NAV on 2021/01/14
|NAV on 2021/01/13
|52 week high on 2021/01/11
|52 week low on 2020/03/18
|Total Expense Ratio on 2020/09/30
|Total Expense Ratio (performance fee) on 2020/09/30
Prime Collective Investment Schemes
South African--Multi Asset--Flexible
Average of the South African - Multi Asset - Flexible category
Autus Prime Opportunity comment - Mar 19
The Autus Investment Team customarily begins the year with a strategic investment workshop to consider the economic and investment factors likely to influence the markets in coming year. This year the mood was less sanguine because members identified several risks to keep an eye on in the coming months. These include the dire state of the government finances and its ever-increasing debt exacerbated by the perilous state of the SOE’s -especially Eskom, credit downgrade potential, the looming national election and a slowing global economy amongst others.
During the quarter the national budget, read by Finance Minister Tito Mboweni, confirmed government’s desperation to raise additional revenue, cut rising expenditure and reduce financial demands from poorly functioning SOE’s. Eskom’s crisis deepened and the intermittent load-shedding is retarding national productivity and economic growth. SA GDP grew by 0.8% in 2018 and is forecast to grow by 1.5% in 2019. Goldman Sachs recently predicted that the electricity crisis could subtract 0.3% from Q1 GDP growth. The RMB/BER Business Confidence Index slumped to a low of 28 index points in the first quarter of 2019. Seven out of ten business people polled expressed dissatisfaction with the current business environment. Particularly concerning is that the declining confidence cuts across all sectors of the economy including the building, retail and manufacturing sectors. The consumer remains constrained and with rising petrol costs, hikes in electricity tariffs and a weaker rand, inflation may begin to tick up. For February 2019, a consumer price inflation rate of 4.1% was recorded. This was comparatively benign mainly because food costs remained relatively constant. Inflation for 2019 is expected to remain within the 3-6% SARB target range. With a frail local economy, slowing global growth and moderate inflation the SARB is not expected to raise interest rates in 2019. At their March review, Moody’s left their rating unchanged. Internationally, global growth is beginning to slow. Interest rate hikes in the US are looking less likely this year as consumer spending weakens. Talks of a US recession are beginning to emerge. Interest rates in China were lowered during the quarter to support flagging growth there. The lack of consensus in the UK on an acceptable Brexit and the concomitant uncertainty is harming new investment and the prospect of growth in the UK. European economies are forecast to remain stable in 2019. The Brent crude oil price has risen by 27% to end the quarter at US$69.00. The global inflationary impact of these higher prices, if sustained, will be closely monitored. These factors combined with the ongoing trade negotiations between China and the US have fuelled investor jitters. We expect more of this jostling to occur in the markets until these major issues are resolved.
The Autus Prime Opportunity Fund returned 7.7% compared to the Peer Group Median of 5.3%. The main contributor to the good performance was the big holding in the Autus Prime Global Equity Feeder Fund which returned 13.1% for the quarter. It was also a great start to the year for companies like Naspers, Capitec, BTI, Anglo American and BHP. We increased our position in Coronation and now forms part of the top 10 Shares in the portfolio. Global shares like Apple, Visa, Mastercard and Visa continued their upward trend. New additions to the fund during the quarter was Sasol, Anheuser-Busch Inbev, Astral Foods and some Multichoice shares which we received out of the unbundling of Naspers. Shares that were sold out of the fund was Nedbank and Woolworths.
We are still cautious of the upcoming local elections, but we feel that the market has already discounted what everyone expects the result would be. We remain positive on the global side of the fund with a 20% holding in the Autus Prime Global Equity Feeder Fund. There is also exposure to the Autus Prime Property Fund which we think will outperform Money Market Funds over the medium-term.
The portfolio may diversify across all asset classes, although a high exposure to equities will be typcal during normal market conditions. The portfolio focusses predominantly on stock selection considering companies, business models and management teams which offers investors the opportunity of real growth given prevailing trends in the macro-economic environment. The manager may invest in unlisted investments from time to time, as well as in participatory interests in other collective investment schemes which are consistent with the portfolio's investment policy.