NAV on 2020/02/27
|NAV on 2020/02/26
|52 week high on 2020/02/18
|52 week low on 2019/02/28
|Total Expense Ratio on 2019/09/30
|Total Expense Ratio (performance fee) on 2019/09/30
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.
Pierre is one of the founding members of African Harvest Fund Managers, which he joined in 1999. Pierre began his business career in the petrochemical industry with Engen Petroleum, moving from product management responsibilities to heading up strategic and mergers and acquisitions activities within the Business Ventures division. After six years in the industry, he joined Prudential Portfolio Managers as an industrial analyst in 1998. Pierre became a portfolio manager in 2001.
Denker SCI Global Equity Feeder Fund - Dec 19
Global equity markets performed well over the quarter. On a total US dollar return basis - the S&P 500 Index gained 9.0%, the MSCI World Index 8.6% and the MSCI Emerging Markets Index 11.8%. The surprising decline in long dated developed market bond yields that started in Q1 reversed in the final quarter of the year. Yield on US 10 year maturity government bonds increased from 1.7% at the end of Q3 to 1.9% at the end of Q4. The yield on 10 year German bonds, which had fallen to -0.6% at the end of Q3, closed the year at -0.2%.
In December President Trump became the third president since America’s founding to be impeached. Nearly all Democrats voted in support of the two articles of impeachment - abuse of power and obstruction of Congress – but they failed to attract Republican support. As Republicans control the Senate and a two-thirds majority would be required to remove Trump from office, a conviction seems unlikely.
In the UK election in December, the Conservative Party secured the biggest majority since 1987 - an unexpected landslide after relentless campaigning on the promise to “Get Brexit Done”. The majority will give Prime Minister Boris Johnson greater leeway to steer future trade talks.
The fund performed in line with its MSCI World Index benchmark which returned 8.6% in the quarter. Financials was the best performing sector for the fund, returning 16% vs. financials in the benchmark returning 8.8%. The major contributors were all London-listed companies - on the clear UK election victory for the Conservatives lead by Boris Johnson, and the subsequent certainty of Brexit going ahead - with a significant rebound in the Prudential plc price from oversold levels (+22%), a 31% surge in Legal & General Group and OneSavings plc rising 26%. The fund’s consumer-focused holdings also contributed to performance. Alibaba gained 27% after posting consensus-beating Q2 results in early November, while UK-based homebuilder Taylor Wimpey strengthened 32%. Altria clawed back some of its losses from earlier in 2019 after better than expected Q3 numbers (+23%).
The most significant detractors from performance came from the IT sector, where the fund’s absence of exposure to a surging Apple share price (the biggest constituent in the MSCI World Index; +31%) and poor performance from Oracle (-3%) did the most damage. Other disappointing returns for the quarter came from Unilever (-4%), Cisco Systems (-2%) and Boeing (-14%). Boeing has experienced ongoing headwinds in its efforts to get the 737 Max approved for commercial use after two of these new regional jets crashed in 2019. In addition, the company fired its CEO in December.
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: 13.1x vs. 16.9x and Div Yld: 3.0% vs. 2.3%), while producing a better return (ROE: 26% vs. 20%) and better profitability (operating margin: 25% vs. 20%). The fund has an active share of 88%.
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.