NAV on 2019/07/18
|NAV on 2019/07/17
|52 week high on 2018/09/03
|52 week low on 2019/01/04
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
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 - Mar 19
The market's appetite for risk assets returned in the first quarter of 2019 as both a dovish Fed and optimism for a truce on trade between the US and China provided support for risk assets.
Global Equities (MSCI AC World Index) had the best quarterly performance since Q3 2010, increasing by 12.3% in US Dollars and recovering most of the losses suffered in Q4 2018. This performance was mostly driven by the heavily-weighted US equity market, which increased by 13.7% in USD, the highest quarterly return since Q3 2009.
During the quarter the US Federal Reserve changed their stance on their normalization path by keeping the federal funds rate unchanged, while slowing down the rate at which they reduce their balance sheet. This more patient approach was a response to concerns relating to prevailing global economic and financial developments, as well as muted inflationary pressures. The Committee no longer expects further rate increases in 2019 and could potentially discontinue the balance sheet reduction program in October, but cautioned that future adjustments still remain data dependent. This more dovish tone provided support for risk assets as it eased some of the market's concerns that future rate hikes may put further pressure on an already fragile global economy.
The trade talks between the USA and China continued to show signs of progress with delegates from both countries remaining optimistic. The friction between the two countries has been a major headwind for global trade and therefore any positive news remains supportive for risk assets. Despite this progress, there is still a lot of uncertainty surrounding certain critical industries, such as technology.
The positive sentiment towards risk assets also supported Emerging Markets, with the index increasing by 10% in US Dollars. This optimism on trade combined with continuing government support for the domestic economy supported the Chinese equity market, with the MSCI China index increasing by 17.85% in US Dollars.
In line with Emerging Markets, the JSE All-Share index also had a strong quarter, increasing by 8.0% in Rand terms. This positive return was however largely attributed to the strong performance of the larger rand hedge shares, as almost half of the companies listed on the JSE All-Share Index produced a negative return over the quarter.
Having initially appreciated against the major currencies at the start of the quarter, the Rand gave back all its gains following the Budget speech in February which once again highlighted the extent of the country’s fiscal problems. This dire fiscal position, combined with the anticipated impact of Eskom’s rolling blackouts, dimmed sentiment towards the country. The Rand ended the quarter at R14.42 to the USD and R18.79 to the GBP, reflecting a depreciation of 0.25% and 2.6% respectively.
The Ginsburg & Selby SCI Growth Fund generated a return of 5.6% in Rands over the quarter, slightly underperforming the ASISA SA Multi-Asset High Equity peer group (5.8%).
The Fund’s slightly lower exposure to offshore equities detracted from performance relative to our peers. Notable strong performers during the quarter were the Contrarius Global Equity Fund and Nedgroup Global Equity Fund, which returned 17.1% and 12.8% respectively in Rands over the quarter.
Going into Q2, we continue to expect increased volatility as most of the concerns which led to the market fall in Q4 remain unresolved. While increased volatility can be painful over the short term, it creates opportunities which our skilled active managers are able to exploit. We are however still cognizant of the risks and therefore maintain the fund's conservative offshore allocation (~21%), 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.