NAV on 2020/05/27
|NAV on 2020/05/26
|52 week high on 2019/12/18
|52 week low on 2020/03/23
|Total Expense Ratio on 2019/12/31
|Total Expense Ratio (performance fee) on 2019/12/31
Sanlam Collective Investments
South African--Multi Asset--High Equity
South African - Multi Asset - High Equity Category Average
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Delphine joined Allan Gray as an analyst in July 2001 after completing her articles at Deloitte & Touche in January 1998. She was appointed as trainee portfolio manager in April 2003 and was promoted to the position of portfolio manager in January 2005 and takes full responsibility in managing the relative portfolios. In February 2006 Delphine accepted an invitation to join the board of Allan Gray Property Trust Management Limited as a director of Grayprop. As at end April 2006, Delphine was also appointed as a director of Allan Gray Limited.
Perpetua SCI Balanced Fund - Dec 19
Following a particularly volatile 2018, 2019 proved to be a comparatively positive year as the All Share Index (ALSI) delivered 12.0% for the year versus -8.5% last year, while the ALBI returned 10.3% for the year versus 7.7% last year. This return, however, was not evenly sourced in terms of sector contributions as SA Resources returned 28.5%, sharply outperforming SA Industrials at 8.9% and SA Financials, which only returned 0.6% for the year. 8 of the top 10 return stocks in 2019 were resource counters, with the top 5 delivering over 100% return each.
The local bond market showed improvements in the fourth quarter. December was the strongest month for the ALBI at 1.9% (October -0.4%; November 0.2%) resulting in a Rand return of 1.7% for the fourth quarter versus 0.7% for the third quarter. Global equities delivered a Rand return of -1.7% in December which constrained fourth quarter returns to 0.2% versus 9.1% in the third quarter. Global bonds fared poorly in the fourth quarter, delivering a Rand return of -1.1%.
Over the last 5 years, returns for the SA equity market have been very disappointing with the ALSI delivering 6.0% compound annual return, failing to beat cash returns at 7.2% or the ALBI at 7.7%.
The portfolio returned 2.7% for the fourth quarter of 2019 versus 2.9% for the composite benchmark over the same period.
The domestic equities of the fund underperformed the market while the global equities outperformed the benchmark by 4.1% in Rand terms. Both our local and global bond exposure also outperformed over the period, outperforming their benchmarks by 0.7% and 4.5%, respectively.
The strengthening of the Rand versus the US dollar negatively impacted the Rand reported returns of the global component of the fund. Within domestic equities for the quarter the overweight position in Woolworths (which had been a positive contributor throughout the year) and Nampak were the most significant relative detractors, followed by our underweight position in Sibanye. Positive contributors over the quarter included underweight positions in Naspers and MTN, as well as our overweight position in Omnia. Our underweight exposure in the Telecommunications sector through the year also contributed positively to relative returns.
The local fixed income allocation in the fund performed in line with the combined weighted interest-bearing composite benchmark.
The equity exposure of the fund remains high (while below the maximum) versus the fund’s history as we are finding an above average number of undervalued equities domestically and globally.
During the past 7 years specifically, the Value style has sharply underperformed the South African market as well as the Growth investment style. While “Value” as a style can experience periods of relative underperformance, it is unusual for the length of underperformance that has occurred. This has been largely driven by the contribution of the technology and internet beneficiary stocks to returns which typify growth stocks. True value-oriented managers would be and were underweight these groups of popular shares and this positioning has therefore negatively affected returns of all-encompassing value managers.
In terms of industry exposure, the domestic equity portfolio remains overweight the food producers and the healthcare sector and is underweight software & computer services and property. We believe the food producers have been impacted by a protracted negative cycle (in terms of rising input costs) and believe this will start to normalize in the period ahead. We believe this, combined with company-specific action, will positively impact their earnings. Our largest overweight positions relative to the equity benchmark include British American Tobacco, Tiger Brands and Woolworths. We believe these shares are good quality businesses trading at meaningful discounts to their fundamental value.
In terms of global equities, fears of a recession and political tension have resulted in the share prices of cyclical stocks characterized as “risk assets” now discounting extremely pessimistic expectations. On the other hand, the share prices of defensive stocks considered as “safe-haven assets” are pricing in very optimistic expectations. Therefore, the valuation divergence between growth and value shares is now at extreme levels relative to history. While an uncomfortable point for most conventional investors, we believe this bodes well for the future performance of value shares. We are increasingly focusing our research efforts to the industrial, energy and financial stocks that have suffered the most from the market’s expectations regarding the economy. We have already commenced adding selected stocks from these sectors to the global equity holdings in the portfolio.
From an interest-bearing perspective, we remain underweight duration relative to the benchmark, when looking holistically at the combined income exposure of bank NCD’s, government nominal bonds and floating rate notes. Giventhe trough in domestic inflation numbers we have seen, we are assessing the potential to opportunistically add inflationlinked bond exposure during the first half of 2020. Offshore, the global income portfolio holds cash (predominantly US dollars), shorter duration US Treasuries with an allocation to short-dated TIPS, to account for the risk of a possible higher overall inflation.
The primary objective of the Perpetua MET Balanced Fund is to offer investors a moderate long term total return. The portfolio will be managed in compliance with prudential investment guidelines for retirement funds in South Africa to the extent allowed for by the Act.
In order to achieve its objective, the investments normally to be included in the portfolio may comprise a combination of assets in liquid form, money market instruments, interest bearing instruments, bonds, debentures, corporate debt, equity securities, property securities, preference shares, convertible equities, derivatives and non-equity securities.
The manager may also invest in participatory interests or any other form of participation in portfolios of collective investment schemes or other similar collective investment schemes as the Act may allow from time to time, and which are consistent with the portfolio's investment policy. Where the aforementioned schemes are operated in territories other than South Africa, participatory interests or any other form of participation in portfolios of these schemes will be included in the portfolio only where the regulatory environment is, to the satisfaction of the manager and the trustee, of sufficient standard to provide investor protection at least equivalent to that in South Africa.
The portfolio may from time to time invest in listed and unlisted 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. The manager may also include forward currency, interest rate and exchange rate swap transactions for efficient portfolio management purposes.