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STANLIB Global Balanced Cautious Fund - News
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STANLIB Global Balanced Cautious comment - Mar 19
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Tuesday, 11 June 2019
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Fund Manager Comment
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Fund Commentary: 1st Quarter Market Background
Global equities (as measured by the MSCI AC World Index) bounced back strongly, returning 12.3% for the quarter in dollar terms. Bonds (Barclays Global Aggregate) returned 2.2%, benefiting from both falling core yields and tightening credit spreads.
Amid more signs of slowing global growth, investors welcomed increasingly dovish signals from key central banks. Apparent progress in US-China trade talks provided further support, as did Chinese stimulus measures - both actual and anticipated.
At its March policy meeting, the Federal Reserve indicated that US rates were unlikely to rise in 2019, and that it would stop reducing its balance sheet in September. Treasury yields fell sharply in response and the US yield curve briefly inverted - a move seen by many as a harbinger of recession.
The ECB pushed out its next projected rate hike to 2020, cut its Eurozone growth forecast for 2019, and pledged another round of stimulus via cheap loans for banks.
Brexit dominated the headlines in Europe. The UK parliament rejected the EU withdrawal agreement three times. While MPs also ruled out a no-deal exit they then voted down every other Brexit plan put in front of them. With time running out, the EU granted a short extension to Article 50. Despite the mounting turmoil, sterling strengthened over the quarter as no-deal fears receded somewhat.
The major equity regions all delivered strong gains. In dollar terms, the US outperformed the MSCI AC World, while the UK was broadly in line with the global index. Asia ex Japan lagged modestly, with Europe ex UK and emerging markets further behind. Japan was the main laggard, with sentiment towards its exportheavy market dampened by disappointing global economic indicators.
Activity
We raised exposure to equities over the quarter, increasing the overweight from +174 basis points (bps) to +348 bps. We also moved from a neutral position in property to an overweight of +55 bps. -We reduced exposure to fixed income, where the underweight widened from -396 bps to -505 bps, and cash, where the overweight fell from +225 bps to +102 bps.
Outlook
Global markets continue to provide evidence of the value to be found in sustainably growing, secular opportunities. With scope for further rerating and expectations that volatility should remain elevated, we believe this backdrop is ideal for investors capable of identifying the market’s long-term winners.
While factors such as technological regulation and trade remain in focus, we believe that structural factors promoting a world which is ‘lower for longer’ remain in place. This should ensure that companies which can sustain above-average growth remain attractive. We therefore retain our focus on companies with durable competitive advantages, as we believe these names are best-placed to sustain high returns on capital and earnings growth through the market cycle.
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Stanlib Global Balanced Cautious comment - Mar 16
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Friday, 17 June 2016
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Fund Manager Comment
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Fund Review
After returning +1.5% in dollars in the quarter to end December, the fund encountered difficult markets in the first quarter of 2016, but still returned a positive +1.4% in dollars. In the year to end December the fund returned -0.2% in dollars after all costs (benchmark +2.1%).
The equity portion of the fund (31.7% at the end of March, down from 32.6% at end December had a difficult quarter, but a good 12 months to end March. The equity portion of the fund returned -2% in dollars in the quarter, the worst return of the four asset classes. Sector allocation hurt during the quarter, with underweights in energy and materials (including mining) plus an overweight in healthcare and technology hurting relative returns.
The property portion of the fund (overweight at 11.1% of portfolio) performed better with a return of +4.9% in dollars in the quarter. Next was the fixed interest portion (down at 21.6% of portfolio from 32.4% at end December and very underweight the benchmark’s 40% of portfolio) which returned +4.8% in the quarter in dollars. So the underweight in fixed interest hurt the relative return most. Cash chipped in with a 2% dollar return. The allocation to cash is 35.7% at end March, much higher than the 24.3% at end December and the benchmark’s 20% allocation.
Looking Ahead
Stock and property markets corrected sharply in the first five weeks of 2016, finally bottoming on 11th February. Since then markets have rallied strongly, recouping most of the losses. Columbia Threadneedle thinks developed stock markets will continue to climb the proverbial wall of worry.
The fund manager continues to believe that economic growth will remain challenged in 2016 and prefers to focus on shares that deliver consistent growth and attractive dividends. However, volatility is expected to remain a key feature.
