How Ashburton’s Targeted Return Fund delivers on capital preservation in volatile times

19 March 2026

One of Ashburton Investments’ key multi-asset funds, the Targeted Return Fund, delivered a robust 12-month return of 22.58%, outperforming its CPI + 3.5% benchmark by 15.59%, on the back of strong performance over the past three and five years.

Vuyo Mvulane, Head of Institutional Distribution at Ashburton Investments, explains that the fund was designed to assist investors in navigating volatile markets by offering capital preservation and downside protection, and delivering on its CPI plus return target. The fund is suitable for traditional institutional investors but is also relevant to a broader range of investor groups with long-term liabilities and capital-preservation needs, including medical schemes and other regulated pools of capital seeking stable real returns.

“Targeted Return is structured as a multi-asset fund with equities capped at 40%, with average equity allocation over the last 5 years sitting in the 20–25% range. It leverages Ashburton’s fixed income and credit capabilities, and is well suited to volatile markets, because it is geared to capture upside and protect on the downside, with its Q1 2025 performance – when the global markets were impacted by big political events – as a strong example of this,” Mvulane explains.

“A key achievement of the fund is the fact that it has met both its primary and secondary objectives over the last three to five years. Over a three-year period, the fund delivered a 14.4% return, and over a five-year period, a 12.1% return where it sits in the first quartile. It also outperformed CPI + 3.5% by 6.9% over three years and 3.7% over five years.” 

Source: Morningstar, ASISA, Ashburton Investments. 

*Past performance is not necessarily a guide to future performance

Why the Targeted Return Fund meets investors’ needs

“With a disciplined approach that delivers low volatility, the fund stands out by leveraging our strong fixed-income capabilities to provide consistent, risk-managed absolute returns for institutional and other investors. It can essentially be described as an ‘absolute return fund’ with capital preservation and no capital losses over a 36-month rolling period,” says Mvulane.

“As a cautious low-equity fund, it employs asset allocation, currency diversification, credit exposure, duration management, and derivative strategies to enhance returns. The goal of the fund is to provide a single solution for the low-risk component of a portfolio or the destination for the conservative investor looking for the higher returns that can be obtained when a wide array of asset classes is available. Its recent performance was driven by broad-based gains across local fixed income, inflation-linked bonds, equities, and property, complemented by global asset exposure,” says Mvulane.

Ashburton’s Targeted Return Fund is constructed using a diversified, multi‑asset approach, anchored in fixed income and complemented by selective allocations to equities and alternative assets. This structure has proven effective in capturing upside while maintaining low volatility and limited drawdown risk, as demonstrated under recent market conditions.

Market context for multi-asset growth

We are currently monitoring the interest rate environment closely, both domestically and internationally. In the United States, the outlook could shift should a political appointee succeed Federal Reserve Chair Jerome Powell when his term concludes in May.

In South Africa, conditions appear relatively stable for now, following the previous South African Reserve Bank’s (SARB) monetary policy committee decision on 29 January, to keep interest rates unchanged. The repo rate remains at 6.75%, with the prime lending rate at 10.25%. Headline inflation dropped to 3.5% in January from 3.6% in December, exceeding the SARB’s 3% target but remaining within its one‑percentage‑point tolerance band.

While the SARB’s inflation forecasts of 3.3% for 2026 and 3.2% for 2027 suggest a stable inflation trajectory, these outcomes will need to be closely monitored. If realised, they point to a period of macroeconomic stability rather than a phase of strong cyclical growth, given that South Africa’s growth constraints remain largely structural rather than inflation‑driven,” said Tlhoni Komako, Fixed Income Portfolio Manager.

“Against this backdrop, we will assess whether South African assets continue to deliver strong returns. The rand appreciated significantly against the US dollar in the past year, aided by the dollar’s depreciation on the one end, wide interest‑rate differentials and improving domestic credibility following a well‑received 2026 National Budget, which reinforced expectations of fiscal consolidation and debt stabilisation. There’s been optimism around South Africa’s removal from the Financial Action Task Force (FATF) grey list and strong performance of South African stocks and bonds on the other – so that’s another factor to watch.” While escalating conflict in the Middle East has driven episodic risk‑off moves and short‑term spikes in oil prices, recent macro analysis suggests that base‑case scenarios assume any oil supply disruptions are likely to be temporary, limiting the longer‑term inflationary impact on South Africa.

Outlook for the future

Looking ahead, the macro environment remains supportive for South African fixed income, with improving fiscal dynamics, attractive real yields and favourable commodity prices likely to sustain positive momentum, says Mvulane.

“However, risks persist, including global policy uncertainty and domestic structural challenges. The Targeted Return Fund remains well-positioned to navigate these dynamics, leveraging its diversified mandate and tactical flexibility to deliver consistent real returns.”

Disclaimer:

Ashburton Management Company (RF) (Proprietary) Limited (Reg No 1996/002547/07) (the “Manager“) is an approved Collective Investment Schemes manager in terms of the Collective Investment Schemes Control Act, No. 45 of 2002 and is the manager of the Ashburton Collective Investment Scheme (“Ashburton CIS”). The Manager is regulated by the Financial Sector Conduct Authority (FSCA) and is a full member of the Association for Savings and Investment SA (ASISA). The Manager and AFM are referred to Ashburton Investments.

Ashburton Fund Managers (Proprietary) Limited (Reg number 2002/013187/07) (“AFM”) is an authorised financial services provider, FSP number 40169 and is the investment manager appointed by the Manager.

Collective Investment Schemes are generally medium- to long-term investments. The value of participatory interests (units) may go down as well as up. Past performance is not necessarily a guide to future performance. Collective investment schemes are traded at ruling prices and can engage in scrip lending and borrowing. A schedule of fees, charges, and maximum commissions, as well as a detailed description of how performance fees are calculated and applied, is available on request from the Manager. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The Manager may close the portfolio to new investors in order to manage it efficiently according to its mandate. This document is not advice in respect of any other financial, investment, trading, tax, legal, accounting, retirement, actuarial or other professional advice or service whatsoever (“advice as defined in terms of FAIS”). In the event a potential investor requires material risks disclosures for the foreign securities included in a portfolio, the manager will upon request provide such potential investor with a document outlining: potential constraints on liquidity & repatriation of funds; Macroeconomics risk; Political risk; Foreign Exchange risk; Tax risk; Settlement risk; and Potential limitations on the availability of market information. The FSP provides solutions which are financial products and services regulated under the FAIS Act but may also provide non-financial products and services which are not afforded the protection of the FAIS Act. These non-financial products and services may be regulated by other legislation.