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Southern Charter BCI Defensive Fund

as at: 
30 June 2018

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Investment Objectives

The Southern Charter BCI Defensive Fund of Funds is a cautious managed fund of funds. The primary investment objective of the portfolio is to provide the investor with a high level of income and stable capital growth. The Fund aims to provide investors with capital growth of 3% above inflation over a rolling two year period by investing in a combination of asset classes including local and international equities, fixed interest, property and cash. The Fund looks to provide capital stability and is ideal for investors with a shorter investment horizon, who seek capital growth and who are within 5 years of retirement. The fund is Regulation 28 compliant.


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 range from 0% to 40%, depending on economic conditions with a neutral weighting of 20%. 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 Years10 Years
SC Defensive FoF'sCumulative5.13%14.10%38.23%132.86%
CPI +3%Cumulative7.51%27.74%51.00%130.49%
SC Defensive FoF'sAnnualised5.13%4.49%6.69%8.82%
CPI +3%Annualised7.51%8.50%8.59%8.71%

Fund Commentary

Trade war concerns continued to dampen sentiment in global markets as China vowed to retaliate against any additional tariffs by the USA. The initial USD34 billion of US tariffs on Chinese goods was expected to be implemented in early July, leaving market participants worried that this would prompt further retaliation from China. The effects of the trade war concerns were evident in the Chinese Shanghai Composite Index, which was down 8.08% month on month (MoM) and is now -13.9% year on year (YoY). The FOMC also met during the month and increased the federal funds rate by a largely expected 25 basis points and indicated that they would hike rates at least twice again before the end of 2018. The prospect of higher US rates, together with uncertainty over global trade continued to weigh in on emerging market (EM) sentiment.

Despite the noise, market returns benefited from the weaker rand (-8.1% vs USD), with Global equities returning 8.2% MoM (in ZAR) and Global properties 10.6% MoM (in ZAR) on the back of continued positive sentiment in the sector. On the local front, South African (SA) equities returned a decent 2.8% MoM (in ZAR). The rebound in the equity market performance from the previous month was driven by a weaker rand as rand hedges benefited from this currency tailwind. Naspers returned an impressive 15.2% MoM (in ZAR) as the company reported that it would consider returning cash to shareholders if it did not find good opportunities to invest its cash pile. Firm commodity prices continued to provide an underpin for Resources, whilst SA Bonds suffered from the EM sell-off. SA property was down 3.5% MoM (in ZAR) on the back of weak sector sentiment and the prospect of rising yields.

Asset Allocation - Values displayed in percentage (%)

Global Equity7.0%18.5%
Global Property0.0%0.7%
Global Bonds13.0%7.9%
SA Cash4.0%7.2%
SA Bonds40.0%33.9%
SA Property8.0%12.2%
SA Equity28.0%19.6%

Asset Class Performance - Values displayed in percentage (%)

1 YearMonthly
Global Equity16.8%8.2%
Global Property10.0%10.6%
Global Bonds6.3%7.5%
SA Cash7.3%0.6%
SA Bonds10.2%-1.2%
SA Property-9.9%-3.5%
SA Equity15.0%2.8%
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Time horizon

Less than 5 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