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Stanlib Global Conservative comment - Jun 14
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Thursday, 11 September 2014
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Fund Manager Comment
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Fund Review
The first quarter of 2014 saw a modest return of 0.43% for the fund, as markets digested the big returns of 2013.
The quarter to end June was much better than the first quarter, as the fund delivered a return of 2.05% in dollars. Stock markets started 2014 very slowly after a particularly strong 2013, but have picked up steam through the second quarter and into the third, so far. For the year to end June the fund did 7.9% in dollars.
The fund has been managed by Thread needle Investments of London for all of 2014. The equity portion of the fund (23.1% of fund) is identical to the STANLIB Global Equity Feeder Fund portfolio. During the quarter to June, the property allocation (8.5% of portfolio), which is the STANLIB Global Property Fund, did best with a return of 7.7% in dollars, followed by the 4.4% from the equity portfolio (23.1% of portfolio), then the 2.97% from the fixed interest portfolio (32.9% of fund, versus 40% for the benchmark), then cash with a return of 0.4% (35.5% of portfolio versus 32% for the benchmark).
The bond portfolio has 85 different bonds, mostly government and corporate bonds, including government bonds of the US, Germany, Japan, France and New Zealand, as well as a few emerging markets.
Looking Ahead
The fund manager at Thread needle, Alex Lyle, continues to see better value in equities than in bonds, although the fund has almost 10% more in bonds (fixed interest) purely because of the benchmark being 40% for fixed interest versus just 20% for equity. This is the nature of a balanced cautious fund. He is happy with the property allocation at just above benchmark.
Although it has been over two years since the US stock market fell by 10% or more and although a correction like this could occur at any time, the bull market remains firmly intact, even after 5.25 years. With economies neither too hot nor too cold, both inflation and short-term and long-term interest rates remain very low, which is supportive of financial assets like shares and property.
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Stanlib Global Conservative comment - Mar 14
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Friday, 6 June 2014
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Fund Manager Comment
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Fund Review
After a good quarter to end 2013 (1.9% in dollars) and solid 2013 year (5% in dollars), the first quarter of 2014 was modest, as the fund did 0.4% in dollars. The performance for the year to end March was 4.8%.
Threadneedle Investments from London are now managing the portfolio, using exactly the same equity portfolio (24.8% of fund versus 20% for the benchmark) as the STANLIB Global Equity Feeder Fund and the STANLIB Global Balanced Feeder Fund. The portfolio is also identical to the rand-based portfolio they manage for us. The equity portfolio underperformed in the first quarter because of its overweight position in the US and Japan and underweight in Europe, although the big underweight in Emerging Markets helped. Share selection also hurt in the quarter, with strength in industrial shares offset by poor performances in financials, healthcare and consumer discretionary shares.
The best performance in the quarter came from the global Property portfolio, managed by STANLIB's team. The performance was 7.6% in dollars, beating the benchmark's 7.1%. The fund is slightly overweight property at 8.3% versus 8% for the benchmark.
Fixed Interest (exactly the same portfolio as held in the STANLIB Global Balanced Feeder Fund) comprises 36.2% of fund versus 40% for the benchmark. The return was good at 2.46% for the three months, ahead of the benchmark's 2.4%. The portfolio is slightly underweight in Cash at 30.8% of fund versus 32% for the benchmark. Cash did 0.64% in dollars, beating the benchmark's 0.2%.
Looking Ahead
Threadneedle Investments, the fund managers based in London, expect economic data to improve globally and also expect reasonable growth in earnings. They believe that shares broadly encapsulated by the "innovation driving growth" and "media content/cable" themes are attractive in the long term. They expect the earnings season to be a catalyst for a rebound in developed markets, as fundamental strengths come to the fore.
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Fund Name Changed
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Thursday, 9 January 2014
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Official Announcement
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The STANLIB Global Conservative Fund will change it's name to STANLIB Global Balanced Cautious Fund, effective from 09 January 2014
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Stanlib Global Conservative comment - Sep 13
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Thursday, 2 January 2014
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Fund Manager Comment
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Fund Review
Your fund had a good quarter to end September with a return of 3.3% in dollars, thanks to a 3.2% move in the month of September. For the year to end September the fund did 4.5% in dollars.
