The importance of a diversified toolkit in growing your ...€¦ · 3 Year IRR Top down = 17 - 20%...
Transcript of The importance of a diversified toolkit in growing your ...€¦ · 3 Year IRR Top down = 17 - 20%...
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INVEST IMPACT GROW
The importance of a diversified toolkit in growing your retirement savings
Omri Thomas | Abax Investments
7 February 2020
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• Founded in 2003
• Focused on delivering outstanding investment
performance for clients
• Investment led and wholesale-only
• Majority owned by staff
• Team of 17 investment professionals with 15 years
average experience
Our businessManager profile
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Multi-asset and fixed income Portfolio managers
Omri Thomas
Rashaad Tayob
Matthew de Wet
Philip Liebenberg
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Investment philosophyForm follows function
Harnesses Abax’s full skillsetAsset allocation, stock selection, income selection and hedging
Build diversified portfolios
to be robust in a range of market outcomes
Downside protection
stock selection, asset allocation & hedging
Invest when risk vs. reward favourable
across the capital structure
Fundamentally value range of assets
top-down and bottom-up analysis
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Multi-asset toolkit
A diversified approach to achieve long-term growth
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Utilise widest toolkit
• Active asset allocation
• Security selection
• Hedging strategies
• Hybrids
• Duration and yield
• Currency
• Diversification and portfolio construction
Toolkit Protect and grow
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Utilise widest toolkit
• Active asset allocation
• Security selection
• Hedging strategies
• Hybrids
• Duration and yield
• Currency
• Diversification and portfolio construction
Toolkit Protect and grow
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SA equity valuationsOne standard deviation cheap
Source: Abax, Statpro, Bloomberg, Morningstar
3 Year IRR
Top down
=
17 - 20% p.a.
Bottom-up
=
15 - 17% p.a.
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Utilise widest toolkit
• Active asset allocation
• Security selection
• Hedging strategies
• Hybrids
• Duration and yield
• Currency
• Diversification and portfolio construction
Toolkit Protect and grow
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Security selection Track record
Source: Abax, Statpro, Bloomberg, Morningstar. As at 31 December 2019
Mandate Inception Measurement indexCAGR
(gross, pa)
vs. Index
(gross, pa)
vs. Peers
(net, pa)
Equity Oct 04 Capped SWIX TR 15.5% +1.9% +2.5%
Small/Mid Cap Equity Jul 04 Small/Mid Cap Index TR 17.0% +0.9% +3.1%
Global Equity Jan 13 MSCI ACWI TR 12.0% +2.2% +3.0%
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Utilise widest toolkit
• Active asset allocation
• Security selection
• Hedging strategies
• Hybrids
• Duration and yield
• Currency
• Diversification and portfolio construction
ToolkitProtect and grow
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We make active use of hedges to:
Typically we would implement a short fence strategy:
• Buy a certain range of protection, normally 8-12%
• Give away the upside above a certain level
Deeper hedges on large positions
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HedgingStrategies
Protect the fund
against falling
prices
Create
asymmetric
pay-offs
Reduce the
volatility/risk to
the fund
Hold winning
positions for
longer
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Utilise widest toolkit
• Active asset allocation
• Security selection
• Hedging strategies
• Hybrids
• Duration and yield
• Currency
• Diversification and portfolio construction
Toolkit Protect and grow
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HybridsConvertible bonds
Source: Abax, Statpro, Bloomberg, Morningstar
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HybridsEurostoxx notes
Source: Abax, Statpro, Bloomberg, Morningstar
Historic
al odds
Bear
odds
1 year 58% 55%
2 years 12% 10%
3 years 8% 5%
4 years 2% 0%
5 years 3% 0%
50% haircut 0% 10%
Cash back 8% 20%
Expected return 20% 13%
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Utilise widest toolkit
• Active asset allocation
• Security selection
• Hedging strategies
• Hybrids
• Duration and yield
• Currency
• Diversification and portfolio construction
Toolkit Protect and grow
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Interesting opportunities High yielders
Source: Abax, Statpro, Bloomberg, Morningstar
Total Duration
High Yield
Bucket
Total = 11%
High Yielders
PSG Prefs
(10% ZAR Yield)
Bank sub debt
(11% ZAR YTM)
Zambezi Prefs
(11% YTM)
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Utilise widest toolkit
• Active asset allocation
• Security selection
• Hedging strategies
• Hybrids
• Duration and yield
• Currency
• Diversification and portfolio construction
Toolkit Protect and grow
