Financial Mail - Investors Monthly - - Analysis: Balanced Funds -

Per­petua has emerged as a lead­ing black eco­nomic em­pow­er­ment man­ager that has started to break into the main­stream. Two fac­tors have helped: one is the in­vest­ment by RMI In­vest­ment Man­agers (which is an un­ex­er­cised op­tion at this stage); the other is the pro­file of its chief in­vest­ment of­fi­cer, Del­phine Goven­der. As well as be­ing a clearly com­pe­tent fund man­ager she has great PR and mar­ket­ing in­stincts.

Per­petua Bal­anced is in the Asisa High Equity cat­e­gory but also in the Morn­ingstar Mod­er­ate Al­lo­ca­tion bucket. This is be­cause Asisa fo­cuses on what funds are al­lowed to do, Morn­ingstar on their his­toric be­hav­iour. Per­petua Bal­anced has never been more than 65% in­vested in eq­ui­ties.

Goven­der says there have been op­por­tu­ni­ties re­cently to buy some fallen an­gels which have come down from very high p:es, such as Brait, Wool­worths and Spar. Pi­o­neer has fallen but is not quite where Goven­der would con­sider buy­ing it. She con­sid­ers Spar to be the best food re­tailer in SA; its fran­chise model al­lows en­trepreneurs to drive or­ganic growth with their own cap­i­tal. Yet in barely a year the share is down 30% from its peak.

Brait has had an even more ex­treme de­r­at­ing, and Goven­der says at cur­rent prices the market is close to putting no value on the trou­bled UK fash­ion re­tailer New Look, while its other as­sets, such as Pre­mier, Vir­gin Ac­tive and Ice­land Foods, are quite good. MTN is the largest hold­ing in fund. The largest sec­tor is fi­nan­cials, at 21%, though this is by no means hefty rel­a­tive to peers. Stan­dard Bank, Old Mu­tual and Bar­clays Africa are in the top 10. But Goven­der is still look­ing for a com­pelling un­lock in the life sec­tor that might make the fund buy, say, Lib­erty.

Per­petua’s sweet spot is in the mid-cap value part of the market. As a value man­ager the fund might be ex­pected to hold a large re­sources po­si­tion, but in fact it is a mod­est 11%, dom­i­nated by Sa­sol and to some ex­tent An­glo Amer­i­can. The fund is about 9% in­vested in for­eign equity and about 10% in for­eign cash.

It will in­vest from Cape Town rather than in­vest­ing in for­eign funds. And the pur­chases will be ac­tive, not pas­sive.

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