NAV on 2019/05/21
|NAV on 2019/05/20
|52 week high on 2018/09/05
|52 week low on 2019/01/07
|Total Expense Ratio on 2018/09/30
|Total Expense Ratio (performance fee) on 2018/09/30
Sanlam Collective Investments
10% STEFI, 10% ALBI, 25% JSE ALSI, 5% US T-Bill, 5% WGBI, 45% MSCI ACWI
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Ginsburg & Selby SCI WW Flex Fund - 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 Worldwide Flexible Fund generated a return of +2.8% in Rands over the quarter, underperforming the ASISA Worldwide Multi-Asset Flexible peer group (+2.9%) and the fund's benchmark (+3.6%). The Fund return for the 1-year period ending 30 September 2018 was 8.2%.
The depreciation of the Rand had a positive impact on the aggregate return over the quarter owing to the Fund's bias towards global equity markets. A notable strong performer during the quarter was the Nedgroup Global Equity Fund, which increased by 10.5% in Rand terms.
As we enter the final quarter of the year, we expect the increased volatility to continue in this uncertain political and economic climate. The disparate performance across the major regions is beginning to create pockets of value for long-term investment, which we believe our managers have the skillset to exploit. During the quarter we took some profits on some of the offshore equity managers to bring the risk asset exposure back to the Funds strategic level (~70%). We remain confident that the Fund’s current asset allocation and complementary blend of active managers provide the necessary diversified exposure to generate long-term value for our clients.
The portfolio may invest in global and local securities, government, corporate and inflation linked bonds, debentures, non-equity securities, property shares, property-related securities, preference shares, money market instruments and assets in liquid form.
The portfolio may also invest in participatory interests and other forms of participation in portfolios of collective investment schemes or other similar schemes 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 and which is consistent with the portfolio's primary objective.
The manager may make active use of listed and unlisted financial instruments to reduce the risk that a general decline in the value of equity, property and bond markets may have on the value of the portfolio. The manager shall have the maximum flexibility to vary assets between the various markets, asset classes and countries to reflect the changing economic and market conditions.
The manager may vary the ratios of securities or assets in liquid form in changing economic environments or market conditions, or to meet the requirements in terms of legislation. The manager may retain cash or place cash in on deposit in terms of the deed and supplemental deed. The manager will be permitted to invest on behalf of the portfolio I offshore investments as legislation permits.