NAV on 2019/01/16
|NAV on 2019/01/15
|52 week high on 2018/09/05
|52 week low on 2019/01/04
|Total Expense Ratio on 2018/09/30
|Total Expense Ratio (performance fee) on 2018/09/30
Sanlam Collective Investments
Average SA MA Low Equity
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Megafin Growth FoF comment - Sep 18
Megafin SCI Growth Fund Update The third quarter of 2018 provided another volatile and challenging backdrop for investors. Asset class, and indeed Fund, performance ebbed and flowed providing a strong argument for why we seek to build diversified Portfolios. In this sense we are pleased with the return of the Fund over this period, which saw it provide performance in line with its peers. Despite a slight bias towards offshore assets (primarily in the equity exposure), the Fund has decent allocations to local asset classes, providing it with unique positioning and healthy diversification. We think this is of utmost importance given the volatility and dispersion present in returns in 2018.
Asset Allocation The local economic environment remains challenging as evidenced by the South African economy slipping into a technical recession after two consecutive quarters of negative GDP growth in Q1 and Q2 2018. President Ramaphosa has done his utmost to encourage investment into the local economy, however, the country remains plagued by a lack of business confidence as well as the recent VAT and petrol price increases which have placed strain on the pocket of the South African consumer. Local risk assets struggled in the third quarter, driven by a combination of disappointing South African economic data as well as general negative sentiment towards emerging markets. Both local listed property and local equities ended the quarter in negative territory, detracting from overall portfolio performance. Global equities contributed to portfolio performance during the quarter, however, the extent of the positive contribution was region dependent, with the greatest contributions coming from U.S. and Japanese equities. Offshore exposures also received a strong tailwind from a weaker rand over the quarter, despite the volatile local currency managing to reverse some of these losses during the month of September. Local equities detracted from relative performance in line with other emerging markets, while the positive contributions from global equities allowed the Portfolio to generate a positive return over the quarter. Despite the challenging outlook, opportunities exist for patient investors. We remain confident in the ability of our asset class exposure and manager selection to generate long term real returns for investors.
Fund Selection Most of the underlying funds contributed positively to performance over the quarter.
The Nedgroup Global Equity Fund was the main contributor to quarterly performance as good stock selection and a materially weaker rand meant the fund was a strong contributor to returns in the third quarter. The main detractor from performance was the Methodical Equity Prescient Fund. A volatile local equity market which continues to be spurred on by large moves in the rand either way was a negative for the Fund which is more suited for trending markets.
There were no changes to the Fund in the third quarter of 2018.
Summary We continue to apply a fundamentally-diversified approach that seeks to maximise reward for risk over the long term. Despite the market-driven setback, the Fund continues to perform within the expected risk/return and drawdown framework over the long term, with asset allocation and investment selection playing an important role for investors.
Investments to be included in the portfolio will, apart from assets in liquid form, consist solely of participatory interests in portfolios of collective investment schemes registered in the Republic of South Africa or of participatory interests in collective investment schemes or other similar schemes operated in territories with a regulatory environment which is to the satisfaction of the manager and the trustee of a sufficient standard to provide investor protection which is at least equivalent to that in South Africa. The portfolio will consist of a mix of collective investment scheme portfolios investing in equity, bond and property markets and money market instruments. The asset allocation will be actively managed by the investment manager to reflect changing economic and market conditions. The portfolio will be managed by Megafin CC. This portfolio will, at no time, duplicate any Sanlam multi asset portfolio. The portfolio will also be allowed to invest in listed and unlisted financial instruments (derivatives) as allowed by the Act from time to time. 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. The Manager shall be permitted to invest on behalf of the portfolio in offshore investments as legislation permits. The Trustee shall ensure that the investment policy set out in the preceding clauses are adhered to; provided that nothing contained in this clause shall preclude the Manager from varying the proportions of securities in terms of changing economic factors or market conditions or from retaining cash in the portfolio and/or placing cash on deposit.