NAV on 2019/03/22
|NAV on 2019/03/21
|52 week high on 2018/09/04
|52 week low on 2019/01/07
|Total Expense Ratio on 2018/12/31
|Total Expense Ratio (performance fee) on 2018/12/31
Sanlam Collective Investments
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Sam has been appointed head of the Unconstrained Strategies team at Momentum Asset Management and brings 16 years' of domestic and global investment experience to the firm. Sam was at Investec Asset Management until September 2011, where he held the positions of director, head of South African equities and portfolio manager in the Global Contrarian team. He started his career in the investment management industry at Allan Gray and moved to Abvest (now ABSA Asset Management), where he fulfilled the roles of portfolio manager, chief investment officer and, ultimately, chief executive officer, before leaving to join Investec Asset Management in early 2006. He headed a team of investment professionals responsible for well over R100 billion in equities across the full spectrum of portfolios, from pure equity to multiasset mandates. He was the lead portfolio manager and key decision maker for close on R40 billion in client assets, including the Investec Global Franchise Fund and Investec Cautious Managed Fund. He also managed the Discovery Equity Fund from its inception in November 2007.
Counterpoint SCI Value Fund - Dec18
SA equities experienced a difficult fourth quarter on the back of increased downside volatility, declining global equity markets and increased risk aversion.
In the fourth quarter, the primary driver of equity returns was the heightened uncertainty regarding the US Fed policy, global growth and equity market contagion.
In South Africa, market leadership remained narrow, led by Resources stocks and selected sectors within the Financial & Industrial complex.
The All Share Index declined by 4.9% over the quarter to exacerbate the negative impact of the previous quarter's losses. All broad sectors declined. SA Industrials were the hardest hit with a decline of 6.5%. Small-Caps fell by 7.3% while Mid-Caps bucked the trend with a positive 2.7% over the quarter.
In terms of Equity sectors, the top performers were Gold Mining +38.1%, Fixed Line Telecoms +25.0% and Platinum +18.4%. The worst performers were Tobacco -27.4%, Pharma -19.3%, and General Financials -9.4%.
The quarter was dominated by a reversal in sentiment towards risk assets in general and equities more specifically. At the end of November, domestic equity valuations had reverted to more reasonable levels and the mild recovery in December augurs well for 2019.
Domestic Policymakers and leadership have demonstrated a resolve to address the structural impediments in the fiscus and critical institutions. The process is underway and will take time. The decline in domestic equity valuations has led to less euphoric expectations and represents an opportunity for investors to participate in the recovery on a more rational basis.
In contrast, Global Equity contagion remains a relevant risk. The CBOE Volatility Index (VIX) spiked in December after a period of relatively stability since February. The abrupt sell-off in US Equities in December spooked market participants and in addition, the trend in EM equities remains negative. China (Shanghai) remains firmly in a bear trend and equity markets across the EM are showing signs of fatigue.
Domestic Equity valuations remain attractive relative to long term growth prospects. The Rand is likely to remain range bound and could strengthen steadily, as US bond yields decline and the US Fed pauses interest rate hikes. SA Inc equities are once again offering pockets of value. We continue to believe that we are entering a prolonged period that will suit stock-pickers and active managers.
The probability is high that domestic equities, as an asset class, will muddle through provided that the risk of global contagion remains benign.
For that reason, we remain cautiously optimistic and confident in our stock selection approach and ability.
The Fund declined by 6.19% in the fourth quarter. Performance lagged both the All Share Index and the average fund. Fund performance has experienced a positive turnaround in the last 19 months, as a change in market leadership has benefited our active, value conscious approach. In relative terms, calendar year 2018 was a very good year for the Fund.
The Fund experienced a challenging quarter, while attempting to take advantage of the heightened volatility in both equity and currency markets. Market leadership was narrow and the Index return was heavily influenced by specific sectors.
Contributors were few, but include the Fund's low exposure to Healthcare, General Financials and industrial stocks dogged by controversy or declining earnings. Avoiding calamity has enabled the fund to add value in recent months and the fourth quarter was no exception. In addition, the low exposure to Naspers was a contributor to relative returns.
Detractors were few but had a very significant impact on performance. They included relatively concentrated positions in Tobacco, Mobile Telecoms and Healthcare. The Fund's high exposure to Global Equities (via the Counterpoint suite of Global Funds) was a significant detractor over the fourth quarter.
The fund positioning and strategy remains virtually unchanged. We remain relatively concentrated and meaningfully different to both the index and the average fund.
Market volatility and the increased disparity in the prices of the underlying stocks, presented an opportunity for marginal changes in our positioning.
The most significant changes include an increase in Tobacco, domestically oriented holding companies and banks. We are steadily increasing our allocation to domestic consumer, mobile telecoms and healthcare. The direct and indirect off-shore exposure remains high but the extent of our positioning has been reduced.
Our recent changes represent exceptional value and are contrarian in nature because certain stocks are currently out of favour.
Cash weighting remains above average. As always, we remain vigilant and ready to deploy cash as opportunities unfold.
The portfolio will be a specialist equity portfolio with a 'value' bias and will consist of financially sound equity securities listed on exchanges and assets in liquid form. The portfolio may invest in listed and unlisted financial instruments that will only be limited by the statutory limitations placed on the inclusion of financial instruments in portfolios. At all times at least 80% of the portfolio's investments will be in listed equity securities. The manager may from time to time invest in participatory interests in portfolios of collective investment schemes registered in the Republic of South Africa and which are consistent with the portfolio's primary objective.