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Southern Charter BCI Growth Fund

as at: 
31 October 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 FoFCumulative-6.7%4.5%28.3%184.8%
BenchmarkCumulative-6.6%9.0%42.7%234.6%
Average FundCumulative-3.7%8.0%31.1%142.3%
Southern Charter BCI Growth FoFAnnualised-6.7%1.5%5.1%11.0%
BenchmarkAnnualised-6.6%2.9%7.4%12.8%
Average FundAnnualised-3.7%2.6%5.6%9.3%

Fund Commentary

October saw global markets record their worst performance since the 2008/2009 global financial crisis. Although US companies continued to report strong earnings growth for the 3rd quarter, markets sold-off amidst fears that US corporate earnings had reached peak growth. Tech giants Amazon and Netflix were down 20.2% and 19.3% in dollars respectively on a month-on-month basis (MoM). The International monetary fund also downgraded its 2019 growth forecasts for the US and China, and cited the deepening trade war as a factor in its decision.

Locally, the new finance minister Tito Mboweni delivered the Medium-term budget policy statement, in which he spoke boldly in areas such as municipal management as well as non-performing State-owned enterprises. He also unpacked how president Ramaphosa’s stimulus package would work. Unfortunately, he also painted a picture of a rising fiscal deficit, which saw a repricing of our local bonds. Moody’s, which is the last of the three major credit ratings agencies to rate South African sovereign debt as investment grade described the budget as “credit negative”.

In-line with the global sell-off in the global financial markets, our local markets were also down for the month, with the JSE All share index down (6% in ZAR) and the All Bond Index down 1.71% (in ZAR) MoM. Market heavyweight, Naspers, lost 15% MoM whilst the rest of the sectors were also in the red. Whilst there was negative sentiment in the global markets, we looked through the noise and re-assessed the fundamentals, which in our view are still positive on the US side. We took the sell-off as an opportunity to add to our US exposure as valuations became undemanding.

Asset Allocation - Values displayed in percentage (%)

BenchmarkFund
Global Equity10.0%24.5%
Global Property0.0%0.5%
Global Fixed Income5.0%6.6%
SA Cash0.0%3.2%
SA Bonds15.0%11.3%
SA Property10.0%8.7%
SA Equity60.0%45.2%

Asset Class Performance - Values displayed in percentage (%)

1 Year1 Month
Global Equity6.2%-3.3%
Global Property5.9%1.1%
Global Fixed Income1.5%2.9%
SA Cash7.3%0.6%
SA Bonds7.8%-1.7%
SA Property-18.7%-1.7%
SA Equity-11.1%-6.1%
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Time horizon

10 or more years to retirement

Risk Profile

  • Low
  • Low-Mod
  • Mod
  • Mod-High
  • High
Morningstar Rating: 
4.00 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