NAV on 2020/02/14
|NAV on 2020/02/13
|52 week high on 2019/04/23
|52 week low on 2019/08/27
|Total Expense Ratio on 2019/09/30
|Total Expense Ratio (performance fee) on 2019/09/30
Sanlam Collective Investments
South African--Equity--Large Cap
95% FTSE/JSE Capped SWIX 40 Index and 5% STeFI calculated over a rolling 1 year period
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Brandon has 17 years investment experience. He started his finance career at NBS Bank where he established and developed the market research and planning function. Brandon then moved to BoE Bank Treasury, where he initially focused on forex exchange trading and interest rate and currency arbitrage. Thereafter, he managed the market risk of BoE Treasury, BoE Stock Brokers and BoE Hedge Funds while completing his CFA. He was Global Treasurer of Seaboard Overseas Limited, a NYSE-listed multi-national commodity-trading company before joining Metropolitan Asset Managers. At Metropolitan, he headed up the Hybrid & Structured Investments unit which specialised in Liability Driven Investments, sovereign, corporate and inflation-linked bond structuring, interest rate and equity-derivative structuring. Brandon was the chairman of the Alternative Strategies Investment Committee and managed an enhanced income fund focusing on alternative asset application and multi-strategy fund management. In early 2012, Brandon, Deon van Zyl and a group of investors founded Saffron Wealth. Brandon is the lead manager on the Saffron Opportunity Income Fund which won the 2014 Raging Bull Award for the Best South African multi-asset income fund on a risk-adjusted basis.
Saffron SCI Large Cap Fund - Sep 19
The Saffron SCI Large Cap Fund returned -8.68% for the quarter, with the benchmark (composite 95% Capped SWIX 40TR + 5% STeFI Call Index) returning- 6.19%, resulting in an underperformance over benchmark of 2.49% for the period.
The third quarter of 2019 was characterised by challenging and uncertain financial asset performance. Sovereign developed market Fixed Income and domestic Gold and Platinum miners performed well due in part to their perceived safe-haven attributes. Most other asset class performance was lacklustre over the period.
Developed Market central banks for the most part continued their cutting cycles with the Federal Reserve (-0.25%), European Central Bank (-0.10%) and Reserve Bank of Australia (-0.25%) leading the charge in the face of further deteriorations in global economic indicators. The third quarter, much like the past two years, was heavily impacted by global News events, such as continued trade negotiations between the US and China, political turmoil in Hong Kong and the bombing of Saudi oil fields.
Over this period, the US S&P500 Index returned 1.69%, the Shanghai Composite returned -1.35% and the Euro Stoxx 600 returned a modest 2.69%. Domestically equities suffered their worst quarter since 2011, with the JSE All Share returning - 4.57% and the more domestically focussed Capped SWIX 40TR returning -6.40%.
On the fixed income side, the US10 year bond strengthened with yields falling by 34 basis points to 1.67% over the period while the 10-year Bund also strengthened by 24 basis points to -0.57%. The spread between the US10 year and Bund 10y remains above 2%, indicating a continued belief in fundamentally different economic outlooks for the two regions. Domestically, South Africa’s 7y R186 bond weakened, ending the quarter higher by 23 basis points but providing a total return of 0.85% over the period. This result for domestic fixed income was scarcely unexpected given the continued deterioration in the South African fiscus however is best explained by the impact of lower global rates brought about by developed market central bank dovishness.
In Commodity markets, Gold and PGM’s delivered solid performance with Gold up 4.33% to multi-year highs while spot Platinum, Palladium and Rhodium returned 5.97%, 9.06% and an enormous 58.21% respectively. Rhodium, the most rare of the Platinum Group Metals and whose primary use (80% of total production) is as a catalytic converter in automobiles. Conversely, growth commodities performed poorly with Iron Ore, Copper and the General CRB Metals Index down 10.04%, 5.22% and 7.24% respectively. Brent crude ended down 8.67% for the quarter despite the attack on the Saudi oil facility.
Domestically, the Rand weakened by 7.70% against the US Dollar (while concurrently weakening against other DM currencies), providing some support to rand hedges. Other EM currencies were also broadly weaker for the quarter with the Indian Rupee and Brazilian Real weakening by 2.67% and 7.96% against the US Dollar. The Turkish Lira bucked the trend however, strengthening by 2.43% against the greenback.
In the global credit space, the Markit iBoxx USD Liquid High Yield Index gained 0.83% over the period. The VIX Index, which measures risk sentiment, traded slightly higher at the end of the quarter at 16.24 from 14.06.
The J.P. Morgan Emerging Market Bond Spread traded slightly higher at 863.81 at quarter end (up 0.90%). The JPM EMBI spread traded at 399.59 (up 2.90 bps). South Africa’s 5-year Credit Default Swap spreads widened by 30bps to 193.43 bps, while Emerging Market peers’ spreads tightened. Russia’s spread traded at 85.94 (- 24 bps), followed by Turkey at 357.98 (-13 bps) and Brazil at 136.54 (-11 bps).
South African equity performance was broadly similar between the main indices. The FTSE/JSE All Share returned -4.57% while the fund’s 95% benchmark, the Capped SWIX40, returned -6.40%. The primary reason for this small difference in performance being the depreciation in the Rand over the period, assisting the dual listed stocks.
In a difficult quarter, the fund took profit and closed out on three positions which were all biased towards rand strength while maintaining its other positions that are responsive to a variety of global macro factors. Current sector exposures include Energy, Industrials, Domestic Property, Logistics, Domestic consumers and Banking.
We expect a moderate reprieve in risk assets due to a less-negative outlook for the global economy. The market will continue to pay close attention to US-China trade talks and further central bank action in the light of some further deterioration in specific US and Global economic indicators.
The portfolio's investment universe consists, apart from assets in liquid form, of equity securities listed on the Johannesburg Stock Exchange. The portfolio may also invest in participatory interests and other forms of participation in portfolios of collective investment schemes, registered in South Africa. The portfolio will invest in up to 50 equity securities and such equity securities will not include companies outside of the top 60 companies by market capitalization on the FTSE/JSE Securities Exchange. The portfolio's equity exposure will always exceed 80% of the portfolio's net asset value. The portfolio may from time to time invest in 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.