We cut the equity weight from our usual 30% (maximum allowed) to 25% for a month, but are now back at 30%, maintaining an overweight position in accordance with the current synchronised upswing evident in the four biggest economies in the world, namely the US, China, Japan and Germany (including most of Europe). This upswing should lead to better company earnings in 2014, which is good for shares.
We continue to hold an overweight position in Japanese equities and an underweight in emerging markets. Meanwhile we remain underweight in bonds (25.5% versus 30% for the benchmark) and more-or-less neutral in cash. Cash comprises 35% of fund and we have 52% in the pound and euro combined and 48% in the dollar.
Looking Ahead
Hopefully the US government deadlock gets suitably sorted. Usually the months of October to April are buoyant months for equity markets and this time should be no exception, because the big economies are recovering in synchronised fashion for the first time in years and both inflation and interest rates remain very low.
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Stanlib Global Conservative comment - Jun 13
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Friday, 20 September 2013
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Fund Manager Comment
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Fund Review
The fund delivered a small negative dollar return of -0.9% in what has been a very volatile quarter. The return in the first six months of 2013 was -0.2% and 5.1% for the year to end June 2013.
During the quarter the MSCI developed markets delivered a small positive dollar return of 0.8%, where your fund is overweight, while the MSCI Emerging Markets Index returned -8%, where your fund is very underweight. We remained 5% underweight in bonds relative to benchmark. Global bonds returned -2.9% in dollars during the quarter, making it -4.8% so far in 2013 and -2.2% for the year to end June.
The most volatile asset class was global listed property which returned -4.9% in the quarter in dollars, but still returned 10.2% for the year to June. We started the quarter very overweight in property at 13% of fund, then sold down to 7%, missing most of the decline, before up-weighting again to around 11% by quarter-end. From peak to trough, property fell 16% in dollar terms, before bouncing a bit.
Looking Ahead
One usually expects plenty of volatility and a fair amount of negativity during the May to August period, which coincides with the languid Northern Hemisphere summer months. So far there has been more volatility in bonds and listed property than in equities because of the US Federal Reserve's mention of cutting back its $85bn bond-buying program called quantitative easing.
One gets the impression that the volatility has been overdone and that markets should be calmer going forward, including both bonds and property. Thus far the bull market in equities remains intact and we continue to prefer developed market equities.
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Stanlib Global Conservative comment - Mar 13
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Thursday, 30 May 2013
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Fund Manager Comment
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Fund Review
After two good quarters of dollar returns (4.3% and 1.4%), the fund had a small positive dollar return of 0.6% in the quarter to end March. The dollar was strong against other currencies. For example the fund was up 3.4% in euros in the quarter and a stellar 9.9% in pounds.
Global equities were up in the quarter by 6.6% in dollars, while global bonds lost 3.1% and global property gained 3%. The big disappointment during the quarter was the negative return (-1.6%) for Emerging Market equities. We started the quarter overweight in emerging markets because on the surface they look better value than developed markets. However, we sold that holding down to just 8.3% of equities, taking the view that developed market equities offer better value.
The fund remains at full weight in equities (30%) and overweight in listed property (10.7% versus 7% for the benchmark.
Looking Ahead
US equities, which comprise around 46% of the MSCI World index, reached a record high in early April and still offer decent value, assuming the US economy continues to grow around 2%. Japanese equities are picking up nicely in line with their economy, so it is Europe and the UK that are struggling a bit.
Overall we still prefer equities and listed property offshore to bonds. Could this be one of the few years when the May to August period is positive rather than negative for risk assets like equities?
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Stanlib Global Conservative comment - Dec 12
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Wednesday, 29 May 2013
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Fund Manager Comment
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Fund Review
After an excellent third quarter of 2012 for the fund (up 4.3% in dollars), the fourth quarter produced a reasonable dollar return of 1.4%. Global equities did 2.6% in dollars; global listed property did best with a return of 4.8% in dollars, while global bonds lost 1.5%. During the year to end December the fund gained 7.9% in dollars. The fund continues to be fully invested in equities (29-30% of fund), overweight in listed property (10.5% versus 7% for the benchmark), underweight in bonds (26.4% versus 30% for the benchmark) and marginally underweight in offshore cash (31.6% versus 33%). The cash holding is 65% in euros and pounds with the pound being the biggest holding.
It was "risk on" during the quarter, with developed market global equities gaining 2.6% in dollars and emerging markets gaining 5.6%. The fund benefited from an overweight position in emerging market equities via the Fidelity Emerging Market Fund and especially from the marked overweight in listed property.
