NAV on 2019/07/23
|NAV on 2019/07/22
|52 week high on 2018/09/05
|52 week low on 2018/12/31
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
Sanlam Collective Investments
MSCI World Equities index - (rand based)
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Douw joined Old Mutual Investments in 1991 as an equity analyst, where he spent the next fifteen years. During this time his responsibilities included that of head of industrial sector research and the management of a variety of equity portfolios. During his last five years with Old Mutual, Douw was responsible for the management of all of its value style mandates, including the Old Mutual Value Fund and the Old Mutual High Yield Opportunity Fund. Douw joined Orthogonal Investments as one of its founding shareholders upon its inception in 2007.
Denker SCI Global Equity Feeder Fund - Mar 19
Much of the negative sentiment of the last quarter of 2018 disappeared in the first one of 2019. The 12.5% rebound in the total return of the MSCI World Index since the start of 2019 has left the index only slightly below the recent high of 29 September 2018 and only 2% shy of its all-time January 2018 high.
All of this has taken place while German bond yields have fallen below zero again (prompting phrases from the commentariat like “the Japanification of Europe”) and the yield curve in the US has inverted. The latter event has in the past been a fairly reliable indicator of a recession ahead, even if the relationship has been regarded as more tenuous recently. Portfolio Review
The fund benefited from its overweight stance in Information Technology (+20%), with Micro Focus rising 51% after better than expected results in the aftermath of integration problems with its acquisition of HP Enterprise’s software business. Cisco Systems rose 25% after strong fiscal 2nd quarter results. Performance was further boosted by a partial reversal of the deeply negative sentiment plaguing tobacco stocks of late, in the wake of US Federal Drug Administration pronouncements against menthol cigarettes and flavoured vaping products (Philip Morris International +34%; Altria Group +17%).
TUI AG detracted from performance (-29%) after issuing separate profit warnings in February and on the last trading day of the quarter. TUI blamed lower than expected bookings in its tour operator business in the first instance and the costs associated with the forced grounding of its 15 Boeing 737 Max aircraft in the second. Raiffeisen Bank also negatively affected portfolio performance, falling 11% on unsubstantiated rumours of a money laundering scandal.
From a global geographic perspective, the fund’s lack of exposure to Japan, which rallied only 7% vs. the 12.5% rally in the MSCI World Index, benefited performance, as did the fund’s sole holding in China (Alibaba, +33%). The fund’s UK stock picks (+14%) were also beneficial to performance as asset prices here were beginning to reflect parliament’s resolution to prevent a hard Brexit, even if the details of such an outcome remain opaque. The fund’s holdings in the US detracted from performance overall (Medtronic +1%; HP Inc. -4.5%; Berkshire Hathaway –1.6%), despite rallies in the previously mentioned tobacco names, Cisco and mortgage insurer Essent Group (+27%).
The fund endeavours to control risk in a rational manner by dampening hard-to-predict factor exposures and focussing its risk budget on proven bottom-up stock picking.
Based on current consensus expectations the fund offers a more attractive valuation than the overall market (fwd P/E: 11.2x vs. 13.4x and Div Yld: 3.1% vs. 2.7%), while producing a better return (ROE: 22% vs. 18%) and better profitability (operating margin: 23% vs. 20%). The fund has an Active Share of 87%.
The portfolio will primarily invest in participatory interests of the FSB approved Sanlam Global Best Ideas Fund, a sub-fund of the Irish domiciled Sanlam Universal Funds plc. The portfolio may also hold ancillary liquid assets, including cash and/or money market instruments.