NAV on 2019/09/13
|NAV on 2019/09/12
|52 week high on 2019/04/23
|52 week low on 2018/11/23
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
Investec Fund Managers SA (RF) (Pty) Ltd.
87.5% SWIX CAPI, 12.5% MSCI ACWI
Chris is the head of South Africa Multi-Asset at Investec Asset Management and the lead portfolio manager for our General Equity Strategy. He joined the company in 2006 from Futuregrowth Asset Management, where he served as head of equities and portfolio manager from 2001. Chris joined RMB Asset Management in 1993, where he spent nine years as an analyst, portfolio manager and ultimately, director. During this time, he managed a number of portfolios, including balanced portfolios for many retirement funds as well as the RMB General Equity Unit Trust. Still with RMBAM, he relocated to Cape Town in 2000 to take responsibility for the PIC equity portfolio outsourced by Futuregrowth, before formally joining Futuregrowth in 2001.
Chris began his career in 1991, when after completing his articles, he joined JD Anderson as a banks/insurance analyst. Chris graduated from the University of Cape Town with a Bachelor of Commerce degree and holds a Bachelor of Computationis (Honours) (Certificate in Theory of Accounting) degree from the University of South Africa. Chris is a Chartered Accountant (SA) as well as a CFA Charterholder.
In line with our commitment of promoting talent from within, Rhynhardt Roodt will start co-managing a portion of the SA general equity funds strategy. Rhynhardt is a co-portfolio manager on the General Equity Strategy. In addition he has dedicated analyst responsibilities for the resources sector and other multi-Asset strategies. Rhynhardt re-joined the firm in 2010 from Oryx Investment Management where he worked for two years as a research analyst and portfolio manager. Rhynhardt began his career at Investec Asset Management in 2004 and spent a year as a client service consultant and as an analyst in risk attribution and performance measurement team, before moving into equity analysis. Rhynhardt has been with Investec Asset Management for 8 years and has 10 years’ experience in the investment industry.
Hannes Van Den Berg
Investec Equity comment - Jun 13
Market review 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 FTSE/JSE All Share Index returned - 0.2% over the quarter, while the FTSE/JSE Shareholder Weighted Index was up 0.7%. Foreign investors were, however, far worse off as the rand continued to weaken against major developed market currencies. US investors who had bought the MSCI South Africa Index would have lost 15.5% of their capital in US dollars (year to date). This loss is largely currency related. It is therefore no surprise to see rand hedge shares again being the quarter's top performers. However, investors had to own industrial rand hedges and not resources. The resource sector has been under significant pressure with local industrial unrest, sluggish Chinese economic data and falling dollar commodity prices. Basic materials underperformed financials and industrials by over 18 percentage points in the second quarter and by more than 30 percentage points year to date. Those areas of the market most exposed to the South African consumer, namely banks and general retailers, also lagged the broader market as investors became more concerned about the financial health of the local consumer. Our holdings in diversified miners Anglo American, BHP Billiton and African Rainbow detracted from performance. This was offset by our underweight positions in the quarter's two worst performing sectors - gold and platinum equities. Our industrial rand hedge stock of choice, Richemont, posted strong financial results and positively contributed to returns. We are underweight two of the largest shares in the local market, MTN and Naspers, both which performed strongly and therefore detracted from performance. The big four banks were negatively affected by the extremely poor trading update from African Bank. Even though the 'big four' have only limited exposure to unsecured lending, weaker sentiment was enough to put pressure on FirstRand, to which we have a large exposure. FirstRand is our favourite banking share and is therefore a core holding. We believe the group is conservatively positioned and will again post satisfying financial results. Our holding in Coronation Fund Managers also made a major positive contribution to returns.
Portfolio activity Global growth will remain tepid for now and, more importantly, will vary across the globe. The Chinese economy has been weaker relative to our expectations. Local Chinese authorities are taking a hard line against excessive credit extension and seem comfortable with the transition from a commodity-intensive to a consumer-driven economy. These factors have led us to moderate our outlook for commodity prices over the medium term and also our appetite for large holdings in the mining sector. We have therefore reduced our positions in Anglo American and BHP Billiton. There are, however, many tentative signs that economic prospects are much more favourable in the US, Europe and Japan. We maintain our view that the global economy should reach 'escape velocity' within the next 12 to 24 months, and that the portfolio should have less exposure to defensive equities. 'Escape velocity' is a term we use to indicate a stage in the economic cycle where equities and other risk assets should comfortably outperform the traditional 'safe haven' assets that investors have so treasured the past few years (for example government bonds and gold). In line with this reasoning, we've reduced our position in SABMiller. The share has rerated significantly, even when compared to the broader staples universe. Its exposure to weakening emerging market currencies is also impacting its earnings outlook negatively, which can result in earnings downgrades. We increased our holding in Richemont, another rand hedge industrial stock. Richemont has, however, derated relative to its peer group. The stock should also benefit more from a cyclical upturn (particularly compared to a defensive share like SABMiller). We expect Richemont's revenue growth to accelerate towards year-end as the comparative base for Swiss watch sales becomes more favourable. It is clear that lower-end consumers are taking strain and that unsecured credit extension (a major source of consumer spending power the past few years) is being reined in. We had little exposure to African Bank going into the last quarter and fortunately we sold out of the stock almost completely by the time the company issued a profit warning. With the upper-end consumer still in good shape, we remain holders of Woolworths. We have, however, reduced the size of our holding slightly.
Portfolio positioning Global defensive sectors - the 'market leaders' of the past two to three years - seem to be struggling to continue their outperformance, particularly in the US. There are concerns that the US Federal Reserve might start tapering its third round of quantitative easing asset purchases sooner than expected. This has resulted in a sharp sell-off in US treasuries as well as 'search-for-yield' equity shares like utilities, telecoms and staples. This trend has not been as prominent in the South African market, as the deteriorating domestic consumer environment, slumping commodity prices and rand weakness have taken centre stage. However, we are cognisant of this change in market leadership, even though it might be somewhat premature, and are positioned accordingly. Positive earnings revisions at reasonable valuations remain at the core of our investment philosophy.
The Investec Equity Fund aims to provide investors with capital growth over the long-term. The objective is to achieve returns well in excess of the FTSE/JSE All Share index, measured over three year periods.
The fund is actively managed and invests in South African equities. The mandate is not restricted to any specific investment style. The investment strategy is underpinned by extensive research focusing on three sector groupings: resources, industrials and financials. The focus is predominantly on individual stock selection. However, macro-economic considerations such as interest rates and the performance of the rand also play an integral part in constructing the portfolio.