FUND IN FOCUS: INVESTEC COMMODITY FUND By Timothy Rangongomarket
place
1 BHP 19.1%
2 Anglo American 19%
3 Impala Platinum 11.8%
4 AngloGold Ashanti 10.5%
5 Sibanye-Stillwater 8.6%
6 Sasol 7.3%
7 Anglo American Platinum 6.1%
8 Mondi 4.6%
9 Africarhodium 2.6%
10 African Rainbow Minerals 2%
TOTAL 91.6%TOP 10 EQUITY HOLDINGS AS AT 30 JUNE 2019:14 finweek 15 August 2019 http://www.fin24.com/finweek
Consistent returns from commodities
A specialist equity fund focused on commodity related companies primarily listed in South Africa.
Benchmark: FTSE/JSE Resources 10 Index (JRESI)
Fund managers: Daniel Sacks
Fund classification: South African – Equity – Resources
Total investment charge: 2.04%
Fund size: R536.5m
Minimum lump sum/subsequent
investment:R10 000/From R500 per month (when minimum
lump sum is not paid)
Contact details: 0860 500 900/
[email protected]FUND INFORMATION: Fund manager insights:
Despite the tough economic conditions that are normal in cyclical industries, Investec
Asset Management’s Commodity Fund – which is focused on commodity related
companies primarily listed in South Africa – makes for a gripping case study to invest
in resources. The fund appears to serve as a feasible investment vehicle to diversify
one’s portfolio to include specific exposure to the sector.
The second quarter of 2019 was very volatile for the resources sector. The fund’s
performance comparison index, the SWIX Resi, fell 0.66% over the period and supply
disruptions in iron ore drove bulk commodity prices higher, said fund manager Daniel
Sacks in a quarterly note to investors.
Weak results saw the commodity fund reduce its positions in Sasol, Harmony
Gold, South32 and Exxaro. This repositioning to ensure capital growth and provide
a reasonable level of income to investors was informed by, among others, capital
expenditure overruns and weak chemical prices translating into lower earnings
at Sasol; weak thermal coal prices and operational performance at Exxaro; and
operational stoppages on safety and capital allocation concerns at South32.
Looking and moving forward, the portfolio manager notes that the fund continued
to buy precious metals miners AngloGold Ashanti (fourth-largest equity holding as at
30 June) and Sibanye-Stillwater (now the world’s largest miner of platinum following
its recent acquisition of Lonmin). Rand platinum group metals (PGM) and gold prices
continued to trend higher during the quarter, leading to substantial earnings upgrades.
“We also increased our iron ore exposure in the portfolio and bought Assore in line
with our investment process,” according to Sacks.
The fund pursues equities that have a history of value creation, demonstrate
strong and improving operating performance, are attractively valued relative to this
performance, and are increasingly drawing investors’ attention.
Sacks further explains that the fund continues to position the portfolio based
on earnings forecasts relative to consensus expectations, on par with commodity
price views and company modelling work, which aims to pre-empt revisions by
the market.Why finweek would consider adding it:
Investing in a fund that focuses on a single sector is riskier as investors don’t get the
diversification benefits of investing across multiple sectors. The fund has nevertheless
illustrated some mastery in traversing the cyclical nature of commodity demand and
the resulting increased risk of short-term losses.
The fund outperformed its benchmark by a substantial 1 630 basis points,
generating an annualised return of 34.8% during the past 12 months to end-June,
despite a lacklustre second quarter for the sector. In 2000, it received a Raging Bull
award for being a top performer and continued to scoop more accolades over the years
(consecutively so from 2014 to 2016, as best equity resources fund). ■
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Shoprite, Murray & Roberts, Mondi Ltd, Pioneer Foods, Vivo Energy p.1 year Since inception in January 1995PERFORMANCE (ANNUALISED AFTER FEES)35
30
25
20
15
10
034.8%18.5% 17.1%12.3%As at 30 June 2019
■ Investec Commodity Fund ■ Benchmark