Stay positive . . . the principle that guides Mike’s multi-asset investment fund
THE investment objective behind Sanlam Four Multi-Strategy Fund is simple – to make money when conditions are favourable, but then not to lose it in difficult times.
It is a pretty straightforward goal on paper, but its execution is anything but easy. Manager Mike Pinggera, a longstanding multiasset investment expert, uses a wide range of financial instruments – from options to holdings in global equities, infrastructure, renewable energy and property – to deliver on the fund’s promise.
So far, he has done a decent job, though it is relatively early days for the fund, which was launched in early 2013 but has been available to retail investors only since November 2013.
Over the past three years, the fund has achieved an overall return of 11 per cent, though much of the performance has been produced in the last year.
The fund is one of 100 ‘targeted absolute return’ vehicles, which try to make a positive return in all kinds of markets.
No two are the same, all using different combinations of assets and financial instruments to produce gains. And they have attracted criticism, especially when failing to generate those absolute returns.
Pinggera sees his fund more as a savings product than an investment and has his own pension invested in it. For regulatory reasons the fund’s objectives are more clearly defined than simply making positive returns. The aim is to outperform the Consumer Prices Index by four percentage points a year over five-year periods, with a target of generating absolute returns on a rolling three-year basis.
The fund has two key elements. There is a ‘safety’ core, which primarily provides the portfolio’s income. This comes from exposure to fixed income, renewable energy, infrastructure and income producing property holdings, such as Land Securities. Key fixed-income positions include corporate bonds in Anglian Water, HSBC and Tesco.
Then there is a ‘growth’ element, built around exposure to global equities. Money is made from holding equities and ‘shortselling’ specific indices. For example, Pinggera is currently shorting the FTSE 100 Index.
Combined, Pinggera says the two strategies produce an income of about three per cent, plus capital uplift. Since November 2013, the fund has produced 22 months of positive return, 17 of negative and one of zero return. ‘We have an eclectic investor base,’ he says. ‘The fund is popular with charities and pension funds. They are drawn in by the fact that we are trying to make money and if that is not possible then we are doing our best not to lose it.’
Sanlam Four manages assets of £4.3 billion. It was spawned out of boutique investment house Four Capital Partners, formed in 2006, before South African-owned financial services group Sanlam took a controlling stake in late 2014.
It is a tight-knit operation of 23 investment professionals, most with more than 20 years in the City under their belt. Before Sanlam, Pinggera worked for Credit Suisse and Insight.
Fund rating website FundCalibre rates nine targeted absolute return funds, but Sanlam Four Multi-Strategy is not one of them.
Among its favoured funds are Brooks MacDonald Defensive Capital and Jupiter Absolute Return.
Last week, investment house Man GLG launched the UK Absolute Strategy Fund, which ambitiously aims to produce an annual return of 10 per cent ‘within an absolute return strategy’.