NAV on 2019/07/22
|NAV on 2019/07/19
|52 week high on 2018/09/03
|52 week low on 2018/12/18
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
Sanlam Collective Investments
South African--Multi Asset--High Equity
CPI for all urban areas plus 7% gross of fees
No email address listed.
No website listed.
Sage SCI* Long Term Solution FoF - Mar 19
The FoF is a combination of underlying managers with diverse skill-sets from various ASISA categories to build an optimal high equity portfolio. The combination of managers strikes a balance between the CPI+7% target of the FoF, and its objective not to lose money over 24 months. Managers focused on capital growth with highly flexible mandates include Bateleur and PSG. These high conviction managers can implement their best investment view across all asset classes and have the discretion to hold up to 100% in equities if so inclined. The Sage Long-Term FoF also makes use of Fairtree for its expertise in SA equities and 36One and Allan Gray to run balanced mandates. Finally, by making use of Matrix with its focus on capital protection, and low-cost index funds to gain predictable exposure to various asset classes, the portfolio construction ensures that the overall FoF remains within the overall 75% maximum equity limit set by the category.
The FoF has enjoyed a strong start to the year, but remains dependent on SA equities delivering reasonable returns, given their importance in achieving a CPI+7% return. The outlook for SA equities remains uncertain given the weak economy, but we have confidence in the ability of the underlying managers' skill-sets to unlock value for the FoF. The look through allocation to equities was reduced from 70.4% to 66.5% over the quarter with the foreign equity allocation increased from 14.0% to 16.9%.
SA equities (up 3.9%) had a reasonable quarter, but only modestly outperformed nominal bonds (up 3.8%) and materially underperformed both emerging (up 10.2%) and developed (up 12.8%) market equities. Our assessment of the upside to SA equities has been reduced despite attractive valuations given the likelihood that economic growth could continue to disappoint.
SA property (up 1.5%) and SA inflation-linked bonds (up 0.5%) both underperformed SA cash (up 1.7%) with global property (up 14.5%) the standout performer and significantly ahead of foreign bonds (up 2%). The subdued performance of SA inflation-linked bonds has been on the back of an improving inflation outlook in SA, while the strong performance of global property has partly been fuelled by an increasingly dovish US Federal Reserve
The US Federal Reserve left short-term rates unchanged at both their January and March meetings, and signalled their intention for no further interest rate increases in 2019. The pause in their tightening cycle reflects a softening of economic growth and subdued inflation in the US, and gave emerging markets some breathing room with the South African Reserve Bank (SARB) being able to leave interest rates unchanged at both its January and March meetings.
South African economic growth continues to disappoint with the SARB now expecting just 1.3% growth in 2019 (materially less the 1.9% the SARB expected for 2019 as recently as last November) while National Treasury (under slightly more optimistic growth assumptions) only expects SA government debt to stabilise in 2023/4 at 60.2%.
SA government debt is priced as if it was already sub-investment grade, and offer an attractive yield given contained inflation forecasts despite market concern around contingent State-Owned Enterprises (SOE) liabilities and potentially optimistic economic growth forecasts.
The Sage Long-Term FoF remains well diversified across managers and strategies and suitably positioned to take advantage of market opportunities as they materialise. Important trades over the quarter were the introduction of low-cost tracker funds and 36One into the portfolio, while Centaur and Coronation were both sells.
The objective of the Sage Sanlam Collective Investments Long Term Solution Fund of Funds is to secure steady growth of capital over a longer term of more than 3 years, and to offer a return of at least CPI plus 7% over a rolling five year period. The portfolio will aim never to have a negative return over any two years.
The investment manager, Sage Wealth Management (Pty) Ltd follows the multi manager style of investing and will invest the portfolio in participatory interests of various collective investment schemes managed by different specialist investment managers. The target of CPI plus 7% will be achieved through the construction of a portfolio with a strategic asset allocation appropriate for a CPI plus 7% return objective.
The objective will be achieved by investing in assets in liquid form, and participatory interests or any other form of participation in portfolios of collective investment scheme portfolios or other similar collective investment schemes the Act may allow from time to time, managed by specialist investment managers. In line with the multi manager investment philosophy, the portfolio will be constructed to achieve diversification across different asset classes as well as different investment managers and investment processes. The philosophy therefore categorically excludes the possibility of the portfolio only investing in underlying collective investment schemes of just one manager. Key value propositions are the selection of multiple specialist investment managers as well as the combination of these managers into optimal portfolio structures in order to achieve the investment objective.
The strategic asset allocation will be achieved by combining participatory interests of collective investment scheme portfolios managed by specialist investment managers who use different and uncorrelated investment strategies.
The portfolio will be investing in participatory interests of portfolios which provide exposure to a flexible combination of equity, bonds, money market instruments, non-equity and property, as well as to various absolute return investment strategies.
The asset allocation will be actively managed by the multi-manager to reflect its view of the changing economic and market conditions. The portfolio will have an equity exposure of between 0% - 75%, depending on the investment manager's investment strategy for a CPI plus 7% return objective at the time. This portfolio is part of a range of risk profiled, multi managed fund of funds portfolios and the SMMI house view tactical asset allocation given specific market conditions will be applied uniformly to the range of portfolios. Therefore, should the house view be bullish on equities, the tactical allocation to equities will increase across the range of portfolios in line with their respective maximum equity exposure limitations, whilst equities exposure will decrease uniformly across all three portfolios should the house view be bearish on equities. Given the application of the SMMI house view exposure approach it is highly unlikely that these portfolios will ever have similar effective equity exposures.
The portfolio will obtain offshore exposure through investment in participatory interests of collective investment schemes approved in terms of the Act.
This portfolio will comply with regulations governing pension funds.