NAV on 2019/11/14
|NAV on 2019/11/13
|52 week high on 2019/08/12
|52 week low on 2019/01/07
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
Sanlam Collective Investments
South African--Multi Asset--Low Equity
25% SWIX, 55% ALBI, 20% SteFi
No email address listed.
No website listed.
Joined Fleming Asset Management in August 1997. Alex was previously a quantitative analyst and economist at Capital Alliance. He has specialised in fixed interest for the past two years.
Sam has been appointed head of the Unconstrained Strategies team at Momentum Asset Management and brings 16 years' of domestic and global investment experience to the firm. Sam was at Investec Asset Management until September 2011, where he held the positions of director, head of South African equities and portfolio manager in the Global Contrarian team. He started his career in the investment management industry at Allan Gray and moved to Abvest (now ABSA Asset Management), where he fulfilled the roles of portfolio manager, chief investment officer and, ultimately, chief executive officer, before leaving to join Investec Asset Management in early 2006. He headed a team of investment professionals responsible for well over R100 billion in equities across the full spectrum of portfolios, from pure equity to multiasset mandates. He was the lead portfolio manager and key decision maker for close on R40 billion in client assets, including the Investec Global Franchise Fund and Investec Cautious Managed Fund. He also managed the Discovery Equity Fund from its inception in November 2007.
Counterpoint SCI Cautious Fund - Jun 19
The second quarter of 2019 maintained the positive trend of the previous quarter, albeit with increased volatility on an intra-quarter basis. The US and Developed markets rebounded strongly while emerging markets nudged up slightly after a stellar first quarter.
Global risk markets experienced a brief correction in May, but the rebound has been swift and characterised by a synchronised and correlated upsurge. The US Fed has continued to signal a remarkable reversal in policy stance. The Fed's pivot in January ushered in a 'risk-on' rally and a return to a regime of favouring the search for yield. The US Fed now appears to be on course to reducing interest rates in July. In 2019, central banks have adopted an abrupt turnaround from Quantitative Tightening to a potential resumption of Quantitative Easing. Market participants are actively repositioning, as financial markets are currently in the throes of navigating this change in regime.
As a consequence, the CBOE Volatility Index (VIX) spiked in May and has stabilised at a relatively higher level. For the moment, the market appears willing to disregard the deep drawdown in December 2018 and the recent spike in volatility. In June 2019, investor complacency and related euphoria returned, as trade-war fears ebbed and central bank dovishness became the prevailing narrative. US equities have rebounded so strongly that we are once again close to all-time highs.
An additional feature of the quarter was the continued recovery in emerging market debt securities. The combination of low valuations, high yields and a supportive Fed policy has buoyed EM financial markets.
Global Bonds advanced by 3.4% as market participants started to price in the Fed's change in policy stance and synchronised Central Bank dovishness. Emerging market bonds advanced in line with the rally in US Bond yields. It remains unclear whether US Bonds are signalling a return to QE or an upcoming recession.
For the quarter, most major asset classes advanced, with relatively few laggards. Gold surged by 9.0% as the US Dollar weakened slightly on the back of worsening yield considerations and declining growth prospects.
The MSCI World Index advanced by 4.2%. MSCI Emerging Market Index appreciated by a paltry 0.7% over the quarter.
Global property, as measured by the iShares Developed Market Property Yield ETF which tracks the FTSE EPRA / NAREIT Developed Index advanced by 0.7% over the quarter. Global Property was relatively resilient during the market drawdown in late 2018 and had an exceptional first quarter rebound. The second quarter has seen a rare divergence in the returns of global listed property and bonds.
On the domestic front, global market action had a positive knock-on effect. Political and economic issues abound but this had more of an impact at the equity sector level.
Domestic fixed income securities have an exceptional second quarter, in line with global trends. The All Bond Index managed a positive return of 3.77% and inflation-linked bonds, as measured by the JSE CILI Index followed suit with a 2.7% return. Cash, as measured by the STeFI index, returned a steady 1.8%. The JSE Preference Share Index had a solid quarter with a positive return of 5.4%. SA Listed Property had another positive return of 4.5% for the quarter. The listed property sector is struggling to sustain a recovery and has yet to reach the January peak.
The All Share Index advanced by 3.9% and maintained the positive momentum of the first quarter of 2019. The advance was not uniform and in terms of broad sectors, SA Resource had the weakest positive return. Small-Caps advanced by 1.8% and Mid-Caps by 1.5% over the quarter. Small-Caps are down by 1.6% for the year, despite the mild recovery 2Q. In terms of Equity sectors, the top performers were Fixed Line Telecoms +29.7%, Gold +29.6% and Mobile Telecoms +17.6%. The worst performers were Tobacco -15.7%, Chemicals -21.3% and Household Goods -30.9%.
