NAV on 2021/02/26
|NAV on 2021/02/25
|52 week high on 2021/02/12
|52 week low on 2020/03/24
|Total Expense Ratio on 2020/12/31
|Total Expense Ratio (performance fee) on 2020/12/31
Ninety One Fund Managers SA (RF) (Pty) Ltd.
South African--Multi Asset--Low Equity
Clyde is Co-Head of Quality at Ninety One. He is a portfolio manager with a focus on multi-asset absolute return and low volatility real return equity investing. His portfolio manager duties include our flagship Opportunity Strategy that he has run since 2003 and our equity oriented Global Franchise and Global Quality Equity Income strategies. Clyde joined the firm in 1999, initially as an asset allocation and sector allocation strategist. Prior to joining the firm, Clyde was awarded a study bursary by Sanlam where he worked for eight years, including five years in asset management. His experience in investments there included fixed income analysis and portfolio management. Clyde graduated from the University of Cape Town with a Bachelor of Science degree in Statistics and Actuarial Science. He was awarded the Certificates in Actuarial Techniques in 1995, and Finance and Investments in 1997 by the Institute of Actuaries in London. Clyde is a CFA Charterholder.
Sumesh is a portfolio manager at Ninety One within our Quality team. He has responsibility for our absolute return strategies and is co-portfolio manager of the Cautious Managed Strategy and the Absolute Balanced Strategy. He joined the firm in 2007 from Metropolitan Asset Managers where he managed the Metropolitan Absolute Return Fund from 2005. Before joining Metropolitan, Sumesh spent three years as an investment actuary at Metropolitan Employee Benefits, where he was responsible for managing smooth bonus funds. Sumesh began his career at Swiss Re Life & Health, where he spent over three years as an actuarial specialist. Sumesh graduated from the University of Cape Town with a Bachelor of Business Science (Hons) degree in Actuarial Science and a postgraduate diploma in Actuarial Science. He is a Fellow of the Institute of Actuaries in the United Kingdom and a Fellow of the Actuarial Society of South Africa.
Duane is a portfolio manager in Ninety One’s Quality team and heads the South African Quality business. He is a co-portfolio manager of the Cautious Managed Strategy. As the head of South African Quality research, he leads the research agenda for the South African-focused Quality analysts, and is also responsible for analysing South African stocks. As part of the broader global Quality team, he researches global stocks. Prior to joining the firm he was Head of SA Equities at Coronation Fund Managers. He also managed absolute return strategies, including co-portfolio management of the Coronation Balanced Defensive Fund. Before that he was a manager in the Transaction Advisory Services division of Ernst & Young in New York, involved primarily in financial due diligence advisory services re mergers and acquisitions. Duane has a Bachelor of Commerce Honours (Accounting) from the University of Natal. He is a Chartered Account and member of the South African Institute of Chartered Accountants and is a CFA charterholder.
Investec Cautious Managed comment - Jun 13
Market review Central bank talk dominated financial markets over the past quarter. Investors reacted positively to the Bank of Japan's announcement early in the quarter about its large-scale monetary easing policies. Riskier trades were particularly well supported, and emerging market equities started to retrace some of the earlier losses. However, US Federal Reserve Chairman Ben Bernanke put a damper on rampant asset price appreciation by hinting that the market should recognise record policy accommodation as finite and data dependent. Even though his comments were merely providing guidance, markets responded immediately. Emerging markets saw one of their weakest months on record. Currencies depreciated against the US dollar and local currency debt - which has been a beneficiary of global investment flows for a long time - sold off sharply. Commodity prices followed other risk assets, first up, then down sharply in June, as global economic growth data remained mixed and the road to a rebalanced Chinese economy seemed rocky. The MSCI AC World NR Index returned -0.4% in dollars over the quarter. Emerging market equities underperformed developed market equities, with the MSCI Emerging Markets NR Index losing 8.1% over the quarter. The Citigroup World Government Bond Index (All Maturities) gave up 3% over this period. The All Bond Index lost 2.3% in rands over the quarter while inflation-linked bonds shed 5% from severely overvalued levels. Cash, as measured by the STeFI Composite Index, returned 1.3% for the quarter. Listed property ended the review period almost flat, having recovered May's losses with a bounce in June. South African equities ended almost unchanged in the second quarter, but volatility was high during this period. The sector laggards remain mostly confined to resource stocks with gold (-33.5%), platinum (-23.9%), coal (-10%) and diversified miners (-10.8%) all experiencing double-digit losses in rands. Year to date, the resources sector is trailing the overall market by 19.4 percentage points. Industrial stocks mostly held their ground over the quarter and defensive stocks, on average, achieved strong absolute returns. Financials lagged, with banks down 6.2% and life insurers flat for the quarter after a particularly weak June.
