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The general equity funds most exposed to local banks

The ride of a lifetime.

CAPE TOWN – Since President Jacob Zuma announced on Wednesday evening that he was replacing Nhlanhla Nene as minister of finance, banking shares on the JSE have been through the wringer. After falling heavily on Thursday and sinking further on Friday, they rebounded again on Monday on the news that Zuma had reconsidered the appointment of David van Rooyen and recalled Pravin Gordhan to head the Treasury instead.

Although an early surge on Monday recovered some of the losses, by the close banking counters were all still trading well below the levels they were at before Nene’s departure.

 

Performance of JSE banking shares 10 – 14 December 2015

Counter

Opening price

10 December

Closing price

14 December

Change

Barclays Africa

R 154.19

R 139.21

-9.72%

Capitec

R 572.00

R 520.00

-9.09%

FirstRand

R 45.55

R 40.20

-11.75%

Investec Plc

R 114.64

R 105.66

-7.80%

Nedbank

R 200.52

R 178.00

-11.23%

Standard Bank

R 122.37

R 106.48

-12.99%

Source: Bloomberg

 

Overall, while the JSE Banks Index gained 8.53% on Monday, it was still 11.59% off where it closed last Wednesday. Despite some sense of stability returning, sentiment was still guarded.

It is also interesting to note the volume of trade in local banks towards the end of last week. On Thursday there were more than four times as many trades in local banking shares than there had been on Wednesday, illustrating the intensity of the market reaction.

The below table shows the incredible surge in volumes last week.

 

Trading volume in the JSE Banks Index

Date

Volme

8 December 2015

26 400 770

9 December 2015

34 859 495

10 December 2015

146 350 737

11 December 2015

118 119 309

Source: Sharenet

 

Investors in local unit trusts were also exposed to this volatility. Financial funds in particular had a very bumpy ride.

Many local general equity funds were also caught in the storm. All six major local banking shares are constituents of the FTSE/JSE Top 40 and some local funds have substantial positions in them.

FirstRand and Standard Bank in particular are extremely popular counters, and make up a large part of many portfolios. There are however funds with large positions in each of the six banks, and these would have felt the impact.

The below tables list the general equity funds most exposed to each of these counters.

 

SA Funds most exposed to Barclays Africa at 30 September 2015

Fund

Portfolio weighting

Cadiz Equity Ladder Fund

9.60%

MitonOptimal IP High Conviction Equity Fund

8.67%

SIM Top Choice Equity Fund

8.65%

Cadiz Mastermind Fund

7.20%

Integre Large Cap Prescient Fund

6.91%

Stanlib Value Fund

6.73%

Investec Active Quants Fund

5.21%

Stanlib SA Equity Fund

5.17%

Discovery Equity Fund

4.93%

Sanlam Stable Growth Fund

4.48%

Source: ProfileData

 

SA Funds most exposed to First Rand/RMB Holdings at 30 September 2015

Fund

Portfolio weighting

4D BCI Flexible Fund

12.49%

Integre Large Cap Prescient Fund

9.31%

Satrix Quality Index Fund

8.27%

Prescient Equity Income Fund

8.21%

NewFunds NewSA Index Fund

7.99%

MitonOptimal IP High Conviction Equity Fund

7.52%

Nedgroup Investments Value Fund

7.45%

Capstone BCI Equity Fund

7.28%

Cratos BCI Equity Fund

6.95%

Nedgroup Investments Rainmaker Fund

6.84%

Source: ProfileData

Note: This table shows the combined weighting in FirstRand and RMB Holdings

 

SA Funds most exposed to Standard Bank at 30 September 2015

Fund

Portfolio weighting

Select Manager MET Flexible Fund

9.33%

Coronation Top 20 Fund

8.02%

Allan Gray SA Equity Fund

7.73%

Marriott Dividend Growth Fund

7.39%

Stanlib Capital Growth Fund

7.28%

Allan Gray Equity Fund

7.11%

Sanlam Select Thematic Equity Fund

6.91%

Perpetua MET Equity Fund

6.91%

NewFunds NewSA Index Fund

6.82%

Integre Large Cap Prescient Fund

6.79%

Source: ProfileData

 

