Finweek English Edition - October 24, 2019

1 year Since inception in February 2013

FUND IN FOCUS: LAURIUM FLEXIBLE PRESCIENT FUND By Timothy Rangongo

market

place

1 US ETN 6.3%

2 Naspers* 6.1%

3 Anglo American 4.5%

4 Absa 4.1%

5 Sasol 3.5%

6 Hammerson Plc 3.4%

7 MTN 3.3%

8 BHP 3.2%

9 EUR ETN 3%

10 Prosus 3%

TOTAL 40.4%

TOP 10 EQUITY HOLDINGS AS AT 30 SEPTEMBER 2019:

*finweek is a publication of Media24, a subsidiary of Naspers.

PERFORMANCE (ANNUALISED AFTER FEES):

12

10

8

6

4

2

0

7.7%

7%

11.9%

10.6%

Generating returns with lower risk

The Laurium Flexible Prescient Fund’s primary objective is achieving long-term capital growth by investing in a diversified

range of local and foreign asset classes.

Benchmark: CPI + 5%

Fund managers: Gavin Vorwerg & Murray Winckler

Fund classification: SA – Multi-Asset – Flexible

Total investment charge: 1.4%

Fund size: R2bn

Minimum lump sum /

subsequent investment:

R50 000/R2 000

Contact details: 011 263 7700/[email protected]

FUND INFORMATION:

As at 30 September 2019

■ Laurium Flexible Prescient Fund ■ Benchmark

Fund manager insights:

Laurium Capital’s Flexible Prescient Fund is a South African multi-asset and flexible

unit trust, which means that the fund has a high degree of flexibility but must invest

a minimum of 70% of its assets in SA, a maximum of 30% in global assets and 10%

in African assets. “We can invest in various asset classes locally and globally, ranging

from equity, fixed interest and listed property to money market instruments,” says Kim

Zietsman, head of marketing and business development at Laurium Capital.

The fund’s flexibility has been working to its advantage, enabling it to avert

lacklustre economic environments, like the one currently being experienced by SA Inc.

It’s managed to beat its benchmark by 0.7 percentage points year-to-date, generating

a return of 7.7% and an annualised return of 11.9% since inception, against a benchmark

return of 10.6%. Over time, the fund usually holds about 80% in both equities (both

foreign and local), she says. At the moment, it’s a little bit lower at 68.9%, partly due to

being underweight in local and offshore equity.

The fund’s biggest exposure to SA Inc. is through bank and retail stocks, but

Zietsman says that inasmuch as they are underweight on SA Inc. stocks, they are also

“quite aware that things could turn quite quickly, should confidence come back, which

has been at its lowest, probably, since 2008.”

“We are fortunate that the SA equity market offers numerous diversification

opportunities beyond the borders and growth drivers of the SA economy. By our

assessment of value, roughly a third of the JSE All Share index value is driven by SA

Inc. In other words, a third of the broad SA market is a function of SA’s heartbeat and

the remainder is driven by the ‘heartbeat’ of other international markets.” JSE-listed

companies that derive a large part of their earnings from offshore operations include the

likes of AB InBev, Richemont and Reinet.

Being passively invested in the S&P 500, which has “done exceptionally well,”

according to Zietsman, contributed to the generation of positive returns for the fund.

The fund went about attaining exposure to the S&P 500 through an exchange-traded

note (ETN) issued by FirstRand, and it is currently the highest equity holding at 6.3% of

the R2bn fund.

Ultimately, it’s “a combination of how we go about our asset allocation, stock

selection and being very mindful of losing capital,” explains Zietsman, adding that “we

apply a hedge fund mindset to try to protect capital on the downside, which I think

assists in achieving inflation-beating returns for clients.”

Why finweek would consider adding it:

It’s a multi-asset fund, so as an investor, one would get exposure to a very diversified

portfolio across different asset classes, locally and internationally. Past performance is

not an indicator of future performance, but the fund comfortably beat the market and

its peers, and has a moderately aggressive risk profile. ■

[email protected]

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14 finweek 24 October 2019 http://www.fin24.com/finweek