CORONATION BALANCED PLUS
This forms part of Coronation’s core or flagship range. It has a 19-year history and is managed by Karl Leinberger, who is also chief investment officer, and Duane Cable. It has outperformed its composite benchmark by 2%/year since inception.
The fund would certainly qualify as a house view fund which displays the Coronation DNA. To keep things simple the fund takes its international holdings through sister funds, with a 19% exposure to the Coronation Global Opportunities Equity Fund and 5% to its award-winning Global Emerging Markets Fund plus a further 2% in the African Frontiers Fund. It has an exposure of more than 5% to the UK property market through two JSE-listed businesses, Intu (formerly Capital Shopping Centres) and Capital & Counties, which owns Covent Garden and Earls Court in London. The domestic shares include house favourites such as Naspers, British American Tobacco, Steinhoff, Anglo American and MTN.
Leinberger says the top-down position is complicated as there is a clear dichotomy within the global economy, with the US in recovery mode and expected to start hiking interest rates in September. At the same time Europe is fighting deflation while China slows down and is now cutting interest rates. Leinberger says that resource shares, after recent declines, present an opportunity to valuation-based investors. But without conviction around the recovery of the Chinese economy he is treating the sector with caution. The fund prefers Anglo American, Mondi, Sasol and Exxaro. It has been hit in the short term by its holdings in platinum shares, though at least these are the low-cost producers, Northam and Impala Platinum.
Cable is not optimistic about the local economy, with slow demand for commodities and the effects of load-shedding. Yet the fund holds food retailers such as Spar, Shoprite and Pick n Pay as well as broad retailers such as Woolworths, Foschini and Clicks.
Leinberger says banks are reasonably priced but the best value in the financial sector can be found in insurers such as MMI and Old Mutual.
He says there is no value in global bonds but domestic bonds are starting to look more attractive. Inflation-linked bonds remain central to the portfolio and corporate bonds are an increasing feature; spreads have widened since the demise of African Bank. He says the fund holds the higher quality property names, which should outperform cash and bonds in the long term.