This month in our series on the Rutherford Funds Explained, the fund in focus is our Rutherford Balanced portfolio, focussing on the basic structure of the fund, how it works to offer consistent inflation beating returns over the long term, with minimal volatility through the market cycles, and which clients it is specifically developed for.
Key Features and Objectives of the Rutherford Balanced Portfolio
- The portfolio is a Fund of Funds comprising a focussed blend of up to 10 top quality unit trusts, each managed independently
- It is designed to achieve returns of inflation +4% over the long term, making it ideal for long term investment growth
- The risk is Moderate-to-High with a higher exposure to equities than to bonds and cash
- The fund is Regulation 28 compliant, requiring that it is managed in compliance with the prudential investment guidelines that apply to retirement funds in South Africa
Strategic Asset Allocation
The Rutherford Balanced strategic asset allocation is based on more than 100 years of statistical data and long-term asset class returns. Our objective is to achieve the target returns with the lowest possible risk – otherwise known as risk adjusted returns. Knowing how each asset class has performed in the past enables us to allocate the optimal weighting per asset class. Consequently, to offer the best risk adjusted return within its mandate of inflation +4%, the Rutherford Balanced fund is composed of a higher proportion of equities (±70%) relative to cash and bonds (±30%)
Market Outlook
On a quarterly basis, the Investment Committee gauges the current risks in the economic environment, both in South Africa and globally, and may adopt a slightly more defensive posture than the ideal long-term Strategic Asset allocation would indicate. In our Market Outlook we look at forecast global economic growth and risk factors such as geopolitical tensions. Currently the wars in Ukraine and the Middle East, and escalating trade tariffs need to be considered.
Macroeconomic View
Our macroeconomic view consists of analysing economies and their strengths and weaknesses. This process is determined by inflation rates, interest rates, debt to GDP ratio, currency strength or weakness, price to earnings ratio, monetary policy, fiscal policy, geopolitical risks, etc. By analysing these aspects of the global economy, we can identify longer term opportunities. Every quarter the investment team reviews the macroeconomic view and rebalances the fund.
Tactical Asset Allocation
Tactical asset allocation is an active management portfolio methodology that tweaks the percentage holdings in various asset classes to take into account current and expected market conditions. The tactical asset allocation within each underlying fund remains the responsibility of our chosen fund managers, so our Balanced portfolio benefits from the different views and perspectives of each team of experts.
Current Asset Allocation in the Rutherford Balanced Fund
Current Holdings in the Rutherford Balanced Fund
The Selection Criteria for our Fund Managers
- The blend of managers must be able to achieve the fund benchmark (e.g. CPI+4%)
- The blend of funds must have the appropriate asset class mix for the targeted return
- The managers must have strong investment allocation frameworks and consistent processes
- The managers must have outstanding long-term performance track records, proving their ability to achieve the applicable benchmark through the market cycles
- The funds all have above average upside capture and downside protection ratios
Investment Styles
One of the key objectives of the Rutherford Balanced portfolio is to achieve the target returns but with low volatility. This provides investors with a more consistent and smoother investment experience and has been proven to encourage investors to take a longer view of market conditions and thereby achieve better investment outcomes. We therefore select funds which have uncorrelated management styles, so that our Balanced portfolio benefits from varying market cycles and differing management approaches.
Rutherford Balanced Fund 5 Year Performance as at 31 January 2025
The Rutherford Balanced Target Market
This fund is most suitable for younger investors and those who are investing for the longer term who are seeking greater market risk and higher returns. The Rutherford Balanced portfolio is a Moderate-to-High risk fund, which has moderate volatility and seeks to provide consistent inflation beating returns to preserve and grow your wealth over the long term. It is ideal to provide long term growth for retirement annuities and endowment investments, as well as living annuities with low withdrawal rates.
Our track record shows that the Rutherford Balanced fund has proven itself a top performing multi-asset fund through the market cycles and as such can find a place in many clients’ investment portfolios.