OLD MUTUAL EDGE 28 FUND:
0% 11 22 22333 34444 5 /1 1 1 1 1 1 1 1 1 1 1 1 1 2 // ///// //// / / 1 36 9236 9 2369 2 6
00 0 100 0 10 00 1 0 for 30 years beyond retirement.”
Brooke attributes the recent strong capital f lows into Edge 28 to its market need; people seeking higher than average returns; and Old Mutual’s track record in the active management space.
“Much of our outperformance so far has been the result of good asset allocation, good equity performances, and investing cash more effectively. It’s also been driven by a number of different counters that you don’t typically see in standard portfolios. These include Capitec Bank, Rhodes Food Group and Telkom.”
Another contributing factor has been the outstanding performance of domestic listed property, which has been trimmed down to about 4.5% of the portfolio.
Edge 28’s outperformance speaks to MacroSolutions being considerably more nimble than its larger competitors, Brooke notes. “However, we expect returns to slow down in the period ahead, a function of the more expensive market. But the nature of this fund should maintain it as a front runner among balanced funds.”
In terms of asset positioning, he and Karas have cut the fund’s domestic equity component to about 40% of the total portfolio, but remain fully invested in offshore shares, their preferred asset class. It makes up about 22% of the portfolio.
“That has meant that a bit more cash has built up in the portfolio, [in addition to] listed property and bonds that we hold. [ This] allows for new buying opportunities when they arise.”
The fund’s fixed income exposure is mainly concentrated on South African long end bonds which offer high yields.
In its international equity exposure, it has been overweight Japan and Europe, both of which performed well in the last period; it’s been underweight emerging markets, helping it relative to several competitors who’ve held big overweight positions.
Brooke has l ightened t he f und’s holding in l isted property, which he believes will generate less real return going forward. “Valuations have become a bit stretched, but we have a significant position in UK listed property company Intu. Moreover, we’ve picked up one or two smaller offshore players that should deliver well in the long term.”
Edge 28 is invested in little over 7% in private equity via broad-based exposure to a number of different players and a number of different geographies, including both international and Africa. Old Mutual is one of SA’s biggest operators in this area.