PERPETUA MET BALANCED

It is early days for this fund, which is less than two years old, but it is worth looking at as it is run by the highly experienced Delphine Govender, previously a director and senior portfolio manager at Allan Gray. The fund has just R7m under management.

Its local equity holdings, which are about 51% of the fund, mirror those in the Perpetua institutional portfolios, but it does not have any foreign equities, though about 15% of the fund, which is held in dollar cash, will soon be deployed into a range of global equities.

Govender says she is confident that the internal global equity process is now ready to go live. Mark Butler, from Aberdeen Asset Management and Coronation, has been appointed to concentrate on global shares, though the entire eight-strong Perpetua Equity team will play a part.

Govender says she ran both equity and balanced portfolios at Allan Gray and says most portfolio managers prefer balanced, as they have a larger opportunity set and more opportunity to provide real returns. Perpetua has a high tracking error of 7% and aims never to be a closet index manager.

It had a heavy position in resources, but has rotated into other cheap shares. Govender says the JSE has more cheap shares now than in the past more than three years. A third of the market is on a p:e below 10.

Anglogold Ashanti, for example, increased from R88/share to R300, and Perpetua sold some to buy beaten-down industrials such as Nampak at R17 (now R21) and Sun International at R70 (now R84). Govender also bought JSE Ltd at R120, which rose to R180, and Aspen, not the classic value share, at R300, and it has since increased to R380. There was even a chance to buy Shoprite cheaply when it fell to R130. Perpetua bought it only to sell again as it moved back to R170.

Govender says the banks are particularly cheap: Standard Bank is the largest position in the fund, but Barclays Africa is not far behind. Imperial is an industrial share that she considers to be cheap, along with Netcare, and of the megacaps she is happy to own a big slug of British American Tobacco. “We need to be rewarded for the risk of being different, but we aren’t going to be different for the sake of it and ignore good businesses.”

But the fund is small enough to play in the mid- and small-cap sectors, and has a material holding in Datatec, for example.

The fund is up 17% in the year to date, about four percentage points ahead of the JSE value index. Govender says the fund is true value rather than deep value. BAT, for example, is a share that ranks well globally among tobacco shares and is highly defensive, with a reliable dividend stream.

Govender talks about the value continuum, which includes unrecognised growth shares as well as quality shares. The fund is 51% invested in the JSE, including small exposures to property and the NewGold ETF, with 15% in dollar cash and 34% on local cash and money market assets.