NAV on 2020/02/24
|NAV on 2020/02/21
|52 week high on 2019/03/28
|52 week low on 2019/10/24
|Total Expense Ratio on 2019/12/31
|Total Expense Ratio (performance fee) on 2019/12/31
Investec Fund Managers SA (RF) (Pty) Ltd.
Low - Medium
South African--Multi Asset--Income
Clyde is head of Quality at Investec Asset Management. He is portfolio manager with a focus on multi-asset absolute return and low volatility real return equity investing. His portfolio manager duties include our flagship Opportunity strategy that he has run since 2003 and our two equity-oriented Global Opportunity Equity and Global Franchise strategies. Clyde joined the firm in 1999, initially as an asset allocation and sector allocation strategist. Prior to Investec Asset Management, Clyde was awarded a study bursary by Sanlam where he worked for eight years, including five years in asset management. His experience in investments there included fixed income analysis and portfolio management. Clyde graduated from the University of Cape Town with a Bachelor of Science (Statistics and Actuarial Science) degree. He was awarded the Certificates in Actuarial Techniques in 1995, and Finance and Investments in 1997 by the Institute of Actuaries in London. Clyde is a CFA Charterholder.
He is co-portfolio manager of the Investec Absolute Balanced Fund and the Investec Cautious Managed Fund.
He joined the firm in 2007 from Metropolitan Asset Managers where he managed the Metropolitan Absolute Return Fund from 2005. Sumesh began his career at Swiss Re Life & Health, where he spent over three years as an actuarial specialist. Sumesh graduated from the University of Cape Town with a Bachelor of Business Science (Honours) degree in Actuarial Science and a Post Graduate Diploma in Actuarial Science. He is also a Fellow of the Institute of Actuaries in the United Kingdom.
Investec Absolute Balanced comment - Jun 13
Market review Central bank talk dominated financial markets over the past quarter. Investors reacted positively to the Bank of Japan's announcement early in the quarter about its large-scale monetary easing policies. Riskier trades were particularly well supported, and emerging market equities started to retrace some of the earlier losses. However, US Federal Reserve Chairman Ben Bernanke put a damper on rampant asset price appreciation by hinting that the market should recognise record policy accommodation as finite and data dependent. Even though his comments were merely providing guidance, markets responded immediately. Emerging markets saw one of their weakest months on record. Currencies depreciated against the US dollar and local currency debt - which has been a beneficiary of global investment flows for a long time - sold off sharply. Commodity prices followed other risk assets, first up, then down sharply in June, as global economic growth data remained mixed and the road to a rebalanced Chinese economy seemed rocky. The MSCI AC World NR Index returned -0.4% in dollars over the quarter. Emerging market equities underperformed developed market equities, with the MSCI Emerging Markets NR Index losing 8.1% over the quarter. The Citigroup World Government Bond Index (All Maturities) gave up 3% over this period. The All Bond Index lost 2.3% in rands over the quarter while inflation-linked bonds shed 5% from severely overvalued levels. Cash, as measured by the STeFI Composite Index, returned 1.3% for the quarter. Listed property ended the review period almost flat, having recovered May's losses with a bounce in June. South African equities ended almost unchanged in the second quarter, but volatility was high during this period. The sector laggards remain mostly confined to resource stocks with gold (-33.5%), platinum (-23.9%), coal (-10%) and diversified miners (-10.8%) all experiencing double-digit losses in rands. Year to date, the resources sector is trailing the overall market by 19.4 percentage points. Industrial stocks mostly held their ground over the quarter and defensive stocks, on average, achieved strong absolute returns. Financials lagged, with banks down 6.2% and life insurers flat for the quarter after a particularly weak June.
Portfolio review The Investec Absolute Balanced Fund is a medium- to long-term alternative to money market funds. The fund aims to produce low volatility, inflation-beating returns that are 1% to 2% ahead of cash. Outperformance is generated by capturing the alpha created through stock selection while minimising the associated market risk through hedging strategies. The fund is currently invested in a combination of equities, fixed interest and cash instruments. Since equity alpha tends to be larger and more accessible than bond alpha, our allocation to equities tends to be large and somewhat static. The limited market risk in the portfolio means that this allocation is independent of the current economic environment as there is little risk of the fund's performance being significantly affected by negative markets. Stock-picking is therefore core to generating returns ahead of cash. The portfolio's return was flat over the quarter, led down by equities and, in large part, by the significant losses on inflation-linked bonds. In addition to inflation linkers, the largest detractors from performance over the quarter were our select resources holdings, NewGold and Impala Platinum. Concerns about the local mining industry remain, and the depreciation of the rand has not been sufficient to offset the effects of falling dollar commodity prices and lower production volumes. As we enter wage negotiation season, tensions among the dominant unions and between labour and management appear to be increasing. Physical gold deteriorated with rising real yields in the US. Higher real yields have increased the opportunity cost of holding the metal.
Portfolio activity We are not short-term traders. Instead, we prefer to take positions in high quality companies that offer good value. Typically, these positions are held over the medium to long term. Activity over the quarter was muted. We increased our underweight positions in AngloGold and Absa, while buying more Richemont shares. Protection in the portfolio was reset at higher levels.
Portfolio positioning The Investec Absolute Balanced Fund offers similar levels of security to cash, but provides enhanced returns through our stock selection and hedging strategies. The portfolio is therefore well positioned to weather volatility and generate cash-beating returns. We remain concerned about further rand weakness. Most economic indicators appear to be pointing to the US economy strengthening and a slowing of easy money. We are slightly less optimistic than most, as increases to bond yields at the long end of the curve will result in further pressure on consumers in the form of increased mortgage repayments. Nevertheless, the strengthening recovery should focus the 'risk-on trade' in the US, resulting in a stronger US dollar. The risk to our local markets is that we have not yet experienced significant foreign outflows, even though we have seen a substantially weaker rand. As the US recovery gains momentum, we expect investors to become increasingly averse to risk in other areas of the global economy, and volatility to rise. On the China front, Beijing has turned its attention away from the quantity of growth, and is instead focusing on the quality of growth. Here, too, it appears that there are concerns about credit extension. Slower growth from China translates into weaker demand for resources, which is not bullish for commodity prices or the rand. The fund is ideally suited to weather this environment. We have hedged most of the market risk, and are therefore primarily concerned about the alpha generated by the individual stocks held within the portfolio. Equities continue to offer the best expected risk-return, and the strongest protection against inflation in the medium to long term. As always, we remain unwavering in our commitment to growing investors' capital in a judicious and discriminate manner.
The Investec Absolute Balanced Fund targets inflation-beating returns measured over three year periods, while actively managing downside risk. The fund invests in a mix of South African equity and fixed income assets. In respect of the equity portion of the fund, the focus is on the analysis of individual stocks and identifying shares that are attractively priced given their inherent value. The fund may invest in fixed income assets such as cash, bonds, inflation linked bonds and listed property. Significant portions of the portfolio are protected from negative returns using financial instruments such as equity and bond index futures. The aim is to preserve capital from a downward move in the market. Fund Features - Strong focus on capital preservation and absolute returns. - Low probability of negative returns over 12-month periods. - Preserves wealth in real terms, regardless of whether markets are rising or falling.