Looking Ahead
STANLIB's house view is that the US and global economies will continue to grow, albeit slowly. Interest rates are expected to remain at rock-bottom levels in most countries after a large number of rate cuts across the world in 2011/2012. After the strong move in markets since July, it is quite possible that returns will be muted in the next month or two or that a correction may ensue. However, the bull market remains intact. Usually after 4 years of a bull market (due on 8th March 2013), one may be cautious, because interest rates start rising as demand gathers pace. This is not prevalent in 2013.
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Stanlib Global Conservative comment - Sep 12
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Monday, 19 November 2012
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Fund Manager Comment
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Fund Review
The fund had a good return in the quarter to end September, doing 3.95% in the quarter and 8.5% in the year to end September, both in dollar terms. It was "risk on" during the quarter, with developed market global equities gaining 6.1% and emerging markets gaining an even better 7%. The fund benefited from an overweight position in European shares (up 9.3% in the quarter in dollars), which bounced back nicely, along with the euro currency (up 7% against the dollar from its low), as well as an overweight in emerging markets. The overweight in global property also proved effective (up 4.7%).
The fund continues to be at full weight in equities (30%), overweight in listed property (9.6% versus 7% for the benchmark), underweight in bonds (22.9% versus 30% for the benchmark) and overweight in offshore cash (37.5% versus 33%). Sterling features as our biggest currency position in our cash holdings and together with the euro comprises 56% of cash. We held a good position in the Aussie dollar, since sold. The fund was largely unchanged during the quarter as we waited for our strategy to unfold in a more positive market.
Looking Ahead
STANLIB's house view is that the US and global economies will continue to grow, albeit slowly. One big positive in 2012, as opposed to 2011, has been the consistent cutting of interest rates around the world. STANLIB remains overweight in equities offshore. After the strong move in markets since July, it is quite possible that returns will be muted in the next month or two. However, with the bull market still intact, there is no certainty on that.
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Stanlib Global Conservative comment - Jun 12
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Thursday, 23 August 2012
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Fund Manager Comment
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Fund Review
After an excellent first quarter in 2012, the second quarter turned distinctly nasty for risk-oriented investments as the European crisis took centre stage yet again. The fund's return was -3.2% during the three month period, on the back of currency movements (the euro lost almost 6% against the dollar and most emerging market currencies lost too) and weaker stock markets (MSCI World Index down 5.4% and MSCI Emerging Markets Index down 8.8%). Listed property held its own during the quarter, while government bonds gained a tad and corporate bonds lost a tad.
During the year to end June the fund lost 5.3%% in dollar terms on the back of much weaker stock markets and currencies, particularly in Europe and in emerging markets.
The fund continues to be at full weight in equities (29-30%), overweight in listed property (8.7% versus 7% for the benchmark), underweight in bonds (22% versus 30% for the benchmark) and overweight in offshore cash (40% versus 33%). The fund was largely unchanged during the quarter.
Looking Ahead
As frequently occurs, the period from April has been a difficult one for global risk markets, coinciding as it does with the languid northern hemisphere summer months. Global economies have weakened and risk aversion has increased, to the detriment of equities, most currencies and some corporate bonds.
STANLIB's house view is that the US and global economies will continue to grow, albeit slowly. We are hopeful that investors will return to riskier investments like equities as the northern hemisphere summer draws to a close in September. One big positive in 2012, as opposed to 2011, has been the consistent cutting of interest rates around the world, as well as the sharp fall in the prices of many commodities, especially oil. Both of these positives should help to underpin economies and stock markets later in 2012.
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Stanlib Global Conservative comment - Mar 12
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Friday, 1 June 2012
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Fund Manager Comment
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Fund Review
The Fund had an excellent quarter, returning 5.8% in dollar terms.
The portfolio benefited from a 30% allocation to equities, which is our typical weighting, including an overweight position in European equities and emerging market equities, both of which had hurt the fund during 2011. Global equities had an excellent quarter (MSCI World Index up 11.7% in dollars and emerging markets up 14.1%) as "risk-on" prevailed - with global economic growth improving and confidence improving in the Eurozone. Even the Japanese market jumped 20% in yen terms (11.7% in dollars). Global property (11.3% of fund) also did well, gaining over 11% in dollars.
