QUES­TION­ABLE AC­TIONS

Finweek English Edition - - INVESTMENT -

Coro­na­tion* sent an i nter­est­ing email to clients as African Bank was go­ing into free fall. “In this re­gard, we want to con­firm to you that the ex­po­sure to African Bank is not ma­te­rial in any of our client funds,” the com­pany stated. It went on to say that the largest ex­po­sure was in the Coro­na­tion Top 20 Fund in which it had an ex­po­sure of 0.62% as of the close on 6 Au­gust. Fair enough, but then if the hold­ing is “not ma­te­rial”, why do they bother hold­ing the stock? If it mat­ters not when it col­lapses, surely it equally mat­ters not if it rose spec­tac­u­larly? Far too many funds hold too many stocks with the long tail be­ing to­tally mean­ing­less in terms of per­for­mance, and then why bother? If I want a long­tail in­vest­ment I can buy an in­dex track­ing ex­change-traded fund. One surely in­vests with an as­set man­ager ex­actly be­cause they se­lect a few se­lect stocks that will have a high con­vic­tion to out­per­form.

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