JWR flagship funds.

Some time ago we decided to create two Fund of Funds in conjunction with ABSA Multi Management to enable us to manage our clients’ portfolios much more tax-efficiently. Usually, when switching from one unit trust to another, a capital gains tax event is triggered and taxes paid, resulting in many clients opting for a “no-switch” approach. This makes it very difficult for us to effectively apply our investment philosophy to our clients’ portfolios.

With the Fund of Funds, no CGT is paid when switching. The two funds we launched are called Red Oak Balanced Fund and Red Oak World Wide Flexible Fund.

We started off using the funds with high assets under management numbers, but have been switching out of these funds into funds where the impact on changes by the manager is more effective. This has proven to be a very successful move due to the ability of the smaller fund managers to be more nimble in applying their investment thesis. If we look at the one-year returns for these two funds we see the following:

Red Oak Balanced                           8,71%

Red Oak World Wide Flex             17,76%

We not only aim to generate the highest return with these funds, but also to lower the volatility compared to that of their peers. Another advantage we have with these funds is the ability to decide on the geographical and asset allocation exposure in the funds. If we believe the developed markets are getting a bit expensive and the rand weakness overdone, we can switch into funds that will give us some more local equity or bond exposure without having to wait for the managers of the funds we invest in to make that move. It must be made clear that we never try to “time the market” with these funds. These funds remain grounded in our longer-term strategic asset allocation framework but do give us the ability to react to shorter-term strategic under- or over-exposed areas of the markets.


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