NAV on 2019/03/19
|NAV on 2019/03/18
|52 week high on 2018/09/05
|52 week low on 2018/03/27
|Total Expense Ratio on 2018/12/31
|Total Expense Ratio (performance fee) on 2018/12/31
Sanlam Collective Investments
MSCI World Index
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Sam has been appointed head of the Unconstrained Strategies team at Momentum Asset Management and brings 16 years' of domestic and global investment experience to the firm. Sam was at Investec Asset Management until September 2011, where he held the positions of director, head of South African equities and portfolio manager in the Global Contrarian team. He started his career in the investment management industry at Allan Gray and moved to Abvest (now ABSA Asset Management), where he fulfilled the roles of portfolio manager, chief investment officer and, ultimately, chief executive officer, before leaving to join Investec Asset Management in early 2006. He headed a team of investment professionals responsible for well over R100 billion in equities across the full spectrum of portfolios, from pure equity to multiasset mandates. He was the lead portfolio manager and key decision maker for close on R40 billion in client assets, including the Investec Global Franchise Fund and Investec Cautious Managed Fund. He also managed the Discovery Equity Fund from its inception in November 2007.
Counterpoint SCI* Global Equity FF -Dec 18
The fourth quarter of 2018 saw an escalation in the 'risk-off' trend of previous quarters. The US Equity market initially bucked the trend but December saw an abrupt and deep capitulation which led to global contagion.
The growing disparity across markets and economies intensified over the quarter as trade war rhetoric and central bank actions once again took center stage. The Fed maintained their commitment to quantitative tightening in early December, which initially supported the US Dollar and maintained pressure on Emerging Markets. Fed action and the accompanying narrative eventually led to a tantrum like sell-off in risk assets in December. Safe havens like Gold and Treasuries benefitted.
The CBOE Volatility Index (VIX) spiked in December. Volatility had been relatively stable since the significant turbulence in early 2018 and despite the increased risk aversion since October. The sudden and deep drawdown in risk assets has punctured the bubble of investor complacency and moderated expectations.
Another feature of the quarter was the inability of security prices to rebound quickly, as was the case in previous cycles. Emerging market securities are declining at a slower rate and the synchronized global growth narrative is rapidly being replaced by fears of a global slowdown, particularly in China.
Global Bonds advanced by 1.2% over the quarter and resumed their customary role as a safe haven in times of distress. Emerging market bonds declined marginally by 0.18% in dollars. US Bonds were surprisingly resilient, which seems to indicate that the Fed tightening cycle may be coming to an end.
For the quarter, most major asset classes declined with relatively few safe havens. Gold advanced by 9.67%. The US Dollar remained stable based on relative yield considerations and better relative growth prospects.
The MSCI World Index experienced a large 13.3% loss over the quarter (it's worst quarterly performance since the third quarter of 2011). MSCI Emerging Market Index declined by 7.4% over the quarter.
Global property, as measured by the iShares Developed Market Property Yield ETF which tracks the FTSE EPRA / NAREIT Developed Index had a difficult quarter with a decline of -5.28%
The Fund outperformed the World Index (in $) for the quarter, with a 10.55% decline. The MSCI World Index experienced a large 13.42% loss over the quarter (it's worst quarterly performance since the third quarter of 2011). MSCI Emerging Market Index declined by 7.41% over the quarter.
Global Equities endured a horrific quarter with sustained downside volatility. The initial downside was driven by Emerging market equities, and in December US Equities experienced a steep downturn.
The extent of the outperformance in the fourth quarter has placed the fund ahead of the MSCI World on most periods ranging from 3 months, 1 year, 2 years and since inception. Stock selection has been a solid contributor while sector selection has been a significant detractor. Dollar strength continued and provided a mild headwind to non-US listed stocks. The fund has lower direct EM exposure, which detracted in Q4, despite adding significant value in prior periods.
At the sector level, lower exposure to Energy, Materials, Industrials and Technology contributed strongly. Higher exposure to selected Real Estate, Consumer Staples and Communication Services also made a significant contribution.
On the other hand, our significant underweight position in Utilities and Healthcare were the biggest detractors.
The Fund has maintained above-average liquidity, since mid-year 2017. As a consequence, cash drag has been a perennial feature of our return profile. In Q4, our patience was finally rewarded and cash was a strong contributor to relative returns.
The sell-off in US Equities and EM equities in general, has provided increased opportunities for us to deploy cash.
We are patient and the Fund positioning remains virtually unchanged. The recent sell-off has enabled us to make marginal changes but the overall slant of the portfolio remains intact.
We continue to hold high quality businesses, with resilient earnings prospects, solid balance sheets and valuations. We remain ready to swiftly deploy liquidity as market opportunities unfold.
The portfolio will apart from assets in liquid form, invest solely in the participatory interests of the Counterpoint Global Equity Fund established under the Sanlam Global Funds PLC scheme. This portfolio invests in participatory interests of underlying portfolios that provide exposure to investments across a broad range of asset classes, currencies and market sectors, operated in territories with a regulatory environment which is to the satisfaction of the Manager and Trustee of a sufficient standard to provide investor protection at least equivalent to that in South Africa.