Many investors assess risk within a balanced fund based on volatility. For retirement savers, we suggest questioning whether the fund hits its return target, which changes where High Street fits in a portfolio.

By Ross Beckley, Chief Investment Officer at High Street Asset Management.

At the Independent Wealth Retreat at Fancourt on 8–9 June, High Street sponsored and ran a series of workshops with advisers on building offshore exposure into Regulation 28 portfolios. The discussions kept returning to one question: how should risk within a balanced fund be assessed?

Most balanced fund reviews begin with volatility. It is the figure that stands out on a fact sheet, and on that measure, the High Street Balanced Prescient Fund looks like a riskier option. Its annualised standard deviation is 14.1%, against a category average of 9.0%, and its maximum drawdown is -25.5% against – 14.2% for the peer group.

But volatility describes how much a fund moves around, not whether it reaches its goal. For a retirement saver, the more relevant question is how likely a fund is to meet its return objective. The High Street Balanced Prescient Fund targets a return of SA CPI +5% per annum over rolling five-year periods, and it surpassed this 97% of the time since inception, against 67% for the category average.* On the measure
that matters most to a retirement saver, it has been among the most consistent funds in the category.*

What it does for a portfolio

This consistency comes from how the Fund was designed in 2018. It holds more than 90% effective Rand-hedge exposure within a Regulation 28 structure, which is unusual, since the two rarely sit together. The Fund maximises the full 45% direct offshore allowance and invests most of the remaining local allocation in Rand-hedge businesses whose earnings come from offshore markets. In effect, it gives a retirement portfolio global exposure.

The diversification this brings is what matters to an adviser. The largest balanced funds in the category tend to move together because they share a similar domestic tilt, so they also tend to fall together. High Street has the fifth-lowest correlation of the 249 funds in the category since inception. Because few model portfolios contain a holding that behaves this differently, adding it can raise returns and, importantly, reduce drawdowns when combined with more conventional funds, without the  adviser needing a view on where the Rand is headed.

Where it fits in a South African allocation

There is a structural case behind this. The Rand has weakened by around 5.0% a year since our democracy, and offshore equities have compounded well ahead of the local market in Rand terms over the same period. Most South African retirement portfolios remain under-exposed to that, held back by Regulation 28 and concentrated in a small number of similar funds.

High Street is built to fill that gap. It works best as the offshore-tilted building block that a compliant portfolio cannot usually reach, rather than as a core holding. The larger, established balanced funds provide the domestic base, and High Street adds the geographic and currency diversification that retirement money otherwise struggles to get.

How advisers should position and use it

Three things are worth getting right when using the Fund.

Sizing. It is meant to be a sleeve within a portfolio rather than the whole of it. High Street’s modelling adds a 20% weight alongside a portfolio of large balanced funds, and at that level the combination has historically produced higher returns with lower drawdowns and a better worst-year outcome. It is a diversifier with a specific role and should be sized for that role.

Suitability. It fits best where retirement money needs offshore exposure but cannot physically leave South Africa: retirement annuities, pension and provident funds, living annuities on platforms with limited offshore capacity, and capital held in local structures such as trusts and foundations. For clients planning to emigrate, it is a way to build offshore exposure before the move.

Setting expectations. This is where the client conversation matters most. Over the past year, the Fund returned 7.1% against a benchmark of 16.1%,* because the Rand strengthened and the hedge that helps in weak-Rand years works against it in strong ones. This is how the Fund is designed to behave. Its outperformance comes through when the Rand is weak, and it gives some of that back during times of significant Rand strength. Sold on the strength of a single year’s return, it sets up the wrong expectations.

The Fund is available on most major retail platforms, including ABSA, Allan Gray, Glacier, Momentum Wealth, Ninety One, Stanlib INN8, Sygnia, amongst others; and on the Momentum FundsAtWork and Sanlam Umbrella Fund, catering to retirement funds. For advisers building portfolios that need genuine
geographic diversification within Regulation 28, it is a low-correlation building block, and it earns its place when sized and positioned as the diversifier it was built to be.

Advisers who want to test the case against their own book can ask the High Street team to run a historical analysis of an existing client portfolio, showing how it would have performed with the inclusion of the High Street Balanced Prescient Fund. If you are interested, please contact the team at High Street on institutional@hsam.co.za.

Sources: all performance and statistic data is derived from High Street, Bloomberg (31/05/26) and the High Street Balanced Prescient Fund MDDs (31/05/26) unless stated otherwise.

*Past performance is not necessarily a guide to future performance and there is no guarantee in respect of capital or returns in a portfolio.

**High Street Balanced Prescient Fund – Class A1 | Benchmark. 1-year return: 7.09% | 16.05%. Highest rolling 1-year return: 48.93% | 30.56%. Lowest rolling 1-year return: -23.61% | -10.44%.

High Street Asset Management (Pty) Ltd is an authorised financial services provider (FSP 45210). Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. CISs are traded at the ruling price and can engage in scrip lending and borrowing. A schedule of fees, charges and maximum commissions is available on request from the Manager. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. Performance has been calculated using net NAV to NAV numbers with income reinvested. There is no guarantee in respect of capital or returns in a portfolio. Prescient Management Company (RF) (Pty) Ltd (“the Manager”) is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). For any additional information such as fund prices, fees, brochures, minimum disclosure documents and application forms please go to www.prescient.co.za. Performance has been calculated using net NAV to NAV numbers with income reinvested. The performance for each period shown reflects the return for investors who have been fully invested for that period. Individual investor performance may differ as a result of initial fees, the actual investment date, the date of reinvestments and dividend withholding tax. Full performance calculations are available from the manager on request. Annualised performance: Annualised performance show longer term performance rescaled to a 1 year period. Annualised performance is the average return per year over the period. Actual annual figures are available to the investor on request. Highest & Lowest return: The highest and lowest returns for any 1 year over the period since inception have been shown. NAV: The net asset value represents the assets of a Fund less its liabilities.