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Opportunities with niche managers: Zwelakhe Mnguni — CIO & co-founder, Benguela Global Fund Managers

‘We specialise in equity investments, and we follow a [different] value-investing approach.’

SIKI MGABADELI: You heard earlier from Wayne that this week has been quite a rollercoaster on the market – in fact, the past three months or so. And that can make people rather nervous. As you know, there are different ways in which you can invest on the market. You can do it yourself or you can get a fund manager to do it for you. So right now we are going to hear about niche managers and what they can do for you.
    We are speaking to Zwelakhe Mnguni, who is chief investment officer and co-founder of Benguela Global Fund Managers. Zwelakhe, thanks for your time this evening.

ZWELAKHE MNGUNI: Thanks, Siki.

SIKI MGABADELI: Firstly I’d like to hear your view on the market.

ZWELAKHE MNGUNI: It’s quite a rollercoaster and I think from our perspective there are essentially three or four things. The first one is the looming US interest-rate hikes, which are pepping up the dollar. And then we get the euro crisis that’s never-ending.

SIKI MGABADELI: Greece.

ZWELAKHE MNGUNI: Ja. I think the third and important one is whether China’s deceleration is going to continue and is it actually worse than people are actually thinking or seeing at the moment?
    Those are some of the key issues that are spooking the market at the moment. And when there is uncertainty people try and move to safer assets and I think assets like US bonds are appreciating as a result.

SIKI MGABADELI: And we’ve seen gold as well – rushing into that as well.

ZWELAKHE MNGUNI: Absolutely.

SIKI MGABADELI: You are a niche manager. Just tell us a little bit about your business.

ZWELAKHE MNGUNI: We manage equity mandates and more recently we’ve done a partnership with ACPI to be able to offer our clients global multi-asset products. But we specialise in equity investments, and we follow a value-investing approach, but the application is quite different from what people commonly see as value investing in South Africa.
    We focus on quality and the difference is that we actually have found a way of quantifying the quality of a business and we are able to track it over time. Based on that, we’ve actually done some studies that show that companies that are in our high quality index have actually outperformed by a significant margin the market, the classic value investors and the low-quality businesses.

SIKI MGABADELI: That’s interesting. We are going to be talking to Andrew Dittberner a little later from Cannon Asset Managers about value investing. So thank you very much for your time today, Zwelakhe Mnguni.

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