NAV on 2020/02/27
|NAV on 2020/02/26
|52 week high on 2019/05/03
|52 week low on 2020/02/27
|Total Expense Ratio on 2019/12/31
|Total Expense Ratio (performance fee) on 2019/12/31
Prescient Management Company Ltd. (PIM)
FTSE/JSE Capped SWIX All Share Index
Aeon Asset Management (Pty) Ltd.
Aeon Active Equity Prescient Comment - Dec 19
The Aeon Active Equity Prescient Fund (CIS) underperformed its benchmark by 156 bps on a net return basis for the fourth quarter of 2019 and is underperforming its benchmark by 91 bps for the year-to-date.
Overweight positions in Impala Platinum and Mondi were the main positive contributors to return for the fourth quarter of 2019. Underweight positions in Sibanye Gold and Anglo American Platinum were the main detractors. The benchmark equity index was up 5.27% for the fourth quarter of 2019.
The strongest sector for the quarter ended December was Healthcare led by Aspen, Mediclinic and Life Healthcare. Aspen announced a divestment to reduce debt. General Retailers was the weakest sector for the quarter, led by Woolworths, Foschini and Truworths due to a subdued trading envi-ronment and poor consumer spend outlook.
Globally, a low interest rate environment and accommodative central bank policies have continued to structurally drive markets. The uncertainty and volatility caused by geopolitical instability has continued to impede market returns. US-China trade concerns remain firmly in investor minds amid a slowing Chinese economy. Markets have become accustomed to Trump’s trade rhetoric, and with strong US employment and good US corporate earnings, markets have generally benefited. Inves-tors, however, remain cautious as no firm trade deal is in place, and with the ongoing presidential impeachment hearings in the US, concern remains as to when a full trade deal will eventually take place. Encouragingly, Fed Chair, Jerome Powell, indicated in his FOMC statement that rates were likely to remain unchanged for a while unless a significant increase in inflation occurs.
Locally, the domestic environment was unfavourable due to the state of the local economy. Senti-ment has continued to be negative as political infighting, economic growth obstacles, indebted parastatals and a potential downgrade remain apparent. Sentiment somewhat improved during the quarter following positive news of efforts being made to fight corruption, as well as placing South African Airways (SAA), which has been loss making for years, into business rescue. The Monetary Policy Committee also kept rates unchanged citing a likely Moody’s ratings downgrade as a key factor in their decision. However, pressure remains on government to find ways to halt the coun-try’s fiscal deterioration. Eskom continued with rolling power black outs which has added to contin-ued negative sentiment.
In company news, Aeon Investment Management, as a signatory of the United Nations Principles for Responsible Investment (UNPRI) engaged with the Department of Trade and Industry (DTI) and JSE to discuss ways of increasing transparency and accountability. We recently also put through pro-posals to reduce inequality through transparent reporting of gender pay gaps and pay ratios of enti-ties with more then 50 employees. Given South Africa's history and growing inequality, increased poverty and unemployment, we should not forget the responsibilities that government and business have to effectively improve South Africa's social structure. We hope these proposals are taken heed of by government and implemented into law.
Looking forward, growth expectations for the local economy seem to be dependent on global growth and renewed efforts by the elected officials. Globally, inflation and GDP growth will be key to try gauge the timing and level of monetary policies. Astute stock picking with our Growth at Reasonable Price (GARP) philosophy that delivers superior value through the cycle and a focus on companies whose cash flows support earnings should stand us in good stead moving forward.
The Aeon Active Equity Prescient Fund will aim to deliver medium to long-term capital growth over time. The Fund will invest in a diversified range of equities across all economic groups and industry sectors as well as across a range of large, mid and small cap shares. The Fund is permitted to invest in listed and unlisted financial instruments in line with the conditions as determined by legislation from time to time. The Fund will predominately invest in South African markets but is however permitted to include investments in offshore jurisdictions subject to the investment conditions determined by legislation from time to time.
The Fund may apart from assets in liquid form also include participatory interests or any other form of participation in portfolios of collective investment schemes or other similar schemes. Where the aforementioned schemes are operated in territories other than in South Africa, participatory interests or any other form of participation in these schemes will be included in the portfolio only where the regulatory environment is to the satisfaction of the manager and trustee and is of a sufficient standard to provide investor protection at least equivalent to that in South Africa.
Nothing in the supplemental deed shall preclude the manager from varying the ratios of securities, to maximise capital growth and investment potential in changing economic environments or market conditions or to meet the requirements, if applicable, of any exchange formally recognised in terms of legislation and from retaining cash or placing cash on deposit in terms of the Deed and any Supplemental Deeds thereto; provided that the manager shall ensure that the aggregate value of the assets comprising the portfolio shall consist of securities of the aggregate value required from time to time by the Act.
The Trustee shall ensure that the investment policy set out in this supplemental deed, the Deed and in all Supplemental Deeds thereto is carried out.
For the purpose of this portfolio, the manager in consultation with the Investment Manager shall reserve the right to close the portfolio to new investors on a date determined by the manager. This will be done in order to be able to manage the portfolio in accordance with its mandate. The manager may, once a portfolio has been closed, open that portfolio again to new investors on a date determined by the manager.