Fund in Focus:
It’s all about the long-term game
Fund manager insights:
Investors need to be defensive in the current South African economic climate, says David Shapiro, one of the fund’s managers. “I have been very nervous about growth in the country for a long time,” he says. Some of the fund’s top defensive stocks include brewer SABMiller, British American Tobacco and Naspers. The fund has been focusing on companies moving their money offshore, he explains.
When picking a stock, Shapiro says he’s looking for long-term growth potential in a company. Those corporates shrinking their businesses, such as Anglo American, are not on his radar.
Another important factor that the fund takes into consideration when choosing stocks is the quality of a company’s management team, according to Shapiro. In this regard, the fund is optimistic about Discovery, Bidvest and Steinhoff, he says.
“We’ve recently started to add Steinhoff,” says Shapiro. The company’s track record in creating wealth for investors is attractive, he explains.
Other wealth-creating stocks include the Rupert family’s luxury-goods company Richemont, their private-hospital venture Mediclinic International as well as Steinhoff – which combines the expertise of Christo Wiese, of Pepkor fame, and that of Markus Jooste – explains Shapiro.
The fund’s preference in terms of international equity assets includes the US market. The fund has invested in the Deutsche Bank tracker fund exposed to the American stocks.
“The US keeps reinventing itself,” says Shapiro. Even at 2% economic growth a year, the world’s largest economy is still expanding at almost twice the pace of South Africa, he explains.
The fund also favours European stocks with growth potential, especially German manufacturing companies and Swiss pharmaceutical stocks, he says.
“The fund aims to generate long-term growth,” adds Shapiro. “I don’t have time for day-to-day swings in the market.”
Why finweek would consider adding it:
The fund was nominated as one of the top two equity unit trusts in SA by Morningstar Research SA. It has delivered solid and steady annualised growth over a number of reporting periods.
Focusing on the creation of wealth by underlying assets, the fund is for the long-term investor who believes in quality companies that generate cash and steers clear of shortterm cyclicals.
The fund is also minimally exposed to base metals and Shapiro is very sceptical about the near-term outlook for commodities. As he puts it: There’s no new China. The Chinese economy’s lacklustre performance and its government’s ineffective response won’t end soon. Not good news for commodities – or the world’s economy.