NAV on 2019/11/19
|NAV on 2019/11/18
|52 week high on 2018/11/28
|52 week low on 2019/08/16
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
Sanlam Collective Investments
South African--Multi Asset--Medium Equity
Composite index: 50% FTSE/JSE All Share and 50% STeFI Index (Net of fees)
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MFS SCI Moderate Fund of funds - Jun 19
Economic Market overview 'Return alone - and especially return over short periods of time-says very little about the quality of investment decisions.' - Howard Marks from Oaktree Capital.
The volatility we experienced during the last quarter of 2018 remains fresh in most investor's minds, yet 2019 has provided committed investors some welcome reprieve from the carnage and even though global assets came under a little bit of pressure from a stronger local currency, local growth assets performed amicably.
Uncertainty around global trade policy combined with continued tensions in the Middle East contributed to some weakness across many emerging markets, putting pressure on global growth asset returns. The negotiations between the US and China around trade tariffs have ebbed and flowed from very positive to extremely negative and although the hubris of President Trump can excite many pundits and journalists, the negotiations have yielded limited, if any, success. On top of these issues, we have seen global growth repeatedly disappoint across many parts of the globe with the IMF and World Bank simultaneously reducing their growth estimates and outlook for the next 3 years.
All of these factors have continued to dampen both consumer and business confidence which spilled over into investor confidence resulting in increased volatility and apprehension around embracing risk. This culminated in a significant market sell off in the month of May 2019 which resulted in significant losses across growth assets. Yet some sanity returned to markets during June which resulted in most global investors ending the quarter almost flat.
Local investors in South Africa had a more upbeat experience and outcome as local growth assets continued to recover from the December 2018 lows. The certainty that came with the completion of our 6th democratic election during May 2019 resulted in some optimism, be it subdued, as the fall out from the previous administration remains enormous. It has come to light that the structural decay associated with State Capture was underestimated and new information continues to lay bare the extent of the problems that government need to address urgently. However we believe the resolve of the new administration under President Ramaphosa is significant and the reward for successful implementation is enormous.
As we stressed during our last communiqué, in spite of risks and uncertainties which might impact growth assets negatively over short-term horizons, we believe the long-term entrenched opportunities remain extremely attractive and integral in ensuring effective portfolio construction and future investment success.
Position going forward
Whilst remaining cognisant with market valuations and exogenous risks, we need to retain growth assets in the portfolio to ensure we achieve our longer-term real return objectives. We have also seen a significant revaluation over the last 3 months as volatility has subsided after the carnage seen in the last quarter of 2018, resulting in many growth assets recovering most if not all of the losses seen in that quarter. This resulted in the valuation of many growth assets moving closer to earnings and market fundamentals, although some disconnect remains which presents further near-term opportunities. We believe premium valuations in certain growth sectors could experience normalisation, yet the general valuation across many sectors present interesting, albeit select, opportunities, especially if the monetary environment remains accommodative.
Asset allocation and diversification therefore remain key to ensuring downside risk management while entrenching long term inflation protection and real returns. Our aim is to provide our investors with diverse exposure across various investment strategies, investment managers and assets while continuing to focus our attention on consistently applying our philosophy and process. The result is a rigorous blend of exposures that should have a high probability of achieving our long-term return objectives (a time horizon of at least 3 years, and longer for the more risk-orientated portfolios) while providing protection against short term swings and negative surprises, and reducing the overall risk our investors face.
We urge investors to remain patient and committed to their chosen investment strategy even though negative surprises are possible. We are continuously looking for ways to increase the certainty of cash flow while remaining cognisant of our longer term capital preservation objectives.
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 equity limits will be aligned with that of the Asisa Fund Classification: Multi Asset Medium Equity, which are currently between 0% and 60%. The portfolio will be managed in accordance with regulations governing pension funds. The portfolio will also be allowed to invest in listed and unlisted financial instruments (derivatives) as allowed by the Act from time to time. The Manager shall be permitted to invest on behalf of the portfolio in offshore investments as legislation permits. 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 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.