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Southern Charter BCI Growth Fund

as at: 
31 August 2018

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Investment Objectives

The Southern Charter BCI Growth Fund of Funds is an aggressively managed fund of funds. The primary investment objective of the portfolio is to provide the investor with a relatively high long term total return. The Fund aims to provide investors with capital growth 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 high allocation growth assets, it is ideal for investors with a long investment horizon, who seek capital growth and who are at least 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 when they occur. The allocation to equities will range from 60% to 75%, depending on economic conditions with neutral weighting of 70 %. The balance is allocated to the other asset classes.

Performance (net of all fees)

FundReturn1 Year3 Years5 Years10 Years
Southern Charter BCI Growth FoFCumulative4.7%16.0%45.5%173.2%
BenchmarkCumulative5.7%24.2%67.3%212.4%
Average FundCumulative6.8%19.3%46.9%135.0%
Southern Charter BCI Growth FoFAnnualised4.7%5.1%7.8%10.6%
BenchmarkAnnualised5.7%7.5%10.8%12.1%
Average FundAnnualised6.8%6.1%8.0%8.9%

Fund Commentary

US markets had an impressive showing in August, with the NASDAQ and S&P 500 reaching record highs on the back of corporate tax cuts, solid economic growth and strong corporate earnings. Furthermore, the S&P 500 achieved a historic milestone as it recorded the longest bull market in history. Jerome Powell, in his Jackson Hole speech acknowledged the strength of the US economy and indicated the Fed’s commitment to its current gradual approach to policy normalisation as they see no signs of a real acceleration in the inflation rate above the 2% target. Uncertainty around Brexit and trade concerns affected the European markets, whilst Asian markets were also down on trade concerns. Emerging markets (EM) came under pressure as the Turkish crisis dominated the headlines and further dampened sentiment.

The rand (ZAR), which is the most traded EM currency, came under pressure as it weakened by 10.6% in the month as investors trimmed their EM exposure. Global property (+13.5 in ZAR) and global equities (+13.3% in ZAR) had the best returns for the month, as they benefited from the weaker currency. Rand hedges and Resource stocks helped the JSE All Share Index (ALSI) close 2.3% higher, despite the index heavyweight Naspers only gaining 1% for the month on the back of a weaker Tencent. Our decision to reduce EM exposure and increase offshore exposure in our funds earlier in the year served us well, as global equity funds did well for the month in ZAR terms. We are mindful of the state of our local economy and reflect that in our current preference for offshore exposure in our tactical asset allocation. Our focus remains on looking at the fundamentals, and building well diversified portfolios that will meaningfully contribute to our client’s wealth on a risk adjusted basis over the long term.

Asset Allocation - Values displayed in percentage (%)

BenchmarkFund
Global Equity10.0%24.7%
Global Property0.0%0.5%
Global Bonds5.0%6.3%
SA Cash0.0%3.4%
SA Bonds15.0%11.5%
SA Property10.0%7.1%
SA Equity60.0%46.5%

Asset Class Performance - Values displayed in percentage (%)

1 Year1 Month
Global Equity28.2%13.3%
Global Property19.4%13.5%
Global Bonds9.7%11.3%
SA Cash7.3%0.6%
SA Bonds8.0%-1.9%
SA Property-12.4%2.2%
SA Equity3.8%1.2%
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Time horizon

10 or more years to retirement

Risk Profile

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

First Floor, Silverberg Terrace

Steenberg Office Park

Steenberg Road

TOKAI, 7945

Authorised Financial Services Provider

Southern Charter Fund Managers (Pty) Ltd FSP No. 740