Coronation Funds: A Guide To Smart Investing

Coronation offers a range of investment funds, including the Coronation Top 20 Fund, an equity fund that invests in shares on the JSE, and the Coronation Fixed Income Fund, which seeks to balance capital appreciation and income for investors. With a strong presence in South Africa, Coronation's funds are tailored to meet the needs of investors, from those seeking steady income to those taking on more risk. The company was founded in 1993 by investment professionals and has since grown into a leading brand in the South African investment industry, managing R623 billion in client assets as of March 2023.

Investment suitability for Coronation Top 20 Fund

The Coronation Top 20 Fund is an equity fund that invests in shares included on the JSE. It aims to outperform the FTSE/JSE Capped All Share Index over a three to five-year period. The fund's mandate does not allow for offshore exposure. It is a general equity fund that aims to significantly outperform the FTSE/JSE Capped All Share Index over a 3 to 5-year period by investing in a concentrated portfolio of 20 shares listed on the JSE Securities Exchange.

The fund is suitable for investors who are building wealth and are comfortable with full exposure to shares in large companies listed in South Africa. Investors must accept that the fund may underperform the market significantly in the short term in pursuit of superior long-term gains. It is also suitable for those holding the Top 20 as one of multiple equity funds in their investment portfolio. The Coronation Top 20 Fund is a suitable investment for those with a moderate risk appetite who are investing for the medium to long term.

The Coronation Top 20 Fund has a Morningstar Medalist Rating of Bronze, indicating a strong management team and sound investment process. However, the fees are considered a weakness, as they are priced within the second-highest quintile among peers.

Coronation, the fund manager of the Coronation Top 20 Fund, is a leading brand in the South African investment industry. It was founded in Cape Town, South Africa, in 1993 by a group of investment professionals and currently manages R623 billion in client assets. Coronation offers a range of South African and international funds that cater to most investors' needs.

Coronation Fixed Income Fund

The Coronation Fixed Income Fund is an open-ended fund that seeks to achieve a balance between capital appreciation and income for investors. The fund achieves its objectives by investing in medium- to long-term FGN, Subnational, and Corporate Bonds, as well as other eligible fixed-income securities. The fund is suitable for investors with a medium- to long-term investment horizon and a moderate risk appetite.

Investment Strategy

The Coronation Fixed Income Fund adopts an investment strategy that ensures a steady return on capital and assured liquidity. The fundamental objective of the fund is to provide unit holders with long-term capital growth and regular income by investing primarily in a diverse portfolio of fixed-income securities. The fund is actively managed, with a focus on both short-term tactical opportunities and a long-term strategic market view.

Benefits of Investing in the Coronation Fixed Income Fund

• Professional Management: The fund is managed by a team of highly skilled and specialized investment professionals, allowing investors to benefit from their expertise and ongoing portfolio review and research.
• Diversification: The fund invests in a diverse range of fixed-income securities, helping to spread risk and maximize returns.
• Affordability: Mutual funds, such as the Coronation Fixed Income Fund, offer an affordable way to invest and diversify your portfolio. They have lower transaction costs compared to individual investors due to the large volume of securities they buy and sell.
• Ease of Subscription and Entry: The fund has a low cost of entry, making it accessible to a wide range of investors.
• Robust Risk Management: The fund is designed to withstand volatility and shocks, backed by robust risk management and compliance systems.

About Coronation

Coronation is a leading brand in the South African investment industry, founded in 1993 by a group of investment professionals. The company is solely focused on asset management and has a strong track record of delivering competitive long-term returns to its clients. With an integrated global investment team and offices in several countries, Coronation offers both segregated and pooled investment vehicles to meet the diverse needs of its clients.

Advantages of tax-free investment

Coronation is a fund management business founded in Cape Town, South Africa, in 1993. The company offers a range of South African and international funds to meet the needs of most investors.

Tax-free investments are a great way to make your savings work harder. Here are some advantages of investing in Coronation Unit Trust Funds:

• No Tax on Interest or Income: With the Coronation Tax-Free Investment, you don't pay any local tax on your investment returns, including interest income, dividends, or capital gains. This boosts your realised investment return.
• No Initial or Administration Fees: There are no initial fees or annual administration fees, only annual management fees dependent on the fund you choose.
• Unrestricted Access to Your Money: You can access your money at any time, although a long-term investment horizon is recommended to fully benefit from compounding returns.
• Wide Range of Funds: You can choose from a range of funds to suit your investment needs, including the popular Market Plus and Global Optimum Growth Feeder funds.
• Open a Tax-Free Investment for Minor Children: You can open a tax-free investment on behalf of your child, unlocking the power of compounding on their long-term savings.
• Easy Transfer: You can transfer your tax-free investment from a bank or another investment manager to Coronation free of charge at any time.
• No Limit on Number of Investments: You can choose to invest in one or more of the Coronation funds, and you also have the flexibility to withdraw money and switch between funds.

Investment portfolio management

There are two main types of investment portfolio management: active and passive. Active portfolio management takes a hands-on approach, with managers trading securities to generate maximum returns. Passive portfolio management, on the other hand, involves choosing investments that track a broad stock market index, aiming to mirror the market's returns.

When investing in Coronation Funds, individuals can opt for either active or passive portfolio management. Coronation offers a range of mutual funds, including the Coronation Money Market Fund, the Coronation Fixed Income Fund, and the Coronation Balanced Fund. These funds pool money from different investors and are managed by a team of investment professionals.

• Asset allocation: Diversifying investments across different asset classes, such as stocks, bonds, and alternative investments, to balance risk and return.
• Risk management: Understanding your risk tolerance and adjusting your portfolio accordingly, whether through volatile or non-volatile assets.
• Rebalancing: Regularly evaluating and adjusting your portfolio to maintain its original risk-return profile and align it with your financial goals.
• Tax minimization: Considering the tax implications of your investment choices to minimize overall tax liability.
• Professional management: Seeking advice or delegating decision-making to licensed portfolio managers, who can provide expertise and dedicated oversight.

Mutual funds

Coronation offers both public and private mutual funds.

Public Mutual Funds

Coronation's public funds are open to all investors, from those seeking a steady income to those taking on more risk to achieve growth. These funds are a pool of cash assets from different investors, managed by a specialised investment team. They invest in different asset classes.

There are three public mutual funds:

• Coronation Money Market Fund
• Coronation Fixed Income Fund
• Coronation Balanced Fund

#### Coronation Money Market Fund

This is an open-ended, low-risk fund that provides capital preservation, liquidity and diversification benefits, with competitive returns. It invests in short-term, low-risk instruments such as treasury bills, term deposits, commercial papers and other money market securities.

#### Coronation Fixed Income Fund

This is an open-ended fund that aims to balance capital appreciation and income for investors. It achieves this by investing in medium to long-term FGN, Subnational and Corporate Bonds, and other fixed-income securities.

#### Coronation Balanced Fund

This fund acts as a portfolio of stocks and bonds, aiming to provide a balanced return of capital and income over the long term. It does this by investing across a broad range of traditional and non-traditional asset classes and securities.

Private Mutual Funds

Private funds are not open to the public and require a minimum investment threshold and knowledge of risk management.

There are two private funds:

• Coronation Fixed Income Dollar Fund
• Credit Opportunities Fund

#### Coronation Fixed Income Dollar Fund

This is an open-ended fund that invests in Eurobonds and other dollar-dominated fixed-income instruments.

#### Credit Opportunities Fund

This is a semi-closed fund that invests in a range of diversified credit opportunities, managed by Coronation Asset Management.

Frequently asked questions