Fund manager Tony Cadle says the house has a different philosophy from its competitors as it takes a top-down approach, looking at the global macros before it decides what shares to buy.
It has about 48% in local equities, with the rest almost equally divided between local bonds & cash and offshore assets. The fund has a concentrated portfolio of 30 shares. Naspers alone makes up more than 11% of the equities, British American Tobacco 9% and Steinhoff 7%. The only resource share in the top 10 is Sasol, and there is less than 14% in the basic materials sector.
Cadle says this allocation did not work between February and April, when resource shares rallied on the back of a stimulus package out of China. He says that in spite of that, the fundamentals for resources are not promising. The fund has a 21% exposure in its equities to financials. The biggest holding is in Ashburton’s ultimate controlling shareholder, RMB Holdings. It has a heavy bias towards rand hedge industrials and its top holdings include Richemont, SABMiller, Reinet, Aspen and Mediclinic.
Cadle says Ashburton has a team-based approach in which the decision making is shared by the analysts and the portfolio managers. The fixed income portion of the portfolio is run by the Ashburton fixed income team, which was enhanced at the end of last year with the purchase of Atlantic Investment Management. The fund has a modest 5% holding in SA Property.
Cadle is concerned that the asset class is now at the tail end of the bull market, though he believes property could still do relatively well if global deflation bites deep and global growth slows.
The fund has almost a full allocation to foreign assets of about 24%, but Cadle is concerned that a low-growth Europe will have a knock-on effect on the US market — which to date has been much stronger. Against this he finds emerging markets quite attractive.
The fund celebrated its third birthday on June 1, and it has been a top-quartile fund since inception. Cadle believes that now that it has a three-year track record it should gather a reasonable pool of assets. It has less than R500m under management at present.