Thursday, August 27, 2009

This Month’s Fund Focus - ABSA Select Equity Fund

ABSA Asset Management offers 22 unit trust funds, many of which offer average performance. However, ABSA Select Equity fund has achieved a superior performance since it started in February 2004. Although its fund size is relatively small, it has a lower total expense ratio (TER). As long as its investment philosophy and fund manager remains the same, it is a unit trust suitable for longer-term investing.

Unit trust fund name: ABSA Select Equity Fund

Category: Domestic Equity - General
Benchmark: FTSE/JSE All Share Index (including income)
Inception date: 23 February 2004
Portfolio Manager: Errol Shear
Fund Size: R394 million

Fund characteristics:
The Fund invests in shares on the stock exchange with the intention of providing investors with long-term capital growth and escalating dividend income. Exposure to equities typically exceeds 75% of the fund and comprises a diverse combination of shares selected following independent research.

Fund objective:
Aims to achieve superior investment performance through careful selection of the best value the JSE has to offer

Total expense ratio:1.13%
Risk rating: Short-term (one-year): Medium high ; Long-term (five-year): Medium low
Daberistic Fund Rating: 4 stars

Top 10 holdings:
ABSA, Anglo American, BHP Billiton, Foschini, Mr Price, Naspers, Remgro, Sasol, SAB Miller, Standard Bank

Fund performance (annualised): This fund Sector average
6 months -0.9% 3.0%
1 year -4.4% -16.8%
3 years 11.1% 4.4%
5 years 24.4% 18.4%

Source: ABSA; FundData; data as at 30 June 2009

Suitable for investors:
Seeking long-term capital growth, with ability to tolerate short-term market volatilities
3-year plus investment horizon

Our recommendation:
Short-term (1-year): Lighten; Long-term (5-year): Hold

Daberistic Fund Rating: This is the rating developed by Daberistic Financial Services. It is based on the fund’s investment philosophy, fund manger’s academic qualifications and experience, the funds’ historic performance and risk characteristics.
¶ - poor;
¶¶ - inferior;
¶¶¶ - average;
¶¶¶¶ - superior;
¶¶¶¶¶ - excellent.

Our recommendation: This is the recommendation given by investors who want to invest tin this fund over the short- or long-term:

Buy – Investors should buy into this fund
Hold – Investors in this fund should continue to hold, but no more buying
Lighten – Investors should sell part of the holding
Sell – Investors should sell the entire holding.

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