NAV on 2019/01/18
|NAV on 2019/01/17
|52 week high on 2018/12/31
|52 week low on 2018/02/01
|Total Expense Ratio on 2018/09/30
|Total Expense Ratio (performance fee) on 2018/09/30
Sanlam Collective Investments
South African--Multi Asset--Income
Stefi + 1% per annum
No email address listed.
No website listed.
Steve has a B.Sc. (Engineering), B.Com (Hons.) and an MBA degree, all from UCT.
He began his career in 1988 as small cap portfolio manager at Old Mutual. He moved to Investec Asset Management as head of equity portfolio management in 1991 and in 1992 moved to Norwich Investments as their chief investment officer.
In 1995 he became MD of Brait Asset Management (then Capital Alliance Asset Management). In 1997 he became the CIO of Fleming Martin Asset Management, and he moved over to Mercury Specialised Fund Managers in the same role in 1999.
He joined SIM in November 2001 and is currently head of portfolio management. He is also head of alternative investments and collective investment portfolios.
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.
Counterpoint SCI Enhanced Income Fund - Sep 18
In Q3 2018, the key feature was the fading of the so-called ‘Ramaphoria’ that reigned in the beginning of the year, as the release of the Q2 GDP figures showed South Africa to have entered a technical recession. The economy contracted by 0.7% on a seasonally adjusted q/q basis, missing market consensus of an increase of 0.6%. For fixed interest markets, the concern is rising for the credit quality of the South African government, and what impact this might have on the budget deficit which is already under strain. In addition, the third quarter was one of shocks to a few emerging market countries, whose currencies and bonds sold off. A lot of this has to do with the further escalation of trade war tensions between the United States and China, and the potential fallout from global trade, as well as with a rising oil price, which at above 80 USD on Brent at quarter end is putting a growth constraint and eventually could put an inflationary strain on oil-importing countries.
Despite this the US economy has continued to grow at a record pace, with labour markets virtually at full employment levels. In view of this, the US Fed increased the Fed funds rate by 0.25% at its September FOMC meeting to 2.25%, with at least another three 25 b.p. rate hikes expected over the next twelve months. With liquidity slowly being drained from the global financial system, US bond yields have started to rise, particularly on the short end of the yield curve, but also on the longer end, with the US 10y breaching 3% again in mid-September, where it continues to trade comfortably.
In the South African market, the ZAR sold off in tandem with its emerging market peers, losing 14% over the first three quarters of 2018 against the US dollar. The bellwether R186 government bond, which had been trading at below 8% in March, breached 9% aggressively in September and continues to trade above this level. Despite inflation being benign and well within the SARB’s 3-6% range, and the only meaningful pressures on inflation being from administrative sources, the SARB’s MPC committee proved hawkish in its September meeting, voting 4 against 3 to keep rates from rising. The market is as a result on the lookout for rate hikes from the SARB, which, if they materialise, will not be welcomed given the weak economy, but they will have to stay the course. What is surprising is that local credit spreads continue to tighten in this weakening economy. We ascribe it to money that would normally have flowed into the heavily-indebted parastatals being diverted into corporate credit, as well as to a weak issuance schedule. This all lead to cash being the best non-equity fixed asset class performer over the third quarter (1.74%), beating bonds (0.78%), inflation-linked bonds (0.46%) and listed property (-1.01%).
The fund managed the continued volatility of the bond markets to its mandate, delivering 2.30% at low risk after costs for the third quarter of 2018. The figure translates into a return of 56b.p above the STeFI Index after costs. This was achieved thanks to not being heavily exposed to the long end of the bond market. We are pleased that the fund is placed in the first quartile of its peers over all periods up to three years, despite this not being the objective of the fund.
The portfolio has started to increase its exposure to the long end of the South African yield curve, as yields above 9% on the R186 can be seen as value. The exposure is not large, and remains a trading rather than a buy-and-hold strategy at present, given the increasing risks to the fiscus and the deteriorating prospects for emerging markets in general. Figures released thus far that will impact third quarter SA GDP growth have not made for good reading, and we judge the South African GDP growth figure for 2018 to print closer to 0.5% than 1%, which calls for caution. We also remain on the outlook for cost-push inflation, which we expect to materialise. We will keep on looking for opportunities in the floating rate space as these present themselves, and will continue to participate in auctions of new issues, bidding at levels that we deem fair for the credit.
Investments to be included in the portfolio will, apart from assets in liquid form, consist of non-equity securities, fixed interest instruments (including, but not limited to, bonds, cash deposits and money market instruments), preference shares of an income nature and listed property securities as well as any other income enhancing securities which are considered consistent with the portfolio's primary objective and that the Act or Registrar may allow from time to time. In order to achieve the portfolio objective, the portfolio's asset allocation and instrument selection will be actively managed and will continually reflect the portfolio Manager's view of the relative attractiveness of the property shares, property related securities, loan stock listed on exchanges, non-equity securities, bonds, money market instruments and preference share markets. Apart from achieving the primary objective of generating high income, the portfolio will actively invest in bonds and/or property securities in order to achieve the secondary objective of long term capital growth. The portfolio's property exposure will be aligned with that of the Asisa Multi Asset Income portfolios category. The portfolio may also invest in listed and unlisted financial instruments in accordance with the Act as well as in offshore investments as permitted by legislation. The Manager may also include participatory interests and other forms of participation of local and global 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.