Striv­ing to beat the JSE Alsi

The fund is a flex­i­ble port­fo­lio that aims to pro­vide in­vestors with high long-term cap­i­tal growth. FUND IN­FOR­MA­TION:

Finweek English Edition - - MAR­KET PLACE - Ed­i­to­rial@fin­

Fund man­ager in­sights:

In­vestors can ex­pect sim­i­lar mar­ket volatil­ity and slightly bet­ter real re­turns this year than over the last two years, says Roger Wil­liams, fund man­ager of the Cen­taur BCI Flex­i­ble Fund. This is thanks to the ex­pec­ta­tion of stable South African in­ter­est rates and im­prov­ing eco­nomic growth, which should lead to im­prov­ing prof­itabil­ity in SA.

“We view volatil­ity favourably as it cre­ates mar­ket con­fu­sion, al­low­ing as­tute stock pick­ers to pick up qual­ity com­pa­nies below in­trin­sic value,” says Wil­liams.

“Cen­taur’s best per­for­mance has come af­ter ex­treme volatil­ity where we cher­ryp­icked the best stocks which re­cov­ered when volatil­ity abated.”

The fund is for in­vestors who have a mod­er­ate to high risk pro­file and re­quire a tax­ef­fi­cient in­vest­ment. Ac­cord­ing to Wil­liams, it is ideal for an in­vestor who re­quires high real re­turns, but does not have the risk ap­petite for a pure eq­uity fund.

“Our mis­sion at Cen­taur As­set Man­age­ment is in­tel­li­gent in­vest­ing, which we achieve by im­ple­ment­ing cal­cu­lated moves to de­liver op­ti­mal re­turns for our clients.”

He says growth in the de­vel­oped world is ro­bust, but ris­ing in­ter­est rates in the US could lead to head­winds for global stock mar­kets. Pres­i­dent Don­ald Trump’s mooted trade poli­cies are par­tic­u­larly con­cern­ing, says Wil­liams, as they may lead to in­creased pro­tec­tion­ism, which will be a long-term neg­a­tive fac­tor for the world econ­omy.

Within SA the big­gest fac­tor is whether Pravin Gord­han stays on as fi­nance min­is­ter and whether SA’s sov­er­eign rat­ing gets down­graded, says Wil­liams.

“If these events oc­cur, I would ex­pect an up­ward step in SA’s cost of cap­i­tal and eq­uity mar­ket volatil­ity. In the ab­sence of a down­grade, I ex­pect an im­prove­ment in con­fi­dence and a pick-up in eco­nomic growth, which hope­fully will snow­ball into bet­ter eco­nomic mo­men­tum.”

Wil­liams adds that Cen­taur’s in­vest­ment phi­los­o­phy weighs up value ver­sus growth and qual­ity: “This in­vest­ment phi­los­o­phy has been dis­tilled into nu­mer­ous heuris­tic mod­els which al­low us to iden­tify ex­cep­tional in­vest­ment op­por­tu­ni­ties. We have an ex­pe­ri­enced team of an­a­lysts who do in-depth re­search into our op­por­tu­nity set.

“We then use our stock-pick­ing en­gine and risk-man­age­ment frame­work to de­cide which stock is worth in­clud­ing within our diver­si­fied port­fo­lio of shares. In ad­di­tion, we have pro­pri­etary macro-in­di­ca­tors which guide as­set al­lo­ca­tion.”

Why fin­week would con­sider adding it:

The fund seeks to achieve re­turns above the JSE All Share In­dex with ma­te­ri­ally lower volatil­ity and draw­downs.

The fund won a Rag­ing Bull Award for the best South African Multi-As­set Flex­i­ble Fund for the best risk-ad­justed re­turns over the five-year pe­riod end­ing De­cem­ber 2016, out­per­form­ing the All Share In­dex by 6% per an­num with less than two-thirds of the volatil­ity of that in­dex.

The fund also won the Morn­ingstar 2016 Award for the best flex­i­ble al­lo­ca­tion fund due to its best risk-ad­justed per­for­mance as at De­cem­ber 2016.

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