NAV on 2019/09/18
|NAV on 2019/09/17
|52 week high on 2018/09/26
|52 week low on 2018/12/10
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
Sanlam Collective Investments
FTSE/JSE Capped Shareholder Weighted Index (Capped SWIX)
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Palvi joined Dibanisa Fund Managers in December 2008. She is responsible for performing the daily fund management of domestic and international investment portfolios.
Prior to joining Dibanisa Fund Managers as a portfolio implementation specialist, Palvi worked at FNB Private Clients as an assistant structured lender for two and a half years, where she was responsible for setting up credit portfolios for high net worth clients.
Maru SCI Capped Swix Enhanced Fund - Sep 18
Global economic growth is likely to slow into 2019
The global economy continued to experience non-synchronised growth across the three major economic zones. In the United States, growth remains strong as the Trump tax cuts fuelled strong internal demand. Although US interest rates are rising they are still low relative to history. The labour market in the US is very tight and we are seeing signs of building wage inflation. Output gaps continue to narrow and risk of further rate hikes seems high.
The European economies are enjoying steady growth however, growing trade disputes could dampen prospects for the export dependent economies. Chinese economic growth is expected to slow from a relatively high base largely driven by slowing infrastructure spending. A further aggravating factor is the continued rise in the price of oil. If prices continue to rise from current levels it could trigger further pressure in emerging markets and weigh on global growth.
South Africa’s economic prospects remain weak
The South African economy remains weak, largely driven by poor demand and selfinflicted structural problems. Disappointingly, the formal employment sector continues to shed jobs adding further downward pressure on consumption spending. The unwelcome rising cost of fuel driven by both an increase in the dollar oil price and the weak currency will also impact negatively on consumption.
The stimulus package recently announced by President Ramaphosa, although well meaning, is unlikely to have much impact on overall growth as it will be funded from within the existing budget and is relatively small compared to the size of the economy. Having contracted in the first two quarters of the year, it is likely that even the subdued forecasts of growth for the full year will prove difficult to achieve.
Negative sentiment towards Emerging Markets has impacted on local equities
The disenchantment with emerging markets that became evident in the second quarter continued into the third quarter as the MSCI World Index outperformed the MSCI Emerging Market Index by about 6% over the quarter. Unfortunately, the South African equity market was one of the worst affected by the loss of confidence with only Greece and Turkey showing poorer year-to-date numbers in US $’s.
Local equities contracted in the 3... quarter with the most significant decline coming late in the quarter. The Capped Swix Index contracted by 1.7% over the quarter and by 4.2% in September alone. The resource sector continued to significantly outperform the financial and industrial sectors achieving a positive return for the quarter. However, this return was helped by a very strong recovery in the platinum sector off a low base with Impala and Amplats both enjoying a strong rebound. Year-to-date the 21% return from resources is well ahead of the financial and industrial sector largely driven by currency weakness.
Property continues to contract but bonds were steady
The property sector continued to contract, falling by 1% over the quarter. The falls were not limited to the Resilient group of companies as Growthpoint, the industry leader, also had a poor quarter contracting by about 9%.
The Rand had a poor quarter
The rand had a poor quarter declining from 13.74 to 14.14 R/US$, a decline of roughly 3%, and faring similarly against the other currencies. At its worst the rand hit 15.4 R/$ but late in the quarter the currency did stage a welcome recovery. However, sentiment remains very fragile and further falls cannot be discounted. Fortunately, the rand did not suffer the losses experienced in the Turkish Lira or the Argentinian Peso.
Commodity prices remain largely flat to down except for oil
Precious metals had a largely flat quarter with only Rhodium having a strong advance of about 14% over the quarter. Since June 2016 Rhodium has risen from 650 $/oz to 2589 $/ oz, an advance of 300%. For the local producers the Platinum Group Metals basket price has risen significantly as a result of the higher Rhodium price and currency weakness. The platinum sector should produce significantly better results in the second half of the year. Base metals have on average declined over 2018 in US dollars and no major advance is expected until China resumes it historically high spending on infrastructure.
Against the trend of gold and base metals the oil price continues to strengthen helped by the recent re-introduction of sanctions against Iran. As the world supply/demand balance is currently tight further rises towards $100/bbl cannot be discounted.
The key risk to the SA economy is rising inflation
The key risk to the South African economy is a currency induced increase in the inflation rate requiring a tightening in monetary policy. The latest inflation numbers to August have yet to reflect the impact of the weaker currency and the rising fuel price, and at 4.9% remains well within the inflation targeting threshold of 6%. However, the trend is now up and higher numbers must be expected in the months ahead. If the inflation number settles above 6% the Reserve Bank may be forced to raise rates. Given the fragility of the economy this would be most unwelcome and it remains uncertain how the consumer would respond.
Q3 was an exciting period for our fund, as many of our active positions rewarded us with positive outperformance, resulting in a higher than normal benchmark outperformance.
This means that the fund has outperformed its benchmark over one year with nearly a quarter of a percent, and underperformed by 0.04% over two years - all after all costs.
The primary objective of the MARU MET SWIX Enhanced Fund is to maximise capital growth in the longer term in pursuit of outperforming the FTSE/JSE Shareholder Weighted Index (SWIX) over a rolling three year period. In reaching the investment objective the manager remains cognisant of the construction and weightings of the instruments in the FTSE/ JSE Shareholder Weighted Index (SWIX) and then enhances the returns generated from the SWIX construction by taking active positions in the large capitalisation securities. The large capitalisation securities consists of the Top 60 - 65 shares in the SWIX, based on market capitalisation and liquidity. The return of the SWIX benchmark is therefore enhanced by over and under weighting the large capitalisation shares, within strict weighting limits (capped at a maximum over or under weight of 2% per security), whilst remaining sector neutral. The remaining positions in the SWIX will be weighted relative to the index with no active position (no over or under weight). With this process we are able to generate alpha whilst always remaining sector neutral in the SWIX and benchmark cognisant. The portfolio will invest a minimum of 90% of market value of the portfolio in equities at all times.
The portfolio may from time to time invest in listed and unlisted financial instruments, in accordance with the provisions of the Act, and the Regulations thereto, as amended from time to time, in order to achieve the portfolio's investment objective. The manager may also include forward currency, interest rate and exchange rate swap transactions for efficient portfolio management purposes.
The Manager may also invest in participatory interests or any other form of participation in portfolios of collective investment schemes or other similar collective investment schemes, as the Act may allow from time to time, and which are consistent with the portfolio's investment policy. Where the aforementioned schemes are operated in territories other than South Africa, participatory interests or any other form of participation in portfolios of these schemes will be included in the portfolio only where the regulatory environment is, to the satisfaction of the Manager and the Trustee, of sufficient standard to provide investor protection at least equivalent to that in South Africa.
The Manager will be permitted to invest on behalf of the MARU MET SWIX Enhanced Fund in offshore investments as legislation permits. The Trustee shall ensure that the investment policy, as set out above, is adhered to, provided that nothing contained in the investment policy shall preclude the Manager from varying the proportions of the aforementioned securities and assets in liquid form, or the assets themselves, should changing economic factors or market conditions so demand. For the purpose of this portfolio, the Manager shall reserve the right to close the portfolio to new investors on a date determined by the Manager. This will be done in order to be able to manage the portfolio in accordance with its mandate. The Manager may, once a portfolio has been closed, open that portfolio again to new investors on a date determined by the Manager.