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Southern Charter BCI Defensive Fund

as at: 
28 February 2017

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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.

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 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 Years8 Years
SC Defensive FoF'sCumulative1.8%19.4%55.7%118.6%
CPI +3%Cumulative9.8%29.2%52.8%117.3%
SC Defensive FoF'sAnnualised1.8%6.1%9.3%9.1%
CPI +3%Annualised9.8%8.9%8.9%9.0%

Fund Commentary

The ALSI retreated 3.1% (-0.6% in USD) in February and underperformed emerging market peers (+3.1% in USD). The National Budget garners a lot of attention from investors as the budget deficit is mainly funded by the local bond market, which tabled a budget that hiked the top marginal income tax rate and increased the dividend withholding tax rate from 15% to 20%.

The Nedgroup Mining and Resources fund was down 7.5% during the month as the market was hit by a sharp correction in resources, especially mining shares, on concerns that the US infrastructure spending program may be delayed as well as a slowdown in the Chinese property market. It is expected that infrastructure spending (railway, roads etc.) in China will fill the gap left by the slowdown in Chinese property in 2017.

In the bond market, the ALBI returned 0.7% the month. The intra-month trading range for the yield of the benchmark R186 SA government bond turned out to be fairly wide at 8.57% to 8.85%, as factors such as the probability of a March Fed rate hike and a cabinet reshuffle in the SA government contributed to the volatility. SA Listed property returned -0.4%, as the rand appreciated 2.5% vs the US dollar and the index has more than 30% foreign earnings.

Asset Allocation - Values displayed in percentage (%)

BenchmarkFund
Int Fixed Income13.0%0.9%
Int Equity7.0%16.3%
Int Property0.0%4.0%
Cash4.0%18.6%
Bonds40.0%30.0%
Property8.0%6.4%
Local Equity28.0%23.8%

Asset Class Performance - Values displayed in percentage (%)

1 YearMonthly
Global Bonds-17.6%-2.5%
MSCI World1.1%-0.2%
Global Property-8.0%-0.1%
Cash7.5%0.6%
ALBI13.5%0.7%
Property10.4%-0.4%
ALSI6.3%-3.1%
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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

CEO & Investment Strategist

Mark Thompson

Chief Investment Officer

Ursula Maritz

(021) 700 1000

 

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

FSP No. 740