NAV on 2021/02/25
|NAV on 2021/02/24
|52 week high on 2021/02/16
|52 week low on 2020/03/23
|Total Expense Ratio on 2020/09/30
|Total Expense Ratio (performance fee) on 2020/09/30
Boutique Collective Investments (RF) (Pty) Ltd.
South African--Multi Asset--High Equity
Meager graduated from the Cape Town University of Technology with a BTech Marketing degree in 1992 and has been involved in the financial services industry ever since. He started his career at Guardbank Unit Trusts, he then moved to Lloyds of London, and Momentum, before joining Warwick Wealth in June 2006. He has passed the Post Graduate Diploma in Financial Planning through the University of the Free State and is a CFP® charter holder. He is one of the FSB approved Category II key individuals at Warwick and has managed private client funds on the JSE since 2006. He is a member of the South African Investment Analysts Society and is an approved Category II investment advisor. Meager is on the committee that co-ordinates the Warwick model portfolios for private clients at Warwick. He is the manager of the Warwick Managed Fund and the Warwick Managed Fund of Funds. Born in Cape Town, in 1971, he is married and has two children.
Cadiz Balanced comment - Dec 19
The Cadiz Balanced fund ended the year with a strong quarter of 3.3% and delivered 8.8% for the year. This is compared to its benchmark, which is the peer group median return of the Multi-Asset High Equity unit trust category, which delivered 2.5% for the quarter and 9.9% for the year.
2019 was plagued with a lot of macro uncertainty throughout the year. Despite this, MSCI World equities delivered 28% (in dollars). The US S&P 500 led the way returning 31% while Emerging markets returned 19%. The two main events that supported global equities were, the US Federal Reserve changing from interest rate hikes to cutting interest rates. Other central banks followed suit providing a healthy underpin to global markets. The other event that boosted equity markets towards the end of the year was a phase one trade agreement between the US and China.
For 2020, analysts are expecting the US equity market to return between 7% and 11%, which is made up of between 5% and 9% earnings growth and 2% dividends. However, the equity bull market that started in 2009 is aging and there are several fundamental headwinds and macro risks to this view that could alter the performance for 2020. Risks that need to be monitored include: •
Declining profit margins because of rising wages and input costs greater than revenue growth. •
High debt levels. •
Equity markets are not cheap, trading on valuations above their long-term averages. If earnings were to disappoint analyst expectations, equity markets could fall significantly. • Political and geopolitical risks.
The best way to invest in this environment is to hold a diversified portfolio of both global and local stocks. Our bottom-up stock selection enables us to find attractively priced businesses even when the overall market valuation is high. Our approach is to invest in predominantly good quality businesses with strong balance sheets and capable management that can compound their earnings over time.
The fund added value through asset allocation, being overweight international equities and high yielding corporate bonds. The fund was underweight local equities, especially financials and property stocks, which enhanced performance.
The main contributors to performance for the year came from the exceptional return of the platinum and gold counters we hold in the fund. Solid returns were also generated from our multi-nationals; Facebook, Naspers, Alphabet (Google) and British American Tobacco along with positive contributions from Mediclinic, Metair and Booking Holdings. The high yielding corporate bonds generated good income for our clients.
Stocks that continue to detract from performance were the UK property counters and the offshore drilling companies. Local general retailers also underperformed this quarter as companies faced margin pressure, due to their operating costs growing more than revenue.
During the quarter, the fund increased its local equity positioning but remains underweight. We incrementally increased our position to multi-nationals Naspers and British American Tobacco and platinum stocks; Impala and Anglo American Platinum. We increased our position in local retailers Shoprite, Truworths and Massmart as the share prices declined. We believe these businesses are attractively priced and offer investors good long-term returns.
The fund also increased its foreign exposure as the rand strengthened and incrementally added to US Retailers. US Retailers had a better quarter after a disappointing third quarter. No new stocks were added to the fund. The fund sold out of Sasol and Brait as their investment cases no longer stacked up. •
Sasol was a small position in the fund and was sold due to the increased financial risk. The balance sheet is under strain due to the large amount of debt incurred for the Lake Charles Chemical Project (LCCP). Sasol is close to breaching its debt covenants and has already stopped paying a dividend. Operational uncertainty at LCCP continues with continual capital cost overruns and management revising their earnings expectations downward. Sasol also needs to invest further capital in its operations to reduce its carbon emissions. All of this points to sub-par returns on capital. We have lowered our assessment of the business and have exited this investment as the risk/reward is no longer attractive.
The fund shifted bond exposure by investing in long dated government bonds at yields greater than 10%. The South African Reserve Bank (SARB) has clearly communicated that the monetary policy objective is an inflation rate of 4.5%, which if achieved will result in a highly attractive 5% real yield (above inflation) for our clients. We still prefer high yielding corporate bonds over government bonds.
We remain disciplined in sticking to our investment philosophy and process and focus intently on limiting permanent capital loss in order to grow your capital over the long term. This is achieved by investing in predominantly good businesses at attractive prices with capable management and low financial risk.
Thank you for your continued support.
The Cadiz BCI Balanced Fund aims to provide investors with a balance between capital growth and income over the medium to long term by investing across asset classes. The portfolio complies with prudential investment guidelines to the extent allowed for by the Act. In order to achieve its objective, the investments normally to be included in the portfolio may comprise a combination of assets in liquid form, money market instruments, interest bearing securities, bonds, debentures, corporate debt, equity securities, property securities, preference shares, convertible equities and non-equity securities.
The portfolio may invest in participatory interests or any other form of participation in portfolios of South African collective investment schemes as the Act may allow from time to time, and which are consistent with the portfolio's investment policy. The portfolio may from time to time invest in listed and unlisted financial instruments, in accordance with the provisions of the Act, and the Regulations thereto, as amended from time to time, in order to achieve the portfolio's investment objective.
The Trustee shall ensure that the investment policy set out in this Supplemental Deed is carried out. For the purpose of this portfolio, the 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.