PRUDENTIAL BALANCED FUND
According to Prudential CE Bernard Fick this is a fund to which the whole of the investment team contributes. The three managers named on the fact sheet are Marc Beckenstrater, the chief investment officer, David Knee, the head of fixed interest, and Michael Moyle, the head of real return.
Fick says the portfolio is benchmark cognisant, and is benchmarked against the peer group. It is pragmatic and “tilted to value with controlled risk exposure”. Naspers, for example, is its largest equity holding, though at 6% out of the 40% invested in SA equities. Equity portfolio manager Craig Butters says that Naspers’s main underlying holding, the social media provider Tencent, is fairly valued in China, and investors get the group’s other Internet interests, print and Pay-TV for free.
Other big holdings are MTN (3%), British American Tobacco (2,5%), Standard Bank (2%) and Old Mutual (2%). Butters says the decision to go overweight on Old Mutual and underweight on Sanlam has worked. One of the shares the house missed was Steinhoff, as it had not foreseen the purchase of Pepkor and the market’s strongly positive reaction. But he says it was pleased that it had ignored the gold and platinum shares, preferring nonmining resources such as Sappi, Mondi and chemical companies. Its main diversified mining share is Glencore.
A further 21% is invested in foreign equity, usually through other funds such as the Singapore-based First Eagle Amundi International Fund. Moyle says was overweight in foreign assets but the peers have moved up and almost all have a full 25% allocation offshore. The balance of Prudential offshore is made up of 2,3% in foreign cash and 1,8% in short foreign bonds.
The fund is overweight in domestic bonds, which make up 11,5% of the portfolio. The fund is extending the duration of its local bonds and also buying bonds with higher coupons such as government-guaranteed Eskom bonds, which pay an additional 1,0% on their coupon. Last year Prudential was overweight in property but it has steadily reduced its position as it believes most property counters are overvalued. It now holds a modest 2,3% position in the asset class, with no foreign property.