NAV on 2019/03/20
|NAV on 2019/03/19
|52 week high on 2018/09/03
|52 week low on 2019/01/04
|Total Expense Ratio on 2018/06/30
|Total Expense Ratio (performance fee) on 2018/06/30
Sanlam Collective Investments
South African--Multi Asset--High Equity
ASISA Category Average: South African - Multi Asset - High Equity
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Ginsburg & Selby SCI Growth FoF - Sep 18
The third quarter of 2018 was positive for global risk assets, as the MSCI AC World Index increased by 4.4% in US Dollar terms. The index return, however, masks the divergent performances across the major regions as the heavily-weighted US market had its best quarterly performance since Q4 2013, while political uncertainty and trade concerns weighed on most of the other regions.
Robust corporate earnings and a thriving economy supported the US equity market during the quarter, which increased by 7.71% in US Dollar terms (i.e. S&P 500). The stable economic indicators and improved employment figures also allowed the Federal Reserve (Fed) to increase the federal funds rate by 25 basis points, taking the rate to 2.125%.
Emerging markets performed poorly over the quarter, as a slowdown in the pace of Chinese credit growth, fears over the vulnerability of certain economies to tighter US monetary policy and concerns about the potential impact of global trade tensions weighed on risk appetite. The MSCI Emerging Market Index declined by 0.95% over the quarter in US dollar terms. Year-to-date the Emerging Market Index has underperformed the developed market by 13.3%, with a total return of -7.4%, relative to the MSCI Developed Market (World) Index of 5.9%.
The negative sentiment towards emerging markets had a knock-on effect on South African assets, as foreigners sold R56bn worth of local bonds and equities during the quarter. The deteriorating local economy further exacerbated the outflows as GDP contracted for the second quarter in a row, putting South Africa into a technical recession. The outflows had an immediate impact on the Rand, which at one point during the quarter depreciated by 12.6% from the end of Q2 2018, to R15.43 to the US Dollar. The currency recovered some of the losses towards the end of the quarter to end at R14.15 to the US Dollar (i.e. a 3.2% depreciation from end of Q2).
The weaker Rand failed to benefit the local equity market during the quarter, as the index fell 2.2% in Rand terms. The negative sentiment to emerging markets impacted the heavily weighted Naspers share, which fell 12% during the quarter.
The SARB kept rates unchanged during the quarter despite the expected inflationary pressures from the weaker currency. The current inflation reading (+4.9%), constrained consumer and low economic growth led the SARB to defer the rate increase, which was a very close decision with 3 of the 7 members voting for an increase.
The Ginsburg & Selby SCI Growth Fund generated a return of -0.1% in Rands over the quarter, underperforming the ASISA SA Multi-Asset High Equity peer group (+1.1%) due to the funds conservative offshore allocation.
As we enter the final quarter of the year, we expect the increased volatility to continue in this uncertain political and economic climate. The increased volatility is beginning to open up pockets of value in the market, however, we are still cognizant of the risks and therefore maintain the fund's conservative offshore allocation (~22%), with the view of increasing the exposure at more opportune currency and valuations levels.
The portfolio aims to provide investors with a return of 3% above the South African Inflation (CPI) after all costs, measured over five –year rolling periods. The portfolio aims to deliver a stable return while providing a high degree of capital certainty over any 24-month period. The portfolio is suitable for investors with a medium term investment horizon.
Investments to be included in the portfolio will, apart from assets in liquid form, consist solely of participatory interests in portfolios of collective investment schemes registered in the Republic of South Africa or of participatory interests in collective investment schemes or other similar schemes operated in territories with a regulatory environment which is to the satisfaction of the manager and the trustee of a sufficient standard to provide investor protection which is at least equivalent to that in South Africa.
The portfolio will be managed in accordance with regulations governing pension funds.