Old Mutual’s range of smoothed funds has delivered record-breaking returns of between 23,8% and 26,2% in 2006, says Steven Levin, general manager: products at Old Mutual.
With year-on-year inflation at 5,8%, these funds have provided above-inflation returns of 18% and more in 2006.
Old Mutual’s Flexi Smoothed Bonus Fund is the best-performing absolute return fund in South Africa over two decades. This fund has a track record of delivering positive real returns over 22 years averaging almost 6% a year.
In a smoothed fund, a life assurer holds back some of the investment growth during times of strong market performance and allocates additional growth during time of poor market performance, thus smoothing market extremes.
“Investors would do well to remember that in 2002, when the JSE all-share [index] fell by 8,2% for the year, investors in the range of smoothed funds enjoyed a positive return of between 1,75% and 4,25%, depending on the portfolio,” Levin says.
Smoothed funds hold a balanced portfolio of assets including South African equities, bonds, property and limited offshore assets.
Levin says smoothed funds are well positioned to continue delivering sound returns in coming years despite an expected slowdown following an equity bull run for the past 15 quarters.
The real returns of smoothed funds of between 18% and 20,4% are after deduction of investment fund charges and tax depending on the portfolio