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The equity funds that didn’t own Steinhoff

Who dodged a bullet for their clients?

When Steinhoff’s share price plunged over 60% on Wednesday after news that CEO Markus Jooste had quit, the immediate reaction was to check who would be most affected. Who are Steinhoff’s major shareholders, and which unit trusts carry the largest exposures?

There is, however, another side to the story. And that is to ask which equity unit trust managers did not own any Steinhoff shares in their funds?

The stock was, until last week, one of the ten largest constituents of the FTSE/JSE SWIX All Share Index and therefore hard to ignore. It was, in fact, one of the most held counters on the JSE.

That’s not to say that every manager that didn’t include Steinhoff in their portfolios had identified that there were serious problems with its accounting. Some may simply have decided it was too complex to understand properly or that it wasn’t offering compelling value.

Whatever the case, however, fund managers that avoided Steinhoff successfully identified that there was more risk in the stock than they were prepared to take. The beneficiaries of that decision will be their clients. Generating good returns is as much about which stocks you avoid, as which you buy.

The list

Checking which funds didn’t own Steinhoff is not quite an exact science, since the latest comprehensive portfolio information available is from September 30. It is possible that managers may have bought shares in the interim. It also requires cross-referencing different sources, which don’t always align. It is therefore possible that it may not yield comprehensive results.

However, the list below shows, to the best of our knowledge, which local equity funds had no exposure to the counter at the end of the third quarter. This does not include funds of funds, since the stock selection would be made by underlying managers, or index tracking portfolios.

The list also indicates instances where a manager did not include Steinhoff in its equity fund, but did hold the stock in one or more of its other portfolios.

SA equity general funds with no Steinhoff exposure at 30 September

Fund

Exposure in other funds

ABAX Equity Prescient Fund

Yes

Allan Gray Equity Fund

Yes

Allan Gray SA Equity Fund

Yes

Ampersand SCI Equity Fund

No

Ashburton Enhanced Value SA Tracker Fund

Yes

Aylett Equity Prescient Fund

No

BCI Enhanced Equity Fund

Yes

BlueAlpha BCI Select Equity Fund

No

Bridge Equity Income Growth Fund

Yes

Cadiz Mastermind Fund

No

Cannon Equity H4 Fund

No

Ci Alpha Fund

No

Ci Engineered Equity Core Fund

No

Citadel SA Dividend Equity H4 Fund

Yes

ClucasGray Equity Prescient Fund

No

Contego B6 MET Value Equity Fund

No

Contego B7 MET Growth Equity Fund

No

Counterpoint MET High Yield Equity Fund

No

Counterpoint MET Value Fund

No

Discovery Dynamic Equity Fund

Yes

Discovery Equity Fund

Yes

Element Earth Equity SCI Fund

No

Element Islamic Equity SCI Fund

No

Emperor IP Momentum Equity Fund

No

Fairtree Equity Prescient Fund

No

Fairtree Prescient Smart Beta Fund

No

Fedgroup General Equity Fund

No

First Avenue SCI Equity Fund

No

Foord Equity Fund

No

GTC Absolute Equity Fund

No

GTC Active Equity Fund

No

GTC Value Fund

No

H4 Focused Wealth Fund

Yes

Hollard Prime Equity Fund

No

iCapital BCI Equity Fund

No

Investec Active Quants Fund

Yes

Investec Equity Fund

Yes

Investec SA Equity Fund

Yes

Investec SA Value Fund

Yes

Investec Value Fund

Yes

Investec Wealth & Investment Dynamic Equity Fund

No

Investec Wealth & Investment Equity Fund

No

IP Equity Fund

No

Kruger Ci Equity Fund

No

Laurium Equity Prescient Fund

No

Marriott Dividend Growth Fund

No

Melville Douglas Stanlib High Alpha Fund

No

MET General Equity Fund

No

Methodical Equity Prescient Fund

No

Momentum Equity Fund

Yes

Momentum Trending Equity Fund

Yes

Momentum Value Equity Fund

Yes

Momentum Value Fund

Yes

Naviga BCI SA Equity Fund

Yes

Northstar SCI Equity Fund

No

Novare Equity Fund

Yes

Oasis Crescent Equity Fund

No

Oasis General Equity Fund

No

Obsidian SCI Equity Fund

Yes

Old Mutual High Yield Opportunity Fund

Yes

Old Mutual Premium Equity Fund

Yes

PPS Equity Fund

No

Prescient Equity Fund

Yes

Prescient Equity Income Fund

Yes

Prime General Equity Fund

Yes

Prime SA Equity Fund

Yes

PSG Equity Fund

No

PSG SA Equity Fund

No

RECM Equity Fund

No

Rezco Equity Fund

No

Sanlam Select Focused Equity Fund

No

Sanlam Select Optimised Equity Fund

No

Sanlam Select Thematic Equity Fund

No

Sentio SCI HIKMA Shariah General Equity Fund

No

SIS Equity Fund

No

Standard STANLIB Equity Fund

No

STANLIB Growth Fund

Yes

Stonehage Fleming SCI Equity Fund

No

Source: ProfileData

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I don’t think that this is particularly accurate. According to Foord Equity Funds most recent fact sheet, Steinhoff is a top 10 holding. It was also down over 4% on Wednesday (much to my dismay).

Patrick, I wonder if GEPF ( govment employers pen fund) are Steinhoff exposed?…mmmmm

Yes. The GEPF is Steinhoff’s second largest shareholder after Christo Wiese. It owns around 8% of the company according to the latest shareholder register we have seen.

Wonder why our finance minister is asking for “a report” to get the same information? 🙂

Is this a list of those who did or did not own Steinhoff – Foord Equity definitely holds (held). And there are others too

Coronation are the 3rd largest shareholder in Steinhoff it would seem. Some rough numbers would indicate that their 5.2% stake is worth just over R2bil from over R9bil before all this. I’m a coronation client and they have been surprisingly quiet. All those highly paid world class asset managers who can predict the second coming and who walk on water during office hours couldn’t see this coming? Have to ask myself what those inflated fees pay for now…..

Agree Coronation have been caught with the brookies down on their ankles. They did not learn from ABIl it seems (amend DEFINITELY).

Particularly galling is that the Sect 28 Balanced + fund had 0.8% of Steinhoff.

Asset mix is not the only game in town in a balance fund; just as important is asset quality. If they were going to punt on a “stretched” asset it should have been limited to a full equity fund.

They are quiet because they cannot get out of this one. This is a bigtime failure by Coronation with huge reputational costs. How Leinberger is going to get out of this one is anyone’s guess.

Though Coro is my biggest asset manager, I have been diversifying away slowly for 3 years but still a bitter taste in the mouth on this one.

Do not expect anything other than hot air from them.

You obviously do not pay attention to their long-term track record. Like all other active managers they make mistakes – it is part and parcel of active management.

I really really cannot believe that there are that many funds. What would their differentiation be in terms of sector/income/value?

South Africans are wasting more money on fun damagers than they lose to zuma corruption and corporate frauds. These people (fun damagers) should all be forced to spend a five year “sabattical” doing a real job. If, after five years, they decide they learnt something they could share, they should be allowed to run a fund that has no minimum fees and a capital guarantee even if it carries a trailing 5 year super bonus if they super outperform the market.

If you won’t do that, sit down.

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