The prime objective of our real return portfolios is to provide the investor with a hedge against the effects of inflation while simultaneously ensuring a real return over and above that of inflation. Our portfolios are thus specifically designed with this aim in mind.
As a separate asset class, our real return products are construed to improve investor liability matching, reducing risk through added diversification, sustain low variability of returns and deliver real returns over and above the effects of inflation.
Portfolios are tailored to the specific client needs and risk profiles which ultimately defines the return that will be targeted.
Absolute return portfolios are inherently targeting capital preservation and also utilise derivative strategies to capture returns from various asset classes, thereby ensuring that investment objectives are realised.
Real return funds are constructed using a methodology that focuses on both strategic and tactical asset allocation. The investment universe includes inflation linked bonds which provide an excellent hedge against inflation, defensive value equities with steady dividend payment streams, nominal bonds and money market instruments. Consideration is also given to property unit trusts and preference shares, depending on the fund risk profile and the levels that have been set for the targeted return.
A long term strategic asset allocation policy may, however, limit the ability to take advantage of opportunities that may present themselves in the short term. This is where our tactical asset allocation methodology is employed.
In essence, this type of fund is primarily designed to provide the investor with a low risk investment vehicle that beats inflation by a specified target over the medium to long term. Should the investor require a higher return target above inflation, the risk profile will change accordingly.