NAV on 2019/03/19
|NAV on 2019/03/18
|52 week high on 2018/09/05
|52 week low on 2018/11/27
|Total Expense Ratio on 2018/12/31
|Total Expense Ratio (performance fee) on 2018/12/31
Old Mutual Unit Trust Managers (RF) (Pty) Ltd.
MSCI Emerging Market NR Index
Feroz is the joint boutique head of Global Emerging Markets and is responsible for managing and building the investment boutique, one of 10 Old Mutual Investment Group boutiques. Prior to setting up Global Emerging Markets, he was a portfolio manager and analyst in the ELECTUS boutique, after joining in February 2012.
He became portfolio manager of the Old Mutual High Yield Opportunity Fund in 2007 and assisted in implementing a philosophy and process for the Old Mutual High Yield Opportunity Fund and Old Mutual Value Fund. While completing his studies, Feroz joined Old Mutual Unit Trusts in 1998. In 2004, he moved to Old Mutual Investment Group as a trainee analyst. With a passion for investments and a flair for numbers, he excelled in analysing both private and listed equities and became an equity analyst responsible for the building and construction, electronics and diversified transport companies. Feroz has 11 years of work experience in the asset management industry.
Siboniso is the joint boutique head of Global Emerging Markets and is responsible for managing and building the investment boutique, one of 10 Old Mutual Investment Group boutiques. Prior to setting up Global Emerging Markets, he was a portfolio manager and analyst in the ELECTUS boutique, after joining in February 2007. In 2011, he was appointed to head up the financials and property research team and assumed responsibility for bank and other financial analyses excluding insurance.
Prior to joining Old Mutual Investment Group, he was a TOPP trainee accountant at Old Mutual for three years. Two of those years were spent in various departments of Old Mutual Investment Group (including Investment Research and Analysis) Siboniso has 10 years of work experience in the asset management industry.
OM Global Emerging Markets comment - Sept 18
Market overview - In US dollars, the MSCI Emerging Markets (EM) Index ended the quarter down 2%, underperforming developed markets by 7% for the quarter. - The best performing emerging markets were Qatar (+13%), Thailand (13%) and Poland (9%). - The worst performing emerging markets were Turkey (-22%), Greece (-18%) and China (-8%).
Performance review As the US/Chinese trade war standoff intensifies, emerging markets continue to be caught in the crossfire with no clear indication of when the volatility will end. Despite this pressure, emerging markets are currently offering significant value and the current environment has created increased investment opportunities. The relentless emerging markets sell-off somewhat stabilised in September, even though the US has followed through on its tariffs against China. However, investors are still nervous, as evidenced by emerging market funds reporting record outflows in the last few months. The global trade war was a black swan event for emerging markets. We knew that the US Federal Reserve would hike interest rates, that quantitative easing would unwind and that China is a managed economy that tends to pull back when it is overheating and stimulate when it underperforms - so none of these issues were a surprise. However, the extent of the global trade war situation was the one that no one really saw coming. While we may be underperforming over the short term, we would encourage clients to judge us according to our longer-term delivery of client returns, as this is in line with how we manage the fund on behalf of clients. The fund’s underperformance is generally attributed to us selling our previous winners and moving those gains into future winners. Often this transition can lead to short-term pain in pursuit of longer-term rewards and prove testing for our investors. What is reassuring is that, during this period, we have not changed a single thing in our investment research and fund management process. We are still buying high quality businesses with excellent corporate governance where there is a decent margin of safety embedded in the valuation.
We continue to find more and more attractive opportunities in highly undervalued businesses, across the emerging markets universe. Some of the notable trades during the quarter include buying some highly attractive Chinese shares such as Tencent, Alibaba, Great Wall Motors and China Medical Systems. At the same time we reduced our holdings in Gentera, Walmex, Dali Foods, Naspers and Sun Pharma, in the wake of strong performance. We’ve also sold out from Baidu, Alsea, ICICI, MultiPlus SA, Netcare, Naver, Hengan and Sasol - given their strong runs and high oil prices. We’ve also sold all Turkish companies with offshore debt exposure to fund more attractive opportunities. We added three new shares to our portfolio, Delta Electronics - a global leader in power and thermal management systems with over 40 years of expertise in power technologies; Bank Rakyat - an Indonesian bank with high returns and a strong distribution advantage in a structurally under-penetrated market; and Fu Shou Yuan - the largest death care services provider in China. Ultimately, over the long term if you buy great businesses with sustainable competitive advantages and business models at attractive valuations, clients should see an appreciation in the value of their investments. Looking forward
What we are currently seeing is not only emerging markets selling off, but also their currencies. On any measure, emerging markets are actually 30% cheaper than developed markets on an aggregate basis, and that provides a buffer. On a longer-term basis, the best determinant of potential returns is the price you pay today for the future opportunity offered by an asset. Emerging markets currencies have become cheaper, and looking at any measure, the US dollar and equity markets are expensive. The S&P 500 Index currently trades on a 32x Shiller price earnings (which adjusts for economic cycles), with emerging markets at 11x. Not only is the US expensive on this basis, but companies are earning record profit margins, so earnings levels are also relatively high. This is being backed by record stimulus measures and cheaper finance, and on a five-year basis, we expect this to unwind. Emerging markets, on the other hand, are on a relatively cheap price earnings multiple or arguably depressed earnings. Post the global financial crisis, emerging economies have had to adjust their businesses to lower global growth and overall utilisation, which has placed pressure on company earnings. Therefore, the biggest current investment opportunities are in emerging markets We remain optimistic about the long-term prospects for emerging market equities. The reasons for which include the clear structural advantages emerging markets have over developed markets, such as:
• Large, young and growing populations • Fastest growing economies in the world • Fastest growing middle-class in the world
We firmly believe that the price you pay for an asset today will determine your future returns. Emerging markets have sold off more than 20% since January this year and have become cheap relative to developed markets. Short-term volatility could persist, but investors with a longer-term horizon should benefit handsomely. We continue to follow our investment research and fund management process and buy high quality businesses with excellent corporate governance where there is a decent margin of safety embedded in the valuation.
OLD MUTUAL GLOBAL EMERGING MARKET FUND will be a general equity portfolio. The main objective of this portfolio will be to deliver long-term capital growth by investing in a diversified portfolio of equity securities and non-equity securities to give exposure to companies operating in emerging market countries. Any income earned will be of an incidental nature.
In order to achieve these objectives, this portfolio will invest primarily in equity securities of companies listed on emerging market exchanges. It may also invest in equity securities of companies listed in developed markets that derive more than half of their assets, revenue or profit from emerging market countries. The portfolio may invest in non-equity investments in any emerging market jurisdiction.
The portfolio may also invest in American Depository Receipts, Global Depository Receipts and other equity securities such as preference shares. The portfolio may invest in listed financial instruments and unlisted forward currency, as well as interest rate or exchange rate swap transactions. These transactions will be included for efficient portfolio management purposes only.
In addition, this portfolio may also hold participatory interests of Collective Investment Schemes in portfolios of Equity, Non-Equity and Money Market securities registered in the Republic of South Africa or of participatory interests or any other form of participation in portfolios of Collective Investment Schemes or other similar schemes operated in territories with a regulatory environment which is, to the satisfaction of the Manager and Trustee, of a sufficient standard to provide investor protection at least equivalent to that in South Africa and which is in line with this investment policy.