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Southern Charter BCI Balanced Fund

as at: 
30 September 2017

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Investment Objectives

The Southern Charter BCI Balanced Fund of Funds is a moderate managed fund of funds. The primary investment objective of the portfolio is to provide the investor with a moderate total return. The Fund aims to provide investors with capital growth of 5% above inflation over the longer term by investing in a combination of asset classes including local and international equities, fixed interest, property and cash. As the Fund has a medium allocation growth assets, it is ideal for investors with a medium investment horizon, who seek capital growth and who are at least 5 - 10 years from retirement. The fund is Regulation 28 compliant.

Strategy

The Fund is actively managed with a value bias. By focusing on macro themes, the Fund looks to exploit valuation discrepancies in asset classes. The allocation to equities will be max 60%, depending on economic conditions with a neutral weighting of 50%. The allocation to assets other than equities, aims to reduce the risk of capital loss in the portfolio.

Performance (net of all fees)

FundReturn1 Year3 Years5 Years9 Years
SC Balanced FoF'sCumulative6.6%22.1%63.9%164.2%
CPI + 5%Cumulative10.0%34.4%67.7%148.0%
Benchmark*Cumulative7.6%28.4%73.0%182.3%
SC Balanced FoF'sAnnualised6.6%6.9%10.4%11.4%
CPI + 5%Annualised10.0%10.3%10.9%10.6%
Benchmark*Annualised7.6%8.7%11.6%12.2%

Fund Commentary

The South African Reserve Bank’s Monetary Policy Committee met in September and decided to keep the repurchase rate (6.75%) unchanged, when it was a widely held view that the MPC would cut rates to support a weakening South African economy. Deteriorating consumer- and business confidence, idiosyncratic political uncertainty and policy paralysis, with risks of fiscal slippage weighing on concerns of further ratings downgrades. The rand was the second worst performing EM currency against the US dollar in 3Q17. Year-to-date, SA equities recorded outflows of $5.6bn, significantly lagging inflows into EM equities of $63.0bn.

The JSE All Share Index ended the third quarter up 8.9%, bringing the total return to 12.6% year-to-date. With U.S Fed rates anticipated to move higher sooner after the September FOMC meeting, U.S equities and the dollar became more attractive, prompting a move away from emerging market equities in particular. The All Bond Index ended the quarter up 3.7% and year-to-date 7.9%, as the yield curve flattened ever so slightly in response to the decision by the SARB. Foreign investors keep accumulating local bonds in search for yield but with the MTBPS in October, risks to fiscal consolidation remain high.

The fund returned 1.3% in September and 6.1% the 3rd quarter. The fund’s exposure to the Coronation Global Emerging Markets and NGI Resources funds were the key drivers of outperformance during the past quarter, returning an impressive 18.6% and 16.8% respectively.

Asset Allocation - Values displayed in percentage (%)

BenchmarkFund
Global Fixed Income7.5%2.2%
Global Equity7.5%23.1%
Global Property0.0%0.2%
SA Cash20.0%11.0%
SA Bonds12.5%23.7%
SA Property10.0%9.3%
SA Equity42.5%30.5%

Asset Class Performance - Values displayed in percentage (%)

1 YearMonthly
Global Bonds-3.7%2.7%
Global Equity16.7%6.3%
Global Property-3.0%3.7%
SA Cash7.6%0.6%
SA Bonds8.2%1.1%
SA Property9.5%1.2%
SA Equity10.2%-0.9%
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Time horizon

5 or more years to retirement

Risk Profile

  • Low
  • Low-Mod
  • Mod
  • Mod-High
  • High
Morningstar Rating: 
3.00 Star

Portfolio Managers

(021) 700 1000

 

1st Floor, Silverberg Terrace
Steenberg Office Park
Steenberg Road
Tokai, 7925

FSP No. 740