FOORD BALANCED FUND

This R47bn fund is the largest component of Foord Asset Management’s submission to the Alexander Forbes Large Manager Watch. As well as Dave Foord himself, the portfolio managers are Daryll Owen, the

deputy chief investment officer, and Dane Schrauwen. It has a full exposure to foreign assets consisting of a 14% exposure to the Foord Global Equity Fund, run by a team in Singapore and Foord International Fund, a multi-asset fund run by Dave Foord himself.

The fund has a 59% exposure to equities, 38% in the domestic market, 21% on foreign markets. It has a token exposure to SA government bonds of 1,3% but a healthy 10% exposure to corporate debt. It is quite conservatively positioned with 19% of the portfolio in the SA money market and 4,5% in foreign cash. Foord director William Fraser says much of the corporate debt consists of short duration credit-linked notes linked to inflation or money market rates. Foord has been light on commodities as it is “not a pretty scenario” with supply increasing and demand falling. “If the earnings and dividend yields of these companies hold up they look cheap but we don’t believe they can stay where they are,” says Fraser.

Foord has avoided construction for similar reasons. The fund’s main commodity plays are Sasol (2,7% of fund) and the gold exchange traded fund NewGold. It considers the latter to be “an insurance policy” in case it is wrong.

Foord’s success has come from investing in shares with much more predictable business models, such as pharmaceutical group and generics king Aspen. It’s a long-term holder of FirstRand, Steinhoff and Richemont.

Fraser says the equity component of the balanced fund differs subtly from the Foord Equity Fund, as equity clients are considered to have a longer horizon and more tolerance of volatility in the short term. But Foord is battling to fill even its equity fund with good ideas. It has an unusually high 9% holding in cash.