During the quarter global government bonds returned -0.5% in dollars and JP Morgan Cash returned 2.4%. We remain underweight bonds (20.3% versus 30% for the benchmark), preferring an overweight in cash (40% of fund versus 33% for the benchmark). At the end of March, the fund's cash position was 31% invested in sterling, 24% in euros, 26% in Aussie dollars and about 19% in US dollars. Early in April we reduced our holding in equities marginally to 27% of fund and increased our holding in US dollar cash.
Looking Ahead
The global equity bull market, including listed property, entered its fourth year after the Great Recession on the 9th of March. Although there may be some weakness during the second quarter, we remain positive towards equities and property because of an improving global economy and because of reasonable valuations, coupled with continuing low interest rates.
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Stanlib Global Conservative comment - Dec 11
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Tuesday, 20 March 2012
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Fund Manager Comment
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Fund Review
The fund had a good final quarter of 2011, gaining 1.94% in dollars as global stock and listed property markets rallied after the sharp declines in the third quarter.
The fund is neutral in equities compared with the benchmark's 30% allocation, which is also the maximum allowed in equities and overweight listed global property at 7.6% of portfolio versus 7% for the benchmark. The underweight is in bonds (20.7% versus 30% for the benchmark), but the fund is overweight in cash at 41% of portfolio relative to the benchmark's 33%. The single biggest cash holding is in US dollars (39% of cash), followed by 30% in pounds and 25% in Aussie dollars. This has been a good mix of currencies to have during the last few months of 2011.
For the 2011 calendar year the fund had a negative return of 5.8%. This reflected partly the sharp 18% fall in the dollar return of emerging markets (mostly because of currency declines), the 9% fall in listed property offshore and the 5% fall in the developed markets. Within developed markets, Germany fell 17.5%, while both France and Hong Kong fell 16% and Australia lost 10.8%. Partly because of the strong dollar, the US stock market outperformed strongly and we were a bit underweight in the US during the second half of the year and overweight in emerging markets. We expect this to reverse in the first quarter of 2012, as emerging markets bounce back, including their currencies.
Looking Ahead
The 2012-year has started positively, with the US stock market up in 6 out of the first 7 trading sessions. The third year of a bull market is typically a very difficult year and 2011 was no exception. The fourth year of a bull market is usually better and there is a fair probability that 2012 will produce decent returns. The portfolio is well positioned from an asset allocation point of view and from a fund selection point of view to outperform in 2012.
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Stanlib Global Conservative comment - Sep 11
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Friday, 23 December 2011
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Fund Manager Comment
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Fund Review
Returns were tough (-9.2% for the quarter and -5.9% for the year) as stock markets (including listed property shares) and currencies retreated sharply, even though the dollar return was somewhat better than the MSCI World Index's -17.1% return and the MSCI Emerging Market's -23% return, both for the quarter, helped by a small positive return from global bonds. The fund has a strategic long-term holding of 30% in equities and 7% in offshore listed property that hurts when markets decline and vice versa. Offshore listed property has fallen by 19% since its July levels in dollar terms.
The fund has maintained a higher cash holding than its benchmark (43% of fund versus 33% for benchmark), preferring cash to bonds (20% of fund versus 30% for benchmark) because of the perceived overpricing of government bonds. However, this stance hurt in the past quarter because government bonds performed well amidst the European debt crisis and the American debt-ceiling debacle. Bonds now look even more expensive, unless economies go into recession and deflation. Fortunately we did switch most of our euro cash (4% of cash) into dollar cash (48% of cash) early in the quarter and this helped the fund's performance because the dollar gained strongly against most currencies.
Looking Ahead
Markets (and economies) are in the hands of European politicians at this critical juncture. Will European leaders apply the right medicine to recapitalize their troubled banks and satisfactorily ring-fence the troubled countries in time to avoid another recession? Markets have been worried that they were taking far too long. In the end, it all comes down to confidence, the confidence for consumers to keep spending, instead of worrying about their jobs and the confidence of businesses to expand.
As of early October, we are hopeful that a rally is long overdue and may gradually be enfolding, because pessimism is at extreme levels and the two key European leaders (Germany and France) have given an undertaking to produce a plan by end October. Whether it is merely a rally in a downward moving market, no one knows at this stage, although chartists suspect it is.
