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Investment Strategy
Friday, August 1, 2008
The success of a diversified Investor

Listed property is an excellent investment choice for income-dependant investors. At least that’s according to experience at Marriott whose funds in this sector have performed exceptionally well: two of its property funds and its Core Income Fund (a property, bond, cash mix) were evidently in the top five income-producing funds over the five years to 2008.

In the quarter to end March 2008, a massive R9 billion flowed into Money Market unit trusts and a further R2.4 billion was placed in fixed interest funds. By contrast, a net R6.7 billion was withdrawn from equity and real estate unit trusts.
“It seems that investors are nervous about the outlook for equities,” comments Mike Ronald, an Investment Professional at Marriott; “they have sought refuge in the income-bearing assets.”
But he has a word of caution for clients. “They should not remain in cash for an extended period. It is easy for investors to become complacent and fail to monitor what is happening to their assets,” he warns. “It is important that whatever assets they own, even cash, they need to be carefully managed to achieve their investment goal.”
Marriott says it specialises in catering for the income requirements of retired investors. It suggests that clients should invest in a fund that has a flexible mandate, such as the Marriott Core Income Fund. This ‘flexible mandate’ enables the asset manager to move the client’s money into property, bonds and cash at the appropriate time, saving him or his financial advisor the stress of trying to time the market.
The product provides clients with a high, reliable income stream (it is less volatile than income derived from cash, which is affected by interest rate fluctuations), and also provides investors with long term income and capital growth.
A fund which blends property, bonds and cash will produce more income for an investor than a plain vanilla income fund. By adjusting the allocation to the three high yielding asset classes at the appropriate time, the client can benefit from each asset class’s attributes. Property, for example, provides investors with a high and growing income but is adversely affected by rising interest rates. If held to maturity, bonds are the ultimate guaranteed investment, providing investors with a known income stream and capital stability. However, during a rising interest rate environment, bond values decline. Cash on the other hand is beneficial to investors during a rising interest rate environment as it provides them with capital stability and rising income streams.
So combining these three asset classes at the appropriate times can create an excellent income solution. Marriott says its approach has been so successful that its Core Income fund has produced more income and a greater total return over the past five years than the top performing Bond fund, Money market fund, Fixed Income Varied specialist fund, and Income fund.
 

Copyright © Insurance Times and Investments® Vol:21.7 1st August, 2008
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