Our Investment Approach

• Intro
• How We Differ
• Sector Allocations
• Selecting a Unit Trust

Selecting Unit Trust Funds

Once we have determined which sectors of the JSE we think are likely to out perform, we will investigate the unit trusts which give us the appropriate exposure. In choosing unit trusts, we will take the following factors into account :

• The track record of the unit trust manager in good times as well as more difficult times for the sector. The track record of the unit trust and that of the fund manager may not be the same - fund managers are prone to move from one fund to another. The reputation and stability of the whole asset management team is also a factor.
• The fees charged by unit trusts have an important effect on performance over time. The fees charged include the annual management fee, the initial brokerage and the creation fee. Preference will be given to unit trusts with lower fees. We are well disposed to index funds for this reason.
• The composition of the unit trust is an important consideration, particularly the split between shares and cash. The shares in which the fund has a heavy weighting will have an impact on performance too. Unfortunately, most unit trusts only disclose their composition at the end of each quarter. Information on the composition can therefore be up to 4 months old. Index funds and unit trusts that are clearly focused on a particular sector are easier to assess. This would be another factor in their favour.
• When choosing money market unit trusts, we will check with the fund manager (besides reviewing the most recent publicly available information) to ensure that none of the money is deposited with a bank or institution that may be insolvent.
• Restraints on removing funds from unit trusts are a growing phenomenon. While these are aimed mainly at wrap funds, some restrictions and penalties are being imposed on linked product companies too. We will give preference to funds that do not impose penalties or restrictions.
• A unit trust manager that is under consideration for inclusion in our recommended portfolios will usually be interviewed by Equinox.co.za. This helps us to understand the manager's current perspective on the market and his/her objectives for the unit trust.
• Unit trust managers that have demonstrated an ability to outperform their peers and the market over time will be given preference. These skills should ideally have been demonstrated over a range of market sectors and in different market circumstances. Performance of the unit trust over the last quarter will not be an important factor.
• The returns generated by the unit trusts will also be compared against the volatility of those returns. One manager may experience far greater swings in performance than another. Our preference would be for the manager who produced the same average return with less volatility (swings in performance).
• Consideration will be given to broad market themes, i.e. growth vs value when choosing unit trusts. These themes can persist for years.
• Equinox.co.za is an independent company. Our investment team considers all unit trusts on their merits as a free and independent advisory service. We pass our wholesale purchase discount on to you and receive no brokerage fees.