NAV on 2019/09/13
|NAV on 2019/09/12
|52 week high on 2019/04/23
|52 week low on 2019/09/04
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
Sanlam Collective Investments
FTSE/JSE CAPI Index (J303T)
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Ampersand SCI Equity - Jun 19
Economic Market Overview
'Return alone-and especially return over short periods of time-says very little about the quality of investment decisions.' - Howard Marks from Oaktree Capital.
The volatility we experienced during the last quarter of 2018 remains fresh in most investor's minds, yet 2019 has provided committed investors some welcome reprieve from the carnage and even though global assets came under a little bit of pressure from a stronger local currency, local growth assets performed amicably.
Uncertainty around global trade policy combined with continued tensions in the Middle East contributed to some weakness across many emerging markets, putting pressure on global growth asset returns. The negotiations between the US and China around trade tariffs have ebbed and flowed from very positive to extremely negative and although the hubris of President Trump can excite many pundits and journalists, the negotiations have yielded limited, if any, success. On top of these issues, we have seen global growth repeatedly disappoint across many parts of the globe with the IMF and World Bank simultaneously reducing their growth estimates and outlook for the next 3 years.
All of these factors have continued to dampen both consumer and business confidence which spilled over into investor confidence resulting in increased volatility and apprehension around embracing risk. This culminated in a significant market sell off in the month of May 2019 which resulted in significant losses across growth assets. Yet some sanity returned to markets during June which resulted in most global investors ending the quarter almost flat.
Local investors in South Africa had a more upbeat experience and outcome as local growth assets continued to recover from the December 2018 lows. The certainty that came with the completion of our 6... democratic election during May 2019 resulted in some optimism, be it subdued, as the fall out from the previous administration remains enormous. It has come to light that the structural decay associated with State Capture was underestimated and new information continues to lay bare the extent of the problems that government need to address urgently. However we believe the resolve of the new administration under President Ramaphosa is significant and the reward for successful implementation is enormous.
As we stressed during our last communiqué, in spite of risks and uncertainties which might impact growth assets negatively over short-term horizons, we believe the long-term entrenched opportunities remain extremely attractive and integral in ensuring effective portfolio construction and future investment success.
Position going forward
Our key positions across the portfolios remain biased toward growth assets in both the local and global environment although our lower risk and more constrained portfolios do have significant exposure to local fixed income assets. The two largest absolute and peer relative positions remain our allocation to offshore assets and our allocation to local listed property.
Whilst remaining cognisant of market valuations and exogenous risks, we need to retain growth assets in the portfolio to ensure we achieve our longer-term real return objectives. As highlighted above, we have also seen a significant revaluation over the last 3 months as volatility has subsided after the carnage seen in the last quarter of 2018, resulting in many growth assets recovering most if not all of the losses seen in that quarter. This resulted in the valuation of many growth assets moving closer to earnings and market fundamentals, although some disconnect remains which presents further near-term opportunities. We believe premium valuations in certain growth sectors could experience normalisation, yet the general valuation across many sectors present interesting, albeit select, opportunities, especially if the monetary environment remains accommodative.
Asset allocation and diversification therefore remain key to ensuring downside risk management while entrenching long term inflation protection and real returns. Our aim is to provide our investors with diverse exposure across various investment strategies, investment managers and assets while continuing to focus our attention on consistently applying our philosophy and process. The result is a rigorous blend of exposures that should have a high probability of achieving our long-term return objectives (a time horizon of at least 3 years, and longer for the more risk-orientated portfolios) while providing protection against short term swings and negative surprises, and reducing the overall risk our investors face.
We urge investors to remain patient and committed to their chosen investment strategy even though negative surprises are possible. We are continuously looking for ways to increase the certainty of cash flow while remaining cognisant of our longer term capital preservation objectives. Our belief in and commitment to our investment approach remains firm and resolute as we have weathered comparable and even worse challenges over the past 11 years. With the commitment from our clients, we remain confident that our philosophy will again result in positive outcomes and ensure safe passage through turbulent markets.
The portfolio's investment universe consists of financially sound equity securities, preference shares, convertible bonds, property shares and property related securities listed on exchanges, and assets in liquid form. The portfolio's equity exposure will always exceed 80% of its net asset value. The Manager may also include unlisted forward currency, interest rate and exchange rate swap transactions for efficient portfolio management purposes.