Portfolio review The portfolio's return was positive for the quarter, led by our global equity holdings and a significantly weaker rand. The largest detractors from performance were the select resources holdings in the portfolio, NewGold and Impala Platinum, as well as our holding in inflation-linked bonds. Concerns about the local mining industry remain, and the depreciation of the rand has not been sufficient to offset the effects of falling dollar commodity prices and lower production volumes. As we enter wage negotiation season, tensions among the dominant unions and between labour and management appear to be increasing. Physical gold deteriorated with rising real yields in the US. Higher real yields have increased the opportunity cost of holding the metal.
Portfolio activity Portfolio activity over the quarter was muted. We purchased a small position in the Impala Platinum convertible bond. It provides exposure to platinum equities with no downside risk if held to maturity, yet it yields a cash return. We sold the remainder of our small holding in African Bank. Our decision was based on concerns about the health of over-indebted consumers, the potential for increased unemployment due to mining sector retrenchments and the increasing risks in African Bank.
Portfolio positioning We remain concerned about further rand weakness. Most economic indicators appear to be pointing to the US economy strengthening and a slowing of easy money. We are slightly less optimistic than most, as increases to bond yields at the long end of the curve will result in further pressure on consumers in the form of increased mortgage repayments. Nevertheless, the strengthening recovery should focus the 'risk-on trade' in the US, resulting in a stronger US dollar. The risk to our local markets is that we have not yet experienced significant foreign outflows, even though we have seen a substantially weaker rand. As the US recovery gains momentum, we expect investors to become increasingly averse to risk in other areas of the global economy, and volatility to rise. On the China front, Beijing has turned its attention away from the quantity of growth, and is instead focusing on the quality of growth. Here, too, it appears that there are concerns about credit extension. Slower growth from China translates into weaker demand for resources, which is not bullish for commodity prices or the rand. Overall, the local equity market is trading at elevated price earnings multiples, with a significant divergence between resource and industrial companies. We expect increased risk to both our equity and bond markets. Given current conditions, we remain invested in opportunities that we believe will reduce the losses from any shocks, and provide investors with inflation-beating returns. While the risk inherent in equities is elevated in the current environment, they offer the best expected return, and the strongest protection against inflation in the medium to long term. A portion of the portfolio is therefore held in local and foreign equities with a strong valuation underpin and rand hedge qualities (39%). To offset the impact of the negative real returns being generated in cash, we hold nominal bonds, inflation-linked bonds and a small amount of credit (24%). Our holding in the gold exchange traded fund (3%) also offers protection. We hold inflation-linked bonds as an additional hedge against inflation, especially inflation imported as a result of a weaker rand. Given the conservative nature of the portfolio, and the risks prevalent in the current environment, we continue to have a high cash weighting (31%). As always, we remain unwavering in our commitment to growing investors' capital in a judicious and discriminate manner.
The objective of the Ninety One Cautious Managed Fund is to provide investors with returns in excess of inflation comprising both capital and income over the medium term. It will achieve this by investing across a well-diversified mix of asset classes, including equities, bonds, cash and listed property in a manner similar to that usually employed by retirement funds. The portfolio will attempt to achieve a moderate to low risk profile by actively managing the exposure to various asset classes and typically would have an actual equity exposure below 40%. The manager will be permitted to invest on behalf of the Ninety One Cautious Managed Fund in offshore investments as legislation permits. The portfolio will be managed in accordance with the investment requirements prescribed, from time to time, for retirement funds in South Africa.