NAV on 2019/01/15
|NAV on 2019/01/14
|52 week high on 2018/09/05
|52 week low on 2019/01/04
|Total Expense Ratio on 2018/09/30
|Total Expense Ratio (performance fee) on 2018/09/30
STANLIB Collective Investments (RF) Limited
South African--Multi Asset--Low Equity
Malcolm Holmes has 11 years investment experience and has been a portfolio manager in his own right, which makes him the perfect candidate to oversee the evaluation of the underlying managers and their portfolios. As the head portfolio manager, Malcolm is the key person responsible for product development and design at STANLIB Multi-Manager. He is responsible for ensuring that our products meet their investment objectives and that the underlying managers meet their mandates.
STANLIB Multi-Manager was established in 1999 and is the centre of excellence for multi-managed solutions within STANLIB. The investment team, led by Chief Investment Officer Joao Frasco, consists of an experienced team with a diverse set of investment skills. We have offices in Johannesburg and London, and currently have mandates in excess of R90 billion under stewardship.
STANLIB Multi-Manager Funds are designed to deliver superior investment returns more consistently than through a single asset manager or mandate. Our approach allows investors’ to outsource the fund / manager selection decision, which includes the ongoing due diligence of managers and construction of portfolios, to meet pre-defined objectives over time.
Risk management is a fundamental component of our investment philosophy and process and is therefore approached holistically. It permeates every part of our investment process, requiring participation and accountability from all individuals involved in the process.
Richo transferred to the Multi-Manager Research and Development Team from within STANLIB. He started his career at STANLIB as a Portfolio Compliance Manager before starting and heading up the STANLIB Implementation Team. The team subsequently merged into the STANLIB Risk, Analytics and Implementation Team and his role broadened to include risk management and analytical related responsibilities. Prior to STANLIB, Richo worked within the Collective Investments Schemes Department at the Financial Services Board. He started his career in 2004 at Life Healthcare as an Information Analyst.
STANLIB MM Defensive Balanced comment - Sep 18
Market overview The global trade war between the United States and China continued to dominate headlines during the quarter. The US intensified tariffs on Chinese goods and China retaliated. Despite the tussle between the two economic giants, the US economy remains strong. This is visible in the rally of the US dollar and their robust labour market. These positive developments gave the Fed room to hike interest rates in September from 2.0% to 2.3%.
Unfortunately, the higher developed market (DM) interest rates and stronger US dollar do not bode well for emerging market (EM) assets such as South Africa, and most EM countries saw their currencies weaken. SA fared worse than its EM peers as signs of poor economic growth surfaced during the quarter, resulting in SA moving into a technical recession.
SA equities lost 1.6% over the quarter, driven largely by poor returns from industrials. SA property lost 1.0%, while SA bonds returned 0.8%. The weaker rand supported offshore returns, leading to a 7.4% total return from global equities.
The Fund returned 1.5% for the quarter, marginally behind the average of ASISA MA Low Equity peers. Since inception three and a half years ago, the Fund has outperformed. The overweight position to resources and rand hedge shares continued to support peer relative performance. The core performance detractor has been the Fund’s allocation to inflation linked bonds at around 10%.
Coronation’s domestic absolute mandate has a rand hedge bias, with a moderately allocation to equities and property. One of their largest positions, MTN, detracted from performance.
Investec believes that investors were too optimistic about President Ramaphosa’s ability to turn the economy around in the short term and that more rational expectations have since taken root. Locally, they view SA government bonds as the best opportunity. Yielding more than 9%, these instruments offer higher risk-adjusted return potential than the retail, banking and property sectors. Their bond exposure remains prudent – lower duration, higher quality instruments, with exposure balanced against offshore holdings to limit the potential for loss. Investec maintains a high global equity allocation positioned around 30% or more.
Prudential prefers resources through counters such as Sasol and Anglo American, but also sees value in financials such as Standard Bank and Old Mutual Ltd. Long duration bonds remain a key investment for Prudential. A high allocation to inflation linked bonds and property detracted from performance over the past year. However, we remain confident that these assets are key diversifiers, providing real returns in the long-term.
STANLIB Absolute remains defensively positioned with a low local equity and property allocation of less than 30%. STANLIB sees various risks in the market and has multiple protection strategies in place to cover these risks. They maintain a relatively high allocation to duration type bonds and have been flexible on the global positioning in trying to harvest performance in difficult market conditions.
Portfolio positioning and outlook
The largest themes in the Fund are overweight resources and rand hedge shares, which has benefited performance over the past year. Global positioning remains critical for diversification.
In addition to further rate hikes in the US, we expect trade wars to continue dominating headlines and this could weigh heavily on EM sentiment. Local asset prices have retreated to levels that may provide a good entry points for investors. However, the global and SA environment remains highly uncertain and we continue to emphasize the importance of having a long-term focus when making investment decisions.
The Fund is a multi-asset class portfolio that is diversified across asset classes, sectors, various strategies and asset managers - both in South Africa and internationally.
The Fund aims to provide modest long-term growth of capital and income with volatility at levels consistent with low equity (max 40% equity) portfolios.
The objective of the Fund is to outperform the average of the ASISA Multi-Asset Low Equity category, at risk levels consistent with that of the sector.