Unit Trust Advisory

KORNER PERSPECTIVE UNIT TRUST ADVISORY

We feel that Körner Perspective is very positioned to advise clients on unit trust/ LISP portfolios or funds as:

  • Our asset management foundation gives a useful perspective on the asset management role played by the fund manager (e.g. in risk profiled funds).
  • Our asset management experience and in-house research (e.g. an understanding of the interest rates and the bond market) also allow us to evaluate the risk return potential of a wide range of funds.
  • Our equity bias allows us to more independently evaluate funds, in terms of general mandate, the approach of the manager and the positioning of the fund, and
  • Our wealth management approach allows us to evaluate the financial planning, tax, cost etc. merits and benefits of funds.

While there is an overwhelmingly wide choice of available funds, it is our view that there is actually too little differentiation in the fund mandates (objectives) with many funds adopting a broader, more inclusive position.

While always open to look into the strategy, positioning etc. of any fund, we follow a number of basic principles when evaluating funds.

The funds should be aligned to the needs of the investor.

It is our view that the funds should be matched to the investor (profile) both on a combined basis (i.e. asset mix) but also critically on an underlying fund basis. This means that the choice of equity fund (for example) should be appropriate for that investor profile and that a conservative investor should by definition be exposed to more prudent equity fund than a more aggressive investor.

 

We Generally Avoid ‘Risk Profiled Funds’

Risk profiled funds (e.g. a conservative or balanced fund) offer investors a single fund, spread across a range of asset classes, designed to produce a specific risk return profile. The theory is that these funds relieve the investor/ advisor of the burden of dynamic asset allocation as this is handled within the fund.

We (as a rule) avoid risk profiled funds for a few reasons, namely:

  • They are generally very static in their asset allocation or operate within tight parameters.
  • They are too expensive. The basic fees effectively charge too much for the cash, fixed income and often property portions.
  • They levy performance fees off low benchmarks, and
  • One should rather allocate assets to the best manager in that class.

While we place a very high value on the investment approach of the fund manager/ house, we feel that one should:

  • Evaluate every fund and house on its outlook and position and not past performance (reputation) and
  • Recognise that different houses have different niches and that no investment house is goods at all styles and asset classes.