Fund Focus

Old Mutual High Yield Opportunity Fund

Most investors invest into unit trust funds to achieve long term capital appreciation. But few investors consider the importance of the unit trust’s dividend. Over the past year interest rates have declined sharply and bank deposits are currently paying +/- 5% interest (taxable) per annum. This barely beats inflation!

The Old Mutual High Yield Opportunity Fund aims to provide the investor with a high level of dividend income (currently not taxed in the hands of private investors) coupled with long term capital growth. It seeks fundamentally sound companies that have high dividend yields and good prospects for medium term growth. The fund will remain heavily invested in shares, with interest bearing investments kept to a minimum in order to enhance the fund’s tax efficiency.

Although the Old Mutual High Yield Opportunity Fund provides long term capital appreciation, the primary objective of this fund is to provide a dividend yield of 1,5 times the FTSE/JSE All Share Index (ALSI) on the initial net investment. The dividend is expected to increase each year. Hence the primary objective in purchasing this unit trust is to receive the increasing dividend yield and the objective of capital appreciation is secondary to this.

The Old Mutual High Yield Opportunity Fund has achieved the following historical returns: (Figures supplied by Morningstar as at 31^st December 2010.

 

Investment returns by their very nature are subject to risk. Past performance is not necessarily a guide to the future. The value of the investment may increase as well as decrease.

Changes to the Allan Gray Living Annuity death benefit options

 Allan Gray recently received notification from SARS advising of its interpretation of the options available to beneficiaries upon the death of an annuitant. In line with this interpretation, Allan Gray Living Annuity beneficiaries can now choose to receive their benefits as eithera cash lump sum, oras an annuity

Beneficiaries may no longer choose to receive their benefits as a combination of both a cash lump sum and an annuity. Beneficiaries that are not natural persons, including trusts, will still only have the option to choose a cash lump sum benefit.

Retirement Annuity Season!

February is generally the month when investors “top up” their retirement annuities. Retirement Annuities premiums are tax deductible within certain limits so it make sense to invest into a retirement annuity before 28^th February to reduce one’s income tax before the financial year end.

The importance of saving for your retirement is well known; the difficulty lies with the decision of what vehicle is best suited for this. When it comes to retirement planning, Retirement Annuities are preferred by many people because they offer significant benefits over other retirement options.

Modern retirement annuities provide access to an extensive range of local and global unit trusts which means that investors can structure their retirement portfolios to meet their own individual needs. At the same time investors benefit from the performances of the underlying unit trust portfolios.

If you would like to “top-up” your retirement annuity this month please contact us early for assistance.