Con­sis­tent high re­turns for medium risk

The pri­mary ob­jec­tive of the Cen­taur BCI Bal­anced Fund is to of­fer in­vestors a mod­er­ate long-term to­tal re­turn. FUND IN­FOR­MA­TION:

Finweek English Edition - - MARKET PLACE - Ed­i­to­rial@fin­week.co.za By Niel Jou­bert

Fund man­ager in­sights:

At Cen­taur As­set Man­age­ment “we be­lieve in in­tel­li­gent in­vest­ing”, says Roger Williams, the fund’s man­ager. Ac­cord­ing to him, this en­tails de­ploy­ing a mul­ti­tude of proven in­vest­ment strate­gies, which al­lows them to iden­tify ex­cel­lent op­por­tu­ni­ties whilst pro­vid­ing di­ver­si­fi­ca­tion. “We com­bine this with strong risk-man­age­ment pro­cesses to re­duce volatil­ity and pre­serve cap­i­tal,” he ex­plains.

The fund utilises nu­mer­ous time-tested as­set allocation and stock-pick­ing strate­gies to out­per­form its bench­mark. He says the fund is for in­vestors that have a mod­er­ate risk ca­pac­ity but re­quire good real re­turns. This in­cludes re­tired in­di­vid­u­als for whom a monthly in­come can be drawn off this fund.

Williams says Cen­taur’s in­vest­ment phi­los­o­phy weighs up value ver­sus growth and qual­ity and has been dis­tilled into nu­mer­ous heuris­tic mod­els which al­low them to iden­tify ex­cep­tional 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 port­fo­lio,” he says. “In ad­di­tion, we have pro­pri­etary macro-in­di­ca­tors which guide as­set allocation. Our method­ol­ogy seeks to cre­ate a port­fo­lio with the best risk-re­ward ra­tio for our in­vestors.”

He says the re­cent down­grade in­creases the risk pre­mium of South Africa, re­sult­ing in high real in­ter­est rates that curb con­sumer ex­pen­di­ture and in­vest­ment. Eco­nomic con­fi­dence re­mains low and eco­nomic pol­icy di­rec­tion is un­cer­tain, re­sult­ing in slug­gish eco­nomic growth. The SA econ­omy and cur­rency is vul­ner­a­ble to in­creased risk aver­sion when in­ter­na­tional con­di­tions de­te­ri­o­rate. “In­vestors’ re­turn and volatil­ity ex­pec­ta­tions should be sim­i­lar to the last two years,” he ex­plains.

The fund has 16% of its as­sets in­vested di­rectly off­shore. “But in the ab­sence of height­ened in­ter­na­tional risk aver­sion we think the rand will re­main rel­a­tively sta­ble. Nev­er­the­less, rand strength will be used as an op­por­tu­nity to in­crease in­ter­na­tional ex­po­sure,” ac­cord­ing to Williams.

“We have 40% of the fund in fixed in­ter­est and prop­erty stocks from which we ex­pect re­turns of 10%, un­der­pin­ning the re­turn of the fund. We have in­creased ex­po­sure to Africa via in­vest­ment in MTN and PPC as these com­pa­nies’ share prices are de­pressed, yet we an­tic­i­pate a strong pick-up in eco­nomic growth in Africa, which these com­pa­nies will ben­e­fit from.”

Why fin­week would con­sider adding it:

Since in­cep­tion in July 2013 the Cen­taur BCI Bal­anced Fund has man­aged to out­per­form the bench­mark by more than three per­cent­age points and de­liver con­sis­tently high re­turns with only medium risk.

Ear­lier this year the fund won the Rag­ing Bull Award for top-per­form­ing SA High Eq­uity Multi-As­set Fund for the three-year pe­riod end­ing De­cem­ber 2016.

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