SA Funds most exposed to Capitec at 30 September 2015

Fund

Portfolio weighting

NeFG BCI Equity Fund

6.39%

Seed Equity Fund

6.34%

NewFunds Equity Momentum Fund

5.78%

Autus BCI Equity Fund

5.69%

Rootstock MET Worldwide Flexible Fund

5.16%

Argon BCI Worldwide Flexible Fund

5.03%

Sygnia Value Fund

4.60%

PSG Equity Fund

4.34%

PSG Flexible Fund

3.82%

NeFG BCI Flexible Fund

3.78%

Source: ProfileData

 

SA Funds most exposed to Nedbank at 30 September 2015

Fund

Portfolio weighting

Warwick MET Equity Fund

7.13%

Coronation Top 20 Fund

6.86%

Marriott Dividend Growth Fund

5.64%

NeFG BCI Equity Fund

5.60%

3 Laws Climate Change Equity Prescient Fund

4.78%

Aylett Equity Prescient Fund

4.17%

Coronation Equity Fund

4.00%

Sanlam Stable Growth Fund

3.96%

IP Flexible Fund

3.93%

Satrix Dividend + Index Fund

3.54%

Source: ProfileData

 

SA Funds most exposed to Investec at 30 September 2015

Fund

Portfolio weighting

Integre Large Cap Prescient Fund

9.27%

Prescient Private Clients Flexible Fund

7.82%

NFB Ci Equity Fund

7.73%

4D BCI Flexible Fund

6.46%

Fairtree Equity Prescient Fund

6.06%

Contego B6 MET Value Equity Fund

5.78%

Cadiz Equity Ladder Fund

5.65%

Prescient Private Clients Managed Fund

5.58%

Absa Large Cap Fund

5.17%

Sanlam Select Flexible Equity Fund

4.96%

Source: ProfileData

Note: This table shows the combined weighting in Investec Plc and Investec Ltd.

It is not surprising to see funds with highly concentrated portfolios, such as the Corontion Top 20 Fund and Integre Large Cap Prescient Fund on these lists. They only hold a small number of funds and have fairly large positions in all of them.

One should also expect the number of passive products that appear. Given how concentrated the local market is, any index is likely to feature at least some stocks in fairly high proportion and that is the case here.

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COMMENTS   3

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there is not enough discussion being made on the impact on YOUR RA’s on this downgrade of the country’s risk profile. the only point I’ve heard is the price of gin – which of course reminds me of the “let them eat cake” comment. overnight I heard that your PIC is picking up all shares in LONMIN that weren’t taken up during the rights issues . Talk about throwing good money after bad – or in this case – placating the miners for marikana. I have consistently suggested taking your money off shore – to the point of selling your home and put that in a bank account in the channel islands. one day you may just ask why you didn’t

Your point on RAs (also include living Annuities) is valid.

This is particularly relevant to those so-called medium equity funds that purport to limit down side.

My view again.
Thanks Moneyweb for a balanced report pertaining to the Banking sector, even Allan Gray featured somewhere (although they only really seems to be committed Standard Bank with a weighting more than 5 %)

Which Fund Manager will receive this year’s rewards for top performance for non-money-market funds available to retail investors on both outright performance and risk-adjusted performance?
Methinks the risk management of some of these funds, with shares like ABIL and other resources stocks were so bad for the retail investors that no award should be made. Some of these ‘rogue traders’’ should also be reminded that proper risk management should be a pre-requisite, in line with FAIS requirements, before you start ignoring dangerous selling signals, by adopting the so-called ‘’hold’’ strategies and thereby playing with other people’s funds!
The least that especially pensioners can expect, is a fund manager that continuously, despite volatile market conditions, remain focused on sticking to their investment philosophy in a bid to provide positive, absolute returns and to grow all their client’s money in real terms “
I think it is extremely important that Funds should realise that investors requires them to stick to market related risk policies and remaining focussed on sticking to their investment philosophies.

End of comments.

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