ANALYSIS
BALANCED FUNDS: For retirement; but start soon
Balanced funds are the common description for the traditional multi-asset portfolio used in pension funds
Balanced funds are the common description for the traditional multi-asset portfolio used in pension funds. Under Regulation 28 of the Retirement Funds Act they can be up to 75% invested in shares, up to 30% offshore and up to 90% in equity and property combined. They are also allowed to invest up to 15% between private equity and hedge funds, though it is hard to find many funds liquid enough for a typical unit trust. So balanced funds are heavily weighted towards growth assets. They start to lose popularity once the retiree’s horizon is five years or less. Clients are then typically transferred to low equity portfolios, which have an equity limit of 40%. In the Association for Savings and Investments SA (Asisa) categories they are called high-equity multi-asset funds and in the Morningstar awards aggressive allocation funds. More than R450bn is invested in the high-equity sector. It has been common to measure balanced funds on a peer basis. The Alexander Forbes Large Manager Watch ...
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