Asset allocation the hardest call

Once you you know what to look for in a unit trust fund and its manager, what remains is to build a diversified portfolio.

Investors unsure of that might opt for an asset allocation or balanced fund.

It’s a good idea, especially letting the fund manager make the all-important asset allocation decisions.

But investors going the balanced fund route should consider using two or more funds: that offers a selection of different manager skills.

Even private client operations running portfolios for wealthy clients use unit trusts. Hennie Franzsen, head of wealth management at FNB Private Clients, said extensive use is made of unit trusts to implement the preferred investment view for clients.

“Unit trust funds typically offer flexibility and tax benefits that are hard to beat.”

But he adds: “It’s not about the fund – it’s all about the asset allocation and the fund manager.”

FNB Private Clients conducts its own research and prefers to make the asset allocation decisions for clients.

Franzsen tells investors using an adviser that if the adviser is charging a fee that should include advice on the asset class and fund manager.

If not, the investor needs to ask the adviser exactly what’s being paid for.

 - Finweek