Page 148 - Profile's Unit Trusts and Collective Investments 2021 issue 2

CHAPTER 8

Fundisa Funds
Fundisa is (or was) a tertiary education programme launched in 2007 as a partnership
between government and ASISA. The Fundisa scheme was closed to new investments in
early 2018 following the government’s announcement of free higher education. ASISA
and the state will honour the terms of the scheme for existing investors provided members
continue to contribute. The scheme was only open to families with incomes of less than R180 000
per annum. Minimum investments were R40 a month. A state-subsidised bonus of 25% per annum
(capped at R600 per year) was designed to encourage participation. The scheme attracted just
over 27 000 investors before it was closed.

lndustrial Sector Funds
South African Industrial category funds invest in shares listed in JSE sectors such as
engineering, transportation, construction, electronics, food producers, retailers, heath care and
telecommunications. In terms of the ASISA standard, at least 80% of assets must be in industrial
shares listed on the JSE (or in a similar sector of an international stock exchange) – industrial
shares include all JSE sectors other than the FTSE/JSE Oil & Gas, Basic Materials, and Financials
industry groups. The benchmark for SA–Equity–Industrial funds is the FTSE/JSE All Share
Industrials index (J257T).
As with all theme funds, investors are warned that Industrial sector funds may be more volatile
than funds that are diversified across a wider range of FTSE/JSE economic groups. In practice,
however, Industrial funds in SA are usually less volatile than Resource funds and often less volatile
than General Equity funds. In the latter case, this is because most General Equity funds in SA have
considerable exposure to Resources shares, which still dominate the JSE’s large cap stocks. Mining
and resource shares, due to the sharp fluctuations that can occur in commodity prices, are
generally regarded as the most volatile (riskiest) stocks.
Unclassified Funds and Other Theme Funds
Unclassified funds (previously called Varied Specialist) are those for which suitable sectors are
not available elsewhere – ie, the Unclassified categories are created to house those funds that don’t
fit anywhere else. Funds in these categories are usually themed (ie, not general equity), but have
fairly unique mandates that don’t allow them to be included in other sectors. These funds should
not be compared to one another within the sector because they define their own benchmarks. The
diversity in the sector means one would not necessarily be comparing “apples with apples”. (This
is why the unclassified sectors are not ranked in published performance tables.)
Themed funds that don’t have their own category are not all found in the Unclassified sectors.
Where a themed fund meets the criteria for a “regular” sector and its asset mix is comparable to
other funds in the sector, ASISA will include the fund in the “regular” sector. The Shari’ah
compliant funds, high dividend yield funds, and currently popular “quants” funds, for example, are
included in the Equity–General sector.
Themes come and go depending on changes in technology, asset performance and areas of
special interest. As noted earlier, Gold funds once had their own sector, as did Empowerment
funds and Technology funds. Other themes historically have included new listings, growth shares,
value shares and consumer stocks. The creation of funds to exploit new, fast growing areas of
business is inevitable, and the future may see the advent of bio-energy funds, agriculture funds or
healthcare funds. Unusual theme funds in the US have included the Vice Fund, which focussed on
gambling, alcohol and tobacco, and the Golf Fund, which invested in companies associated with
the sport. Narrowly themed funds, however, are not always that helpful to investors – they often
exploit a passing fad or fashion and do not always offer the dependable long-term performance that
investors seek.

146 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts