NAV on 2021/07/28
|NAV on 2021/07/27
|52 week high on 2021/04/16
|52 week low on 2020/10/29
|Total Expense Ratio on 2021/03/31
|Total Expense Ratio (performance fee) on 2021/03/31
Prime Collective Investment Schemes
85% FTSE/JSE Capped All-Share; 15% MSCI World TR Index, calculated over a rolling 1-year period
Autus Fund Managers
Autus Prime Equity comment - Sep 19
It is increasingly difficult to find “green shoots” of hope when surveying the current South African economic landscape. The economy rebounded by 3.1% in 2Q2019 after the -3.1% recorded in 1Q2019. The mining and finance sectors contributed positively while manufacturing and trade detracted from economic growth in the quarter. For 2019 GDP growth of 0.6% is projected. Recent inflation updates and expectations show that inflation is at or near the midpoint of the 3%-6% target range despite fuel prices having risen 14.5% year-to-date and administered prices being hiked. Headline inflation of 4.2% is forecast for 2019. At their July meeting, the SARB elected to lower the bank rate by 0.25% to 6.5% while the prime rate was lowered to 10%. Effectively, the SARB returned to the SA consumer what it took away in November 2018. Business confidence (SA Chamber of Commerce and Industry Index) continued to drop in August to levels not seen in 34 years. The NHI Bill was released, setting out the architecture for an NHI fund. This has raised questions over the future of private healthcare and the cost and funding implications on government revenue. Prevailing policy uncertainty, the Eskom debt burden, an increasing budget deficit, and worsening debt-to-GDP ratio make a Moody’s rating downgrade ever more likely in the foreseeable future.
Credit must be given to Finance Minister Mboweni for publishing a paper offering a detailed examination of the structural reforms needed to reverse the downward trend in South Africa’s growth potential and competitiveness. Sadly, it was met with much resistance from alliance partners and some members in the ruling party. We hope that consensus could be reached sooner rather than later by all major role-players on implementing much needed economic and job growth initiatives as a matter of urgency.
Internationally, two interest rate cuts of 25 basis points each were announced by the United States Federal Reserve. Further import tariffs on Chinese goods were extended by the Trump administration until after the end-of-year festive season as trade negotiations between the world’s two largest economies continue with no clear solution in sight. The United States Treasury bond yield curve inverted at the two-year and ten-year maturities which caused some investors to speculate that a recession could be looming. The last time the yield curve inverted at these maturities was in 2007. In July, Boris Johnson was elected as the new Prime Minister of the United Kingdom. Johnson promised to deliver on the withdrawal of the United Kingdom from the European Union even if it comes at the cost of having no trade agreement (a so-called Hard Brexit). Early indications are that Johnson will struggle to win the necessary parliamentary support to deliver on his promise (as was the case with his predecessor).
The return on the Fund was -3.32%, which matched the benchmark return. This outcome is one of coincidence as the Fund holdings deviate from benchmark in a meaningful way. Discovery and Old Mutual were sold out during the quarter as a result of increased governance risks. New listing Prosus was the only addition to the Fund; it was acquired through the Naspers corporate action in September. The outlook for the South African corporate profit growth remains bleak in the near term, but these conditions could offer attractive opportunities. We are ready to exploit these opportunities with the relatively high level of cash reserves we currently hold.
In order to achieve its objective, the portfolio's holdings will typically be dominated by high quality, large-capitalisation stocks, and will be augmented with selected exposure to local and/ or offshore companies. The manager may invest in unlisted investments from time to time, as well as in participatory interests in other collective investment schemes which are consistent with the portfolio's investment policy. The portfolio's equity exposure must at all times exceed 80% of its net asset value.