CAPE TOWN – The South African multi-asset flexible unit trust category contains some star performers. Over the five years to the end of August, the Centaur BCI Flexible Fund, Imalivest MET Flexible Fund and Autus BCI Opportunity out-performed every local general equity fund, bar one.
Essentially these funds have been run as equity mandates, but with the optionality of defaulting into cash. Their performance can therefore largely be put down to some astute stock selection.
The below tables show which shares these funds bought into over the year to June, and which they sold out of. The share must have had a weighting of more than 1% for it to be considered. They also reflect any substantial changes to positions in the fund, which must reflect a change of more than 1% in the weighting and not be due to share price movement.
The first thing that stands out is that Autus clearly lost faith in resource counters over the year. It held all three of the big diversified miners – Anglo American, BHP Billiton and Glencore – back in June 2014, but subsequently sold out of all of them.
It also got out of its position in Sasol. Following the drop in the oil price, Sasol’s share price has fallen over 30% over the last year.
Autus also moved out of both Curro and Distell, which have been high flyers over the last three and a half years. Some analysts still have an appetite for them, but others feel that they are now looking rather fully priced and there is a case for taking profits.
There is also a theme to two of the stocks the fund has bought into, with Autus showing a preference for healthcare companies through Aspen and Mediclinic. Neither could be said to be particularly cheap but both have been sold off since the start of the year and their reliable earnings streams may be attractive in the current uncertain environment.
While Autus has been buying Mediclinic and First Rand, Imalivest has been selling. And where Autus was reducing exposure to Remgro, Imalivest was buying into the counter.
In addition, Imalivest has shown a preference for the big insurance companies, being a buyer of both Liberty and Old Mutual. The positions it took in two other financial counters – JSE and Remgro – also suggest a search for quality.
A further interesting aspect of its portfolio is that Imalivest nearly doubled its holding in Capital & Counties over the last year. It also holds a substantial portion of its portfolio in Intu, so that nearly 10% of its assets were held in these two international property counters at the end of June.
Mediclinic is the only other counter that has been traded by all three, with Centaur on the side of those who no longer see value there. It has also sold out of Aspen, while Autus was buying.
Perhaps the most interesting addition to Centaur’s portfolio is Wilson Bayly Holmes – Ovcon (WBHO). Very few people have an appetite for construction stocks at the moment, and WBHO is around 35% down since November last year. However at a price-to-earnings ratio of under ten, and a dividend yield close to 3.5%, bargain hunters may see something there.
Centaur also bought into the thinly-traded small-cap Business Connexion (BCX) before it was bought out by Telkom. The R6.60 per share that BCX shareholders got from Telkom was a healthy premium on where the share had traded all year, and together with a 20 cent special dividend it certainly delivered value to the portfolio.
It is also worth noting that Centaur bought into three retailers – Shoprite, Spar and Woolworths – despite the current concerns around the South African consumer. It also added to its position in the troubled Lewis, which has slid dramatically over the last three months over concerns about its lending practices.