INVESTEC VALUE FUND

The largest of the value funds with R4,7bn under management, though this keeps falling. Manager John Biccard has a highly concentrated portfolio with 22% in gold shares, 18% in platinum and 19% in cash. He recently sold out of his position in Steinhoff (once 12% of the fund) and is building one in Sappi which proved to be a good performer in

2014, with a 29% return. The only significant holding in financials is Barclays Africa Group, which gained 45% over the year.

Biccard says there is a deficit of platinum, with production lower than sales. The platinum mines are on a record low price to book, enterprise value to revenue and price to replacement ratios. Biccard’s view on gold shares is driven in part by valuation but primarily by his macroeconomic view. In the long term quantitative easing will continue and as central banks print money, it will be a catalyst for the sustained upward movement in the US dollar gold price, he says.

Biccard summarises his investment universe as shares trading below the rating that they traditionally traded in the past, relative to the market. He also invests in shares trading at a discount to net asset value.

The fund has a 25% exposure to foreign shares, through the Investec Global Value fund, which Biccard says often looks at shares which are down at least 90% from their peak, such as cellphone manufacturer Nokia. Another is British pub owner Enterprise Inns, which fell from £3,50 to 20p. Others include Weight Watchers, which fell from $80 to $7 as slimmers turned to free apps. About half of the portfolio is in Japan where many good companies have come under pressure. Biccard loves the gold theme and has Egyptian mining business Centamin in the fund. Biccard has a strong following but says he can’t see a change in market sentiment in the short term. Investors in the fund need to take a long-term approach.