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The funds most exposed to Steinhoff

Over 300 unit trusts and ETFs held the stock at the end of September.

The news that Steinhoff’s long-serving CEO Markus Jooste had quit sent the company’s share price into freefall on Wednesday morning. Steinhoff opened more than 60% lower, falling from its overnight close of R45.65 to as low as R17.57.

Overall, Steinhoff’s share price has dropped more than 80% over the past 18 months. The stock peaked at over R90 in June last year.

Jooste had served as the company’s CEO since 1988 and had overseen an expansion that turned Steinhoff into Europe’s second largest homeware retailer. However, his resignation followed persistent concerns about potential irregularities in the company’s financial statements, which reached a head when Steinhoff announced this week that it would release unaudited annual results.

The company noted on Monday that its auditors had not yet “finalised their review of certain matters and circumstances, most of which were raised by the criminal and tax investigation in Germany”. Less than 48 hours later, Jooste stepped down.

The impact of the massive drop in the share price will be widely felt in South Africa as, until this week, Steinhoff was one of the 15 largest companies on the JSE. It was therefore widely held across a range of unit trust and ETF portfolios.

According to statistics from ProfileData, Steinhoff was held in 341 funds at the end of September. This is the most recent date for which full fund portfolios are available. A Moneyweb analysis conducted earlier this year also found that Steinhoff was the fifth most widely held share in South African portfolios.

The table below shows the funds most exposed to the share at September 30 2017.

SA funds most exposed to Steinhoff

Fund

% of fund

NewFunds S&P GIVI South African Industrial Index Fund

13.06%

Ashburton Low Beta SA Composite Tracker Fund

12.46%

Momentum Industrial Fund

8.74%

Baobab BCI Flexible Opportunity Fund

8.24%

NewFunds S&P GIVI South Africa Top 50 Index Fund

7.82%

NewFunds Shari’ah Top 40 Index Fund

7.60%

Coronation Industrial Fund

7.46%

Nedgroup Investments Opportunity Fund

7.42%

Old Mutual Industrial Fund

7.33%

Seed Equity Fund*

7.27%

Community Growth Equity Fund

7.24%

STANLIB Shari’ah Equity Fund

7.16%

Denker Sanlam Collective Investments SA Equity Fund

6.92%

Prime Worldwide Equity Fund

6.91%

Truffle SCI General Equity Fund

6.86%

As at September 30 2017

Source: ProfileData

*The Seed Equity Fund sold out of this position entirely in November and was therefore not exposed to the current sell-off.

It’s notable that two index tracking funds top the list, and there are two more in the top six. The S&P Givi indices are designed to incorporate stocks that offer both intrinsic value and lower volatility. Similarly, the Ashburton Low Beta SA Composite Tracker Fund is also meant to deliver lower volatility.

Until this point, Steinhoff had demonstrated particularly low volatility in comparison to the rest of the market, and that explains its high weighting in these indices.

Shari’ah funds are also prominent on the list. Given their restricted investment universe, Steinhoff is not only a prominent stock in the local Shari’ah index, but is also highly favoured by active managers.

For more detail on which funds hold Steinhoff, use Moneyweb’s unit trust portfolio tool.

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COMMENTS   15

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Hi Patrick,

The Seed Equity Fund (listed above) sold out of all Steinhoff exposure in the middle of November – so fortunately not holding for the latest sell off. Would you be able to update your article please.

Mike Browne

dodged a bullet right there!

LOL – I got one tween the eyes!!!

Good job Mike, did Seed perhaps expect some future issues? Any chance you sold NPN at the top?

Thanks Mike. I’ve made a note in the article.

Thanks Patrick – much appreciated.

As the Seed Equity fund is a fund-of funds (with a rather pedestrian track record to say the least) surely it would have been one or more of the underlying fund managers that actually sold out of Steinhoff and while Seed can take some credit surely most of it should go to the relevant fund manager/s?

While the Seed Equity is managed by an external manager, it is not a fund of funds but is in fact managed on a segregated basis by a single manager. The performance isn’t great, but a new manager was appointed at the end of last year, and so performance this year will hopefully be a better reflection of what investors should expect going forward. I made no claims/took no credit for selling out of the share – just wanted to give some clarity to readers of the article what the true position is within the Fund.

Mike Browne

Time to buy. Be greedy when all fear!

Just put R10,000 down at R10 a share on easy equities
Let’s hope it pays $$$

Naspers is next in line…

Corruption in the end catches up!

Ashburton Low Beta? Oh the irony. Fitrstand and associates have taken real bath here.

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