FO­ORD BAL­ANCED FUND

Financial Mail - Investors Monthly - - Analysis: High Equity Funds -

This R47bn fund is the largest com­po­nent of Fo­ord As­set Man­age­ment’s sub­mis­sion to the Alexan­der Forbes Large Man­ager Watch. As well as Dave Fo­ord him­self, the port­fo­lio man­agers are Daryll Owen, the

deputy chief in­vest­ment of­fi­cer, and Dane Schrauwen. It has a full ex­po­sure to for­eign as­sets con­sist­ing of a 14% ex­po­sure to the Fo­ord Global Eq­uity Fund, run by a team in Sin­ga­pore and Fo­ord In­ter­na­tional Fund, a multi-as­set fund run by Dave Fo­ord him­self.

The fund has a 59% ex­po­sure to eq­ui­ties, 38% in the do­mes­tic mar­ket, 21% on for­eign mar­kets. It has a to­ken ex­po­sure to SA gov­ern­ment bonds of 1,3% but a healthy 10% ex­po­sure to cor­po­rate debt. It is quite con­ser­va­tively po­si­tioned with 19% of the port­fo­lio in the SA money mar­ket and 4,5% in for­eign cash. Fo­ord di­rec­tor Wil­liam Fraser says much of the cor­po­rate debt con­sists of short du­ra­tion credit-linked notes linked to in­fla­tion or money mar­ket rates. Fo­ord has been light on com­modi­ties as it is “not a pretty sce­nario” with sup­ply in­creas­ing and de­mand fall­ing. “If the earn­ings and div­i­dend yields of these com­pa­nies hold up they look cheap but we don’t be­lieve they can stay where they are,” says Fraser.

Fo­ord has avoided con­struc­tion for sim­i­lar rea­sons. The fund’s main com­mod­ity plays are Sa­sol (2,7% of fund) and the gold ex­change traded fund NewGold. It con­sid­ers the lat­ter to be “an in­sur­ance pol­icy” in case it is wrong.

Fo­ord’s suc­cess has come from in­vest­ing in shares with much more pre­dictable busi­ness mod­els, such as phar­ma­ceu­ti­cal group and gener­ics king Aspen. It’s a long-term holder of FirstRand, Stein­hoff and Richemont.

Fraser says the eq­uity com­po­nent of the bal­anced fund dif­fers sub­tly from the Fo­ord Eq­uity Fund, as eq­uity clients are con­sid­ered to have a longer hori­zon and more tol­er­ance of volatil­ity in the short term. But Fo­ord is bat­tling to fill even its eq­uity fund with good ideas. It has an un­usu­ally high 9% hold­ing in cash.

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