Low equity funds are one of the largest unit trust sectors, with R210bn under management. As they are limited to 40% exposure to equities, they are considered a good option in the last five years before retirement, and the early years of retirement itself.The risk of absolute loss is far lower than in a balanced or equity fund, but there is still enough equity for the fund to provide real returns over the medium term.As JSE equities have been a dismal performer over the five years to March 2020, many investors have fallen out of love with these funds. They have sought refuge in the multiasset income funds, which may not invest more than 10% of their assets in shares, including pref shares. In the 12 months to June 2021 the income category saw inflows of R15.4bn while low equity funds saw outflows of R4.8bn.That has started to turn, as investors realised the opportunity cost of not being invested in the JSE as shares bounced back from lockdown lows.Many low equity funds have also sho...
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