In this second series of “focus on funds,” we will be discussing the Coral Income Fund.
The Fund: “The Coral Income Fund, (CIF) is an actively managed, open-ended, unit trust scheme that invests exclusively in fixed income securities and money market instruments. It invests mainly in investment-grade fixed-income securities and money market instruments.”
Fund Objective: “The main investment objective is to enable investors to achieve stable and consistent income flows.”
Fund Strategy: To achieve the above objective, the strategy of the fund is to invest in a portfolio of securities with a maximum of 30% in quoted equities and the lance in high quality fixed income securities.
Fund Holdings: Going by the May 2021 edition of the SEC report, the FSDH Asset Management’s Coral Income fund held 6% of its assets in money market securities while 94% was held in bonds. An asset allocation diverges slightly from the fund strategy.
Expense Ratio: The expense ratio of the fund as at May 2021 was 0.21%.
Performance History: Coral Income fund is one of the funds in Nigeria with consistent positive returns over time. According to independent analysis by Quantitative Financial Analytics, the fund generated returns of 20.12%, minus 4.92% and 12.97% in 2007, 2008 and 2009 respectively. The fund has not made any losses since 2009 on an annual basis, although it made losses in some months with the years.
Since January 2009, Coral Income Fund has generated a cumulative return of 139.95%.
Dividend History: Coral Income fund pays dividends consistently. The last dividend payment on record was in 2020 when it paid a per unit dividend of N30.29.
Volatility and Other Statistics: True to the stated investment strategy, the fund is a medium volatility fund. Using standard deviation as a measure of volatility, the fund has a standard deviation of 6.23 It also has an Alpha of 7.81, Sharpe Ratio of 0.35 and Beta and R-Squared of 0.001 and 0.001 respectively. An R-Squared of .001 implies that the fund does not move in tandem with the Nigerian Stock market.
The low volatility of the fund can be seen from its price trend which shows little or no ups and downs.
Risk Return Profile: When risk was profiled by Quantitative Financial Analytics, the Coral Income fund was found to have a risk level of 6.23 with a return of 10.96. That puts the fund in the league of medium-risk high return funds.
Suitability of Fund: Launched in 2006, the fund is suitable for and aimed at high-net-worth individuals, institutional and retail investors who desire a professionally managed fund.
Minimum Investment: The initial investment in the fund is N5,000 and subsequent investments in multiples of N5,000.
What it all boils down to
This means that if you had invested N1 million in January 2009, you would have N2,399,500 in your account now.
Note: All images used in this article were sourced from Quantitative Financial Analytics.