Three needs, two decades of outperformance

Twenty years ago, we launched three funds as part of our local unit trust fund range, the Coronation Strategic Income, Coronation Capital Plus and Coronation Market Plus funds. While each fund set out to meet a very different investor need, they all shared the common goal of not only meeting, but exceeding, the expectations of their investors through active multi-asset class investing.

Below, we briefly look at how each of these funds have managed to do just that over this two-decade long period.

Coronation Strategic Income

Most investors need to keep a portion of their savings liquid for different reasons. And, if the past 18 months have taught investors anything, it is the importance of having an emergency fund to tap into as part of your investment portfolio. The natural assumption would be to keep such monies in cash, but, if this is a permanent component of your investment strategy, it may be more efficient to consider a conservative fund with the ability to do better than cash (i.e. one that is likely to deliver a better return than that of a cash deposit at the bank).

Delivering a return that is higher than that of a traditional money market or pure income fund (i.e. cash equivalents) is exactly what we set out to do with the launch of Coronation Strategic Income back in July 2001. Over the subsequent 20-year period to end June 2021, the Fund has outperformed cash by 2.4% p.a with an annualised net return of 9.8%. Over this period, the Fund also managed to outperform cash over any rolling 12-month period 80% of the time.

You can read more about this fund here or in our Corolab investment guide.

Coronation Capital Plus Fund

What retired investors need from their investment is to achieve two outcomes simultaneously – growth and protection against downside risk. This means that they are seeking inflation-beating returns that are delivered in a manner that doesn’t expose their capital to the full impact of severe market corrections (which occur periodically, as has been the case in the early stages of the Covid-19 induced market selloff).

Inflation-beating returns are crucial, as your accumulated retirement savings may need to last over multiple decades should you live longer than the average life expectancy. Managing downside risk is equally important, given that when you withdraw a regular income from your capital, your investment returns need to be less volatile.

For the past two decades, the Coronation Capital Plus Fund has delivered on this dual need by producing returns that are well ahead of its inflation +4% benchmark. In fact, an investment at launch would have resulted in more than double that of inflation over the 20-year period, while at the same time being consciously managed to minimise downside risk (Figure 2).

As a practical example, an investor who started off with an income drawdown of 5% per year (in line with industry guidelines for those aged 65) at the fund’s inception in July 2001, saw a more than tripling of their nominal capital over the last two decades, while drawing more than 2.3 times their initial capital as income over that period. Put simply, for every R1 million invested in Coronation Capital Plus 20 years ago, you would have R3.34 million today, after withdrawing R2.33 million in income*.

You can read more about this Fund here or in our Corolab investment guide.

Coronation Market Plus

Individuals with the ability to invest beyond what they are saving for their retirement (discretionary investors) may want a fund that can express views beyond the constraints of Regulation 28 – and rightly expect such a solution to outperform a traditional balanced fund. If managed well, this multi-asset class fund can even provide a return that is close to, or in line with, the market but without the associated volatility of a pure equity fund. Enter Coronation Market Plus.

Since its inception in 2001, the Fund has met the needs of aggressive investors aiming to build long-term capital outside of their retirement portfolio. With the ability to invest more than 75% in equities and 30% offshore (as mandated by Regulation 28), the Fund has delivered real returns of 9.3% p.a.

You can read more about this Fund here.

Two decades of adding value to our clients

It is rewarding to look back and see how we have added value to our clients over time. Through active asset management, within three multi-asset mandates, their track records celebrate the delivery of competitive long-term returns to our clients for more than two decades (Figure 4).+

*The value of R1m invested in Coronation Capital Plus at inception through to 30 June 2021. It assumes an initial drawdown rate of 5% per year set at inception and income calculated on each anniversary.

For highest and lowest returns of these funds, please refer to their fact sheets

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