NAV on 2019/07/18
|NAV on 2019/07/17
|52 week high on 2018/09/05
|52 week low on 2019/01/07
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
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 -Mar 19
Market overview The first quarter of 2019 reversed the negative trend of the previous quarter. The US Equity market rebounded strongly and emerging markets continued the recovery that had started in late 2018.
Global risk markets surged upward in a synchronised and correlated fashion as the US Fed surprised the markets with an abrupt reversal in policy stance. The Fed's pivot ushered in a 'risk-on' rally and a return to a regime of favouring the search for yield. The US Fed has since, confirmed their pause in tightening and now appear to be on course to reducing interest rates in the future. The abrupt turnaround from Quantitative Tightening to a potential resumption of Quantitative Easing is truly unprecedented and financial markets are currently in the throes of navigating this change in regime.
As a consequence, the CBOE Volatility Index (VIX) declined significantly. Volatility has returned to the relatively stable pattern of 2017. The spike in volatility and deep drawdown in December 2018, is now a distant memory. Investor complacency and related euphoria has returned. Developed market equities have rebounded so strongly that we are close to all-time highs.
An additional feature of the quarter was the continued recovery in emerging market securities. The combination of low valuations, high yields and a supportive Fed policy has buoyed EM financial markets. Global Bonds advanced by 1.9% as market participants started to price in the Fed's change in policy stance. Emerging market bonds advanced in line with the rally in US Bond yields. It remains unclear whether US Bonds are signalling a return to QE or an upcoming recession. For the quarter, most major asset classes advanced, with relatively few laggards. Gold was surprisingly resilient the US Dollar remained stable based despite worsening yield considerations and declining growth prospects. The MSCI World Index advanced by 12.6%. MSCI Emerging Market Index appreciated by 10.0% over the quarter. Global property, as measured by the iShares Developed Market Property Yield ETF which tracks the FTSE EPRA / NAREIT Developed Index advanced by 14.6% over the quarter. Global Property was relatively resilient during the market drawdown and has held it's own in the recent rebound.
Portfolio overview The Fund lagged the World Index (in $) for the quarter, despite a satisfactory 10.2% advance. The MSCI World Index experienced a 12.5% return over the quarter.
Global Equities rebounded strongly in line with risk markets, as less restrictive monetary policy and lower fears of a hostile trade war appeared more likely.
Fund performance has lagged the recent advance but remains well ahead of the MSCI World over six months, a period that includes a deeper market drawdown. Our defensive positioning protected capital in down markets but has struggled to keep pace in the recent recovery.
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 added at some value at the margin.
At the sector level, lower exposure to Energy, Industrials and Technology were the biggest detractors. Higher exposure to selected Real Estate stocks, made a significant contribution. On the other hand, our significant underweight position in Utilities and Healthcare were the biggest contributors.
Stock selection has been the primary driver of returns. In particular, the significant overweight in Tobacco stocks added the most value. 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 Q1, the drag from cash was the main reason the fund lagged the broader market.
Portfolio positioning We are patient and the Fund positioning remains virtually unchanged. The recent advance 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.