NAV on 2021/01/22
|NAV on 2021/01/21
|52 week high on 2020/05/04
|52 week low on 2020/03/25
|Total Expense Ratio on 2020/09/30
|Total Expense Ratio (performance fee) on 2020/09/30
Sanlam Collective Investments
75% MSCI World + 20% US$ Cash + 5% Stefi
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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 Owner Flexible - Dec 19
The fourth quarter of 2019 dramatically reversed the trend of the previous quarter, with strong equity advances to record highs. The US maintained strong positive momentum while emerging market equities led global markets, buoyed by the strength of EM currencies relative to the US dollar.
Increasing risk-appetite fuelled a sustained rally across most asset classes, as market participants responded to narratives of de-escalating trade tensions and continued stimulus. The US Fed has continued to act in line with a reversal in policy stance and obliged the market with aggressive repo operations since September. The Fed’s pivot in January ushered in a ‘risk-on’ rally and the fourth quarter was the culmination of an exceptional year for risk-taking. Central banks across the world are responding aggressively to stave off an economic slowdown. Market participants are positioned for a melt-up and they have not been disappointed.
The CBOE Volatility Index (VIX) spiked in May and has stabilised since then. For the moment, the market appears willing to disregard macro headwinds and extreme valuations. Central bank support remains the overriding narrative and US equities remain close to all-time highs.
An additional feature of the quarter was the marginal rise in developed market bond yields. Global Bonds declined by 0.50% as market participants started to price in a Fed stalemate and a resumption in synchronised global growth. Emerging market bonds advanced in line with the rally in emerging currencies and a renewed search for yield. The signal from the bond market remains unclear and the weakness in trend suggests a low level of conviction. For the quarter, most major asset classes advanced, with relatively few losers. Gold surged by 3.04%, in line with US Dollar weakness and despite rising yields. Gold appears to be trading in line with real yields and the increasing demand for safe havens, in an environment of rising uncertainty. It is rare for Gold to be correlated with risk assets and time will tell which asset class is providing the correct signal. The MSCI World Index surged by 8.7% in US Dollars.
MSCI Emerging Market Index advanced by 11.9% over the quarter, aided by an explosive rally of EM currencies relative to the dollar. Global property, as measured by the iShares Developed Market Property Yield ETF which tracks the FTSE EPRA / NAREIT Developed Index advanced by 1.96% over the quarter. Global Property was relatively resilient during the market drawdown in late 2018 and displayed the same resilience in 2019.
The Fund had a positive quarter, with a 4.2% advance, which lagged the Benchmark Index return of 5.4%.
Global Equities were led higher by EM Equities, as less restrictive monetary policy and lower fears of a hostile trade war, buoyed risk assets and weakened the US Dollar.
Stock selection was good and lagged the broader equity market. Cash drag and lack of exposure to specific sectors explain the overall lag at the fund level.
Market leadership has been very narrow and sector specific. Market leaders include stocks that meet our strict Owner-Manager criteria, but excessively high valuations have restricted our exposure. Our lack of exposure to the winning sectors explain most of the performance lag. Our stock selection and defensive positioning protected capital in May 2019 but has struggled to keep pace since the start of the market recovery in June 2019.
For the majority of the fourth quarter, Technology, Healthcare and Financials led the market higher. Narrow price leadership has been mirrored in terms of valuations with the Technology & Healthcare closing off the calendar year at significant premiums to the market. The risk-on sentiment has favoured mega caps and sectors with price momentum. The leading mega caps do not meet our owner-manager criteria and explains most of the funds relative lag.
In addition, stock selection has been a net detractor. Dollar weakness provided a mild tailwind to non-US listed stocks. The fund has lower direct EM exposure, which detracted significantly in the fourth quarter as EM Equities surged strongly. Stock-picking within Retail and Materials contributed significantly.
At the sector level, lower exposure to Materials, Technology and Healthcare were the biggest detractors. On the other hand, our significant underweight position in Utilities, Industrial and Energy contributed at the margin.
Our diversified selection of quality owner managed equities, has a natural bias towards Consumer cyclicals, Real Estate and Diversified Financials. In the fourth quarter, this bias resulted in positive returns, but lower participation than we would have expected.
We have an intentional bias towards Owner-Managed stocks with strong balance sheets, cheaper valuations and solid fundamentals. We anticipate an environment where excessive debt and high valuations will become significant headwinds for equities. Since April 2019, this bias has not worked well and the fourth quarter was particularly acute. Equity market participants appear willing to disregard high valuations and excessive debt, in the current regime of easy monetary policy.
The Fund is focused on stock-picking and accordingly, stock selection will always be the primary driver of returns.
The Fund has maintained above-average liquidity. As a consequence, cash drag has been a perennial feature of our return profile and the fourth quarter was no exception.
We are patient and the Fund positioning remains virtually unchanged. The recent surge has enabled us to reposition our exposure but the overall slant of the portfolio remains intact.
The Fund retains an above-average cash weighting and an inherently defensive positioning. The overwhelming signal from our underlying owner managers is one of conservatism and caution at this stage of the cycle. The current Equity rally is very momentum driven, with weak sponsorship. For that reason, we remain concerned about a potential spike in volatility and a sustained increase in risk aversion.
We remain ready to swiftly deploy liquidity as market opportunities unfold.
The COUNTERPOINT GLOBAL OWNER MANAGED FLEXIBLE FUND (the “Fund”) will seek to achieve its investment objective by investing globally in equities, bonds, property related securities (which may include real estate investment trusts and equities in real estate companies) and money market instruments. This Fund will invest primarily in securities of companies whose key individual shareholder is actively involved in the business, in the capacity of Chief Executive Officer, Director or Executive Chairman. In normal market conditions, the Fund's exposure to Owner Managed Securities will at all times be at least 60% of its net assets. The Fund may also invest indirectly in such assets through investment in collective investment schemes which invest in assets described above. The Fund may use specialist financial techniques (derivatives) to manage the Fund's risk exposure and for efficient portfolio management.