Model portfolios

With hundreds of unit trusts in existence, how do you choose among them? How do you combine them synergistically and how do you ensure that they meet your investment objectives? For an individual investor this can be a major challenge. Coupled with the size of the investment universe, the information and skills available to the investor to aid their choice is often limited, making it difficult to construct an effective solution.

A model portfolio solution addresses the investor’s problem by providing a complete solution through a single investment product which provides access to the skills of some of the best investment managers, blends funds synergistically and improves the investor’s chance of achieving their investment goals.

The basic principle of a model portfolio solution is the grouping of more than one unit trust to form a portfolio, the premise being that a single unit trust fund seldom ranks consistently as the top performing fund. Different managers have different areas of expertise, be it asset allocation, stock selection, investment style et cetera. A well-structured model portfolio solution will focus not only on the identification of superior funds but also on blending them together in a way that

By opting for a model portfolio solution, the investor may be afforded the following benefits:

• * Diversification of manager risk
• * Performance not linked to one manager
• * Cost effectiveness of blending managers
• * Comprehensive due diligence done on all managers
• * Ongoing monitoring of constituent funds to make sure they remain suitable and in line with investor objectives
• * Focus on investment objectives

The Inflation Plus Model Portfolios provides a solution which differs in its construct to the traditional model portfolio approach, in that they are designed to meet the investor’s unique objectives through targeted returns.

Mi-Plan’s primary principle is to construct a range of target return portfolios: Inflation Plus 2-3, Inflation Plus 4-5, Inflation Plus 6-7, and Flexible Growth - that, individually or in combination, allow the investor the greatest likelihood of attaining their financial goals. The models aim to achieve returns in excess of the benchmark returns of CPI +2%; CPI +4%; and CPI +6%; 40% MSCI, 25% JSE ALSI, 30% STeFI, 5% J253 per annum respectively. The product design and investment philosophy are key to the achievement of these goals.

The investment philosophy is based on selecting the right asset managers and blending them together to achieve synergy.