NAV on 2019/09/19
|NAV on 2019/09/18
|52 week high on 2019/04/23
|52 week low on 2019/01/02
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
Sanlam Collective Investments
South African--Multi Asset--High Equity
Median of high equity category
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Royce completed his articles with KPMG and then spent a year in England with a leading financial institution. He joined RMB Asset Management in 1994 as a research analyst and portfolio manager, responsible for the Financial team and asset allocation within this category. Royce is the joint portfolio manager for the RMB Financial Services Fund and the RMB Strategic Opportunities Fund.
Richard joined RMB Asset Management in 1994 after a brief spell at the Anglo American Corporation. Richard is currently the Chief Strategist at RMB Asset Management and takes responsibility for commodities research and portfolio management. Richard manages the RMB Conservative Fund of Funds, the RMB Income Plus Fund of Funds, the RMB Moderate Fund of Funds and jointly manages the RMB Strategic Opportunities Fund.
Obsidian SCI Balanced comment - Mar 17
Pro emerging market assets We entered 2017 with the view that EM currencies would continue to show strength on the back of improving global trade. These stronger currencies should reduce inflation and provide support for their interest rate sensitive assets in particular. The rand and the SA consumer price index (CPI) followed this trend through 2016, running well ahead of its emerging market peer group. As a result, we diversified our domestic interest rate sensitive (IRS) bet into other EM territories whose currencies (and IRS assets) had lagged the rand. That said, we believed the rand would continue to thrive on the prevailing global cyclical rally, cognisant of the fact that it was now fair value against most hard currencies. As a consequence, we still held a significant portion of SA interest rate sensitive equity and long-dated SA Government bonds. Because of our belief in resurgent global growth, we also remained positive about our domestic cyclical equity and therefore maintained our exposure to select counters.
Then came the reshuffle The continuation of our pro-domestic stance going into 2017 speaks to our thinking around the possibility of an irreversible capture of the Treasury - either Zuma didn’t have the power to remove Gordhan, or if he tried, he himself would be extricated. When it became clear that neither of these outcomes would eventuate, we tempered our domestic IRS bet, allocating the proceeds to offshore assets (in addition to the EM exposure we had already established). This was a very difficult decision to make as we have previously discounted the impact of political events on the fundamental relationships we believe to be the drivers of asset class returns. However, Zuma’s latest triumph (and his country’s largest tragedy) likely signals an end to our previously disciplined fiscal behavior, and further denudes our state institutions of their thinning corruption armour. We believe our decision to reduce our SA Inc. exposure under this scenario was prudent.
Our burning question The most important question to answer now is does the rand dislocate from its fundamental drivers (namely commodity prices) because of the pending onslaught on the fiscus, or does it re-establish the pre-shuffle trajectory thanks to an overwhelming flow of assets into emerging market economies? The market reaction to Gordhan’s removal was subdued compared to Nene-gate. We believe the prevailing emerging market favour has cushioned the blow to some extent. But the ability of the rand to continue benefitting from the general EM rally comes into question when the case of Turkey is examined; the lira has decoupled from the commodity price index since the attempted coup.
Our SA Government Bond position We are still willing to maintain our exposure to SA Government Bonds (albeit smaller after the reshuffle). In a previous investment piece we put forward the notion that sovereign downgrades to junk rarely impact bond returns over the medium to long term. Rather, it is inflation that drives their performance. We concede that there is now an upside risk to our inflation numbers, especially if the rand unhinges from its fundamental driver, namely commodity prices. But given the capital flows that emerging markets are currently enjoying, we don’t yet believe that SA CPI is going to blow out. In addition, our bond yields are relatively attractive to other emerging market bonds given the respective levels of inflation.
Conclusion We believe the macro theme that supports EM currencies and their interest rate sensitive assets is still in play. However, the uncertainty of how the rand will behave post a political event imbued with lasting consequences warranted a reduction in our local interest rate sensitive bet. Due to the rand hedge nature of our domestic commodity players, we have largely maintained our exposure to our select cyclical counters.
The portfolio will invest in a combination of equities, bonds, money market instruments, listed property as well as international equities and fixed interest investments. The portfolio will be broadly diversified across asset classes. Active asset allocation and securities selection strategies appropriate to the needs of moderate investors will be followed. This portfolio will be managed in accordance with regulations governing pension funds. The exposure to equities will not exceed 75%. The investment manager will also be allowed to invest in listed and unlisted financial instruments (derivatives) as allowed by the Act from time to time in order to achieve its investment objective. This portfolio will be managed by Obsidian Capital (Pty) Ltd and will at no time replicate any other Sanlam balanced portfolio.
Apart from the above, the portfolio may also invest in participatory interests of portfolios of collective investment schemes registered in the Republic of South Africa or of participatory interest 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 for investor protection which is at least equivalent to that in South Africa.
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.
The Manager shall be permitted to invest on behalf of the Obsidian Sanlam Collective Investments Balanced Fund 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.