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The traditional unit trust investor would look for a one-stop broad equity fund, and diligently pay monthly by debit order. But that is a very small portion of the market today.

Equity funds are now primarily used as “building blocks” by multimanagers and the more sophisticated financial advisers. These investors often blend three or four equity funds together, preferring funds which represent the top picks of each fund manager.

This month we look at these concentrated general equity funds, or, as their managers prefer to call them, focused, high-conviction funds.

They hold 20 to 25 shares, which is not as aggressive as it sounds: academics argue that a fund is sufficiently diversified with 16 to 18 shares. A logical way to build an equity portfolio is what’s known as the core and satellite approach, which uses an index fund as the core. Retail investors who want to invest in just one fund should be wary of choosing these funds, unless they are prepared to keep their proverbial certificates in a drawer for 25 or 30 years. These funds are more volatile than the traditional general equity funds offered by the likes of Investec, Old Mutual and even Allan Gray. This month we look at five funds from very different houses, all of which can be described as concentrated. The JSE doesn’t have that many investable shares — to be generous, about 120 — so the names will often be the same. With the exception of Bridge, which has it own specific goals, all the funds hold Naspers. Steinhoff is another frequently occurring share. All these funds call themsel...

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