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Stanlib Global Conservative comment - Jun 11
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Monday, 19 September 2011
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Fund Manager Comment
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Fund Review
The second quarter was a difficult one for global stock markets as a variety of negative issues affected sentiment and economic growth, including the Japanese tsunami, the high oil and food prices, the Greek and other European debt issues. As a result the fund had a small negative return of 0.3% in rands or 0.4% in dollars. For the year to end June, the fund returned -0.7% in rands and 12.6% in dollars.
At one stage during the June quarter, we lowered the equity weighting from 30% to the low 20% area, but reverted back to 30% near the end of June. The fund has 27% of equities in Emerging Markets (well above the benchmark's 14%) and an additional 12% of equities in China/Asia, because we think Chinese stocks offer good value after 21 months of sideways movement. Once inflation begins to subside in China, allowing the authorities to take their foot off the tightening break, the market should pick up.
Our underweight in bonds hurt us during the June quarter. Bonds returned 3.2% in dollars during the quarter, although they are losing value (yields rising) as the new quarter gets underway. We have preferred to hold an overweight position in money markets (currency funds), with a preference for the euro and pound over the dollar.
Looking Ahead
Global stock markets usually experience difficult times during the May to September period. This year has been no exception, although a nice bounce is unfolding in early July. We think on balance that we've seen the lows for the year and that the bull market remains intact, even though we may see further declines before September.
However, slow economies in the developed world, coupled with weaker oil and food prices, imply lower interest rates for longer, which is good for equities. Fortunately companies are listed on stock markets, not governments, many of which remain mired in debt.
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Stanlib Global Conservative comment - Mar 11
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Tuesday, 14 June 2011
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Fund Manager Comment
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Fund Review
The fund had a decent quarter, returning 2.3% in dollars. During the year to end March the dollar return was around 6%. The fund has a maximum allowable allocation to equities of 30% and global equities did 14% during the year to end March. As usual, we were active during the quarter, reducing our equity allocation to under 20% at one stage during the Egyptian crisis, before reverting back to the maximum allowable 30% allocation a few weeks later. Fourteen percent of the equity allocation is invested in emerging markets, down from the 33% held at end December, partly because the developed markets have offered good value. We cut the holding in offshore listed property to zero during the tricky period, before returning to a holding of 7.4% of fund (slightly above the benchmark's 7%). We have continued to hold a very underweight position in global bonds (13.7% versus the benchmark's 30%) because of concerns about possible capital loss as economies gather steam and infl ation picks up. The cash position in the fund has therefore been high at around the 48% level. At the end of the quarter 67% of that cash was in the euro, pound and Canadian dollar, with 33% in the US dollar. The dollar lost 6% against the euro, 3.8% against the pound and 2.8% against the Canadian dollar during the quarter. So the cash position has added value to the fund's return.
Looking Ahead
Global stock markets bounced back nicely in late March as investors placed the Egyptian, Libyan and Japanese crises in perspective relative to the good news of the global economic recovery continuing to make progress in most regions. Offshore equities remain undervalued and to-date interest rates in the developed markets are still at record lows, although the European rates may rise later in April by 0.25% because of higher infl ation in Europe. Risks are higher because of the 26% dollar rise in the oil price so far in 2011 and because of issues in Japan and the Middle East. Also we are always cautious during the May to August period, which coincides with the northern hemisphere summer months. However, all-in-all, the global equity bull market remains intact.
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Stanlib Global Conservative comment - Dec 10
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Friday, 25 February 2011
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Fund Manager Comment
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Fund Review
Your fund managed to record a small positive dollar return in the last quarter of 2010, although the return was a bit disappointing, even though it was a bit better in pounds (1.5%) and in euros (2.6%). In this particular three month period, our mix of Fidelity equity funds appears to have under-performed the MSCI World Index's 8.6% dollar return. However, the return for the 2010 year was more pleasing at 4.9% in dollars, 8.1% in pounds and 11.4% in euros, since the MSCI World Index did 9.6% for the year and your fund is allowed a maximum of 30% of assets in equities. The equity portion of the fund is well diversified amongst developed markets and emerging markets, with the latter around 33% of equities. The fund is at its maximum allowable percentage in equities (30%) and is slightly overweight in listed property shares offshore (7.4% versus the benchmark's 7%). Global listed property returned 5% in dollars during the quarter and 15.6% during the year, which was less than equities for the quarter but better over the year. We made a big change to the bond portfolio during the quarter, deciding to go heavily underweight in global bonds, cutting our position to as low as 9% of portfolio (versus the benchmark's 30%). The reason for this was the sharp jump in government bond yields - leading to capital losses - during late 2010 as bond yields normalized, meaning they rose from extremely low levels (expecting a possible double-dip recession) to more normal levels as the economic news improved. The fund's bond portfolio was more heavily invested in corporate bonds that held up better than governments. However, the risk of higher yields remains.
