NAV on 2019/09/18
|NAV on 2019/09/17
|52 week high on 2019/04/23
|52 week low on 2019/01/07
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
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 - Jun 19
SA equities experienced another strong quarter, in line with global equity markets. The rebound was supported by increasing expectations of a Fed rate cut in July and a continued decline in global bond yields.
In the second quarter, the primary driver of equity returns was increasing risk appetite in response to less restrictive monetary policy and a reduction in fears of a hostile trade war.
In South Africa, the rally was led by Financials and Industrials, with returns of 5.4% and 4.0% respectively. Resources managed a meagre gain of 2.4%, which lagged the other sectors and was well behind the 17.8% return of the previous quarter.
The All Share Index advanced by 3.9% and maintained the positive momentum of the first quarter of 2019. The advance was not uniform and in terms of broad sectors, SA Resource had the weakest positive return. Small-Caps advanced by 1.8% and Mid-Caps by 1.5% over the quarter. Small-Caps are down by 1.6% for the year, despite the mild recovery 2Q. In terms of Equity sectors, the top performers were Fixed Line Telecoms +29.7%, Gold +29.6% and Mobile Telecoms +17.6%. The worst performers were Tobacco -15.7%, Chemicals -21.3% and Household Goods -30.9%.
The quarter was more volatile but continued to be dominated by a positive reversal in sentiment towards risk assets in general and equities more specifically. Domestically oriented equities, most notably Small-Caps, have not participated in the recent advance and valuations have reverted to more reasonable levels. 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. 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. Moody’s seem willing to grant additional time for policymakers to set the country on the road to fiscal recovery. The MSCI World Index advanced by 4.2% in US$ terms. MSCI Emerging Market Index appreciated by just 0.7% in US$, over the quarter. Global equity markets surged upward in a synchronised and correlated fashion after a brief correction in May. Dovish rhetoric from the US Fed, sparked a renewed ‘risk-on’ rally and a return to a regime of favouring the search for yield. The quarter exhibited increased volatility and by mid-year, investor complacency and related euphoria have returned. Developed market equities have rebounded so strongly that we are close to all-time highs. 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 continues the current monetary policy path. 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. Portfolio overview The Fund declined by 0.31% in the second quarter. Performance lagged both the All Share Index and the average fund. Fund performance has experienced a positive turnaround in the last 25 months, as a change in market leadership has benefited our active, value conscious approach. In relative terms, the Fund has achieved above-average performance over both 1 year and 2 years. Market conditions, particularly in the recent quarter, have not been ideal for our style of value but the fund has mitigated this headwind with astute stock selection, conservatism and complete avoidance of value traps. Stock and residual sector selection contributed strongly. In the first instance, the Fund's low exposure to Chemicals and Household Goods added value. Avoiding calamity has enabled the fund to add value in recent months and the second quarter of 2019 was no exception. In addition, our overweight in Mobile Telecoms and Gold contributed significantly. Detractors were few but had an outsized impact on performance. Low exposure to Naspers was a massive detractor to relative returns. In addition, higher exposure to Tobacco and Global Equities lagged the advance in SA Equities. Cash drag also provided a mild detraction. Portfolio positioning The fund positioning and strategy remains virtually unchanged. We remain relatively concentrated and meaningfully different to both the index and the average fund. The market’s continued advance and the increased disparity in valuations, presented an opportunity for fairly significant changes in our positioning over the quarter. The most significant changes include an increase in Tobacco stocks, domestically oriented holding companies and precious metals stocks. We are steadily increasing our allocation to domestic consumer and healthcare. The direct and indirect offshore exposure of the fund remains above average but the extent was tactically reduced prior to the strengthening of the rand at the end of the quarter. The recent changes represent exceptional value and are contrarian in nature as certain stocks remain 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.