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CurrencyA separate asset class
Source: Abax, Statpro, Bloomberg, Morningstar
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Utilise widest toolkit
• Active asset allocation
• Security selection
• Hedging strategies
• Hybrids
• Duration and yield
• Currency
• Diversification and portfolio construction
Toolkit Protect and grow
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Abax InvestmentsValuations as at end December 2019
Source: Abax Investments
Cheap
• SA Equity
• EM Equity
• SA Hybrids
• Protection (Vol)
Fair• DM (ex US) Equity
• SA Bonds
• SA Linkers
• SA Property
• ZAR
Expensive
• US Equity
• DM Bonds
• DM Credit
• DM Cash
• Commodities
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Amplify SCI* Flexible EquityCurrent asset allocation
Source: Abax Investments
Exposure % %
Physical Equity Exposure 46%
Index Future Exposure 0%
Index Option Exposure -2%
Equity Option Exposure 4%
Net Effective Exposure (Local) 48%
Offshore Equity 12%
Property 6%
High Yielders 10%
Converts 4%
Net Exposure 'risk assets' 80%
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Amplify SCI* Flexible Equity Fund
*Sanlam Collective Investments
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AimAsymmetric mind-set providing capital growth over the medium to long term, looking to deliver equity-like returns at lower risk levels
RiskAn aggressive solution with potential capital volatility over the short term but less volatile than a pure equity fund
AssetsLarge exposure to equity instruments and will look to diversify across the capital structure, using strategic hedging for protection |
Maximum 100% equity | Maximum 30% offshore
ReturnPeer-group benchmark with two-thirds upside; one-third downside of ALSI
ASISASouth African Multi-Asset Flexible
Amplify SCI* Flexible Equity Solution profile
*Sanlam Collective Investments
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Amplify SCI* Flexible Equity FundManaged by Abax Investments
Competitor selection based on the Glacier Shopping List for 2019Q3 Source: Abax Investments & Morningstar Direct as at end December 2019
2/3rd upside capture of FTSE/JSE
As at end December 2019
Annualised
return (%)
1 Year
Amplify SCI Flexible Equity B4 15.54
Fund A 7.29
Fund B -1.55
FTSE/JSE All Share 12.05
(ASISA) SA MA Flexible Equity 7.95
1/3rd downside capture of FTSE/JSE
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Thank you
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Amplify Investment Partners (Pty) Ltd is an authorised Financial Services Provider. Sanlam Investments consists of the following authorised Financial
Services Providers: Sanlam Investment Management (Pty) Ltd (“SIM”), Sanlam Multi Manager International (Pty) Ltd (“SMMI”), Satrix Managers (RF) (Pty)
Ltd, Graviton Wealth Management (Pty) Ltd (“GWM”), Graviton Financial Partners (Pty) Ltd (“GFP”), Satrix Investments (Pty) Ltd, Amplify Investment
Partners (Pty) Ltd, Sanlam Capital Markets (Pty) Ltd (“SCM”), Sanlam Private Wealth (Pty) Ltd (“SPW”), Sanlam Credit Fund Advisor Proprietary Limited,
Sanlam Africa Real Estate Advisor Proprietary Limited and Sanlam Employee Benefits (“SEB”), a division of Sanlam Life Insurance Limited and Simeka
Wealth (Pty) Ltd; and has the following approved Management Companies under the Collective Investment Schemes Control Act: Sanlam Collective
Investments (RF) (Pty) Ltd (“SCI”) and Satrix Managers (RF) (Pty) Ltd (“Satrix”). Sanlam Collective Investments (RF) (Pty) Ltd is a registered and
approved Manager in terms of the Collective Investment Schemes Control Act. A schedule of fees can be obtained from the Manager.
Abax Investments is a licenced financial services provider (FSP no: 856)
Matrix Fund Managers is a licenced financial services provider (FSP no: 44663)
Sentio Capital Management is a licenced financial services provider (FSP no: 33483)
Terebinth Capital is a licenced financial services provider (FSP no: 47909)
Truffle Asset Management is a licenced financial services provider (FSP no: 36584)
Laurium Capital is a licenced financial services provider (FSP no: 856)
Collective investment schemes are generally medium- to long-term investments. Past performance is not necessarily a guide to future performance,
and the value of investments/units /unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available from
the Manager on request. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The Manager does not provide
any guarantee with respect to either the capital or the return of a portfolio. The manager has the right to close the portfolio to new investors in order to
manage it more efficiently in accordance with its mandate. Income funds derive their income primarily from interest-bearing instruments. The yield is
current and is calculated on a daily basis. If the fund holds assets in foreign countries it could be exposed to the following risks regarding potential
constraints on liquidity and the repatriation of funds: macro-economic, political, foreign exchange.
Disclaimer