In the process they have showcased the ability of professional advisers to accurately assess a clientâ€™s risk tolerance and develop an appropriate asset allocation strategy.
â€œThe proof is in the amount of â€˜sticky moneyâ€™ these products attract. Clients who stick around for the long haul will have reason to thank their advisers in years to come.
â€œWe believe this concept will not just create â€˜sticky moneyâ€™ but â€˜sticky clientsâ€™ who will maintain enduring relationships with advisers.â€
From July 2005 to July 2006, Fund Focus Funds attracted total inflows of R814 million. There was an outflow of just R180 million over the period, for a net inflow of more than R633 million.
Yet over the final quarter, markets â€œwent negativeâ€ as the interest rate cycle turned and sentiment cooled toward Emerging Markets. As South Africa is the most liquid of all jurisdictions in the Emerging Markets Index this can prompt an international sell-off and trigger a flight to the sidelines by local investors.
In the case of Fund Focus Funds, this failed to occur on anything like the scale seen in previous periods of volatility.
STANLIB believes the educational base from which the product evolved has helped to ease traditional skittishness. The companyâ€™s Retail Investment Management team initially introduced the Fund Focus concept as an educational and awareness tool. After enthusiastic response from advisers and investors over a two-year period, this educational aid was developed into client solution.
Zietsman commented: â€œDuring Emerging Market scares in the â€˜90s and during the prolonged equity market decline in 2001-2003, local investors were very skittish. Some stayed on the sidelines for years, missing much of the equity upside in the three years to May 2006.
â€œThis three-year bull-run turned out to be a big wealth-building opportunity with JSE gains of 200%. Greater â€˜stickabilityâ€™ would have been well rewarded.
â€œImproved market education has encouraged a more long-term view. This groundwork enabled us to develop a risk-profiled product that encourages a more strategic approach. Asset diversification helps manage risk while product design enables ongoing adjustments in line with market changes.
â€œAdvisers have stuck with the concept from Day One and have helped turn this into one of STANLIBâ€™s most successful market innovations.â€
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