In Q2, SA Equities held up much better than other Emerging Market. Domestic Policymakers and leadership have demonstrated a resolve to address the structural impediments in the fiscus and critical institutions. The process is underway and will take time.
The quarter was more volatile but continued to be dominated by a positive reversal in sentiment towards risk assets in general and equities more specifically. Domestically oriented equities, most notably Small-Caps, have not participated in the recent advance and valuations have reverted to more reasonable levels. The decline in domestic equity valuations has led to less euphoric expectations and represents an opportunity for investors to participate in the recovery on a more rational basis.
Domestic Policymakers and leadership have demonstrated a resolve to address the structural impediments in the fiscus and critical institutions. The process is underway and will take time. Moody's seem willing to grant additional time for policymakers to set the country on the road to fiscal recovery.
Domestic Equity valuations remain attractive relative to long term growth prospects. The Rand is likely to remain range bound and could strengthen steadily, as US bond yields decline, and the US Fed continues the current monetary policy path. SA Inc equities are prolonged period that will suit stock-pickers and active managers.
The probability is high that equities, as an asset class, could continue to muddle through. Risk assets have recovered to previous highs but remain extremely vulnerable to either a recession or a sudden increase in risk aversion.
For that reason, we continue to advocate caution and conservatism, with adequate diversification across portfolios.
The Fund advanced by 0.29%, which lagged the average fund. Performance was mixed, in a quarter when most asset classes advanced and our fund positioning remained inherently conservative.
In the context of our defensive positioning, the fund navigated the quarter reasonably well. Equity stock selection was the biggest contributor on the domestic front. Our intentional bias towards diversification and conservatism continued as preference shares, inflationlinkers and nominal bonds generated surprisingly strong positive returns and cushioned the downside volatility in other risk assets.
The net result was below-average performance for the quarter, that does not detract from the excellent relative performance of the Fund since the middle of 2017. In particular, the Fund has generated above-average performance over all periods ranging from 6 months to 3 years.
On the domestic front, our stock selection discipline and asset allocation experience enabled us to maintain our trend of avoiding or averting the worst performing securities and sectors. Our overweight in Financials and selected Resources added value. In equities, our very low exposure to the domestic retailers added significant value.
Detractors were few but had an outsized impact on relative returns. Our overweight in Tobacco and low exposure to Naspers was the biggest detractor. In addition, the lower allocation to domestic equities detracted in terms of asset allocation.
Our selection of global equities had another solid quarter. In contrast with recent trends, our overweight allocation to Global Equities was unable to compensate for the lower domestic equity weighting, as currency tailwinds reversed and global stock selection lagged a buoyant domestic equity market. Our above-average cash position was a relative detractor over the quarter, as virtually every asset class advanced.
The fund positioning and strategy remains virtually unchanged.
We remain marginally under-weight equities and within equities, we favour global and quality. Our foreign exposure remains high, but we have reduced foreign exposure in anticipation of less currency tailwinds and in response to attractive valuations on the domestic front.
We re-configured our domestic equity exposure during the quarter as value re-emerged after an extended sell-off. We continue to increase exposure to domestically oriented stocks.
Our Fixed Income exposure is inherently conservative, lower duration and adequately diversified. Our increase in government bond exposure during the previous quarter added immediate value. We remain underweight relative to the average fund, based on fiscal considerations. We have no parastatal or SOE debt exposure.
Cash is a residual outcome of our investment process. Cash balances increased marginally over the quarter as we rebalanced the currency and sector exposure after significant advances.
In order to achieve this objective the investments to be acquired for the portfolio will cover the full spectrum of securities, and include equities, participatory interests in collective investment schemes in property, loan stock listed on exchanges, non-equity securities, preference shares, bonds, money market instruments and assets in liquid form. 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 markets may have on the value of the portfolio. The manager may from time to time invest in participatory interests in portfolios of collective investment schemes registered in the Republic of South Africa and which are consistent with the portfolio's primary objective. The equity limits will be aligned with that of the Asisa Fund Classification: SA - Multi Asset - Low Equity. The use of derivative strategies may be pursued actively and will only be limited by the statutory limitations placed on the inclusion of financial instruments in portfolios. The Manager shall be permitted to invest on behalf of the portfolio in offshore investments as legislation permits. The portfolio will be managed in accordance with regulations governing pension funds.