PERPETUA BALANCED FUND
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.