Looking Ahead
We remain optimistic for continued recovery in most of the global economies and in further improvement in global equity markets, despite the anticipation of market corrections from time to time. Developed markets remain for now at 1999 levels in dollar terms
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Stanlib Global Conservative comment - Sep 10
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Wednesday, 5 January 2011
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Fund Manager Comment
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The 3rd quarter of 2010 was an excellent quarter for the fund, with a dollar return of around 9.5%. This was achieved by largely being in the right assets at the right time. The MSCI World Index of developed market equities did 13.9% during the quarter in dollars, with Europe excelling - interesting considering all the crises in Europe - with a return of 19.4% (well ahead of the US's 11.5% return) and Australia (23.7%) and Hong Kong (21.9%) also doing well. Fortunately we maintained a heavy overweight position (over 40% of equities) in emerging markets, because the MSCI Emerging Markets Index returned 18.2%, well ahead of the developed markets, with Turkey (31.9%), South Africa (25.4%) and Thailand (32.5%) excelling. During the quarter equity markets had a strong July, after which we cut our equity holding from the maximum 30% allowed to under 20% and entirely sold out of our listed property holding. This was because we were concerned about further downside risk during the northern hemisphere summer. Fortunately August was a down month, following which we reinvested in our equity position (back to 30%) and listed property position (7.5%) just in time for the start of the northern hemisphere autumn (1st September). That was a good move because September was a fantastic month for global equities, led by emerging markets (up 11.1%) and also developed markets (up 9.4%). Listed property (7% of fund) rose by 14% in dollar terms during the 3rd quarter, adding nicely to your fund's returns, while global bonds (21.9% of portfolio) returned 8.3%. Importantly, because the fund holds as much as 35% in cash (currency funds) - and at times more - the currency holdings play a crucial role. During late August and throughout September this cash was 77% in sterling and euros and only 23% in dollars. From the 24th of August to the end of September the dollar lost 7.7% against the euro and 2.5% against the pound. So the fund's recovery in hard currency terms from the 2008 debacle has continued nicely. The fund has overcome the collapse in October 2008, when Lehman Bros went bang, and is now trading at the same dollar unit price as in August 2008. In euro terms, the fund is trading at January 2008 levels and in pound terms the fund is close to another all-time record high, some 10% higher than the highest unit price recorded in 2008. Looking ahead: After the recent big gain in markets (into early October), the elastic may be a tad stretched, meaning we may have a correction or consolidation. However, there is a good probability that after this consolidation markets will continue to recover from the 2008 crash.
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Stanlib Global Conservative comment - Jun 10
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Thursday, 9 September 2010
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Fund Manager Comment
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Fund Review
The June quarter started well as markets appreciated strongly until mid-April. Then the wheels came off, as the news on Greece and various other European countries got worse and worse. We underestimated the sovereign debt crisis in some of those countries, but in particular we underestimated its effect on global markets and on the Euro, which lost 9.5% against the Dollar during the three months to end June. In Dollar terms, the fund lost around 6% during the quarter, partly on the back of the 13% decline in global equities and partly on the back of the rampantly strong Dollar. In Pound terms, the loss was 4.7% for the quarter, but over the year to end June the fund was up 13% in Pound terms (2.6% in Dollar terms). In Euro terms, the fund was up 3.6% during the quarter and 17.7% during the twelve months to end June. We made very few changes during the quarter, apart from up-weighting our holding in sterling cash at the expense of Dollar cash and also selling the Aussie Dollar cash holding. Otherwise, we held onto the different asset classes, including equities, bonds and property. One small positive on the equity side has been the outperformance of emerging market equities over developed market equities, which is unusual during times of risk aversion (selling of riskier assets). The fund has 24% of its equity holding in emerging markets, which is 11% overweight the benchmark (MSCI All Countries Index).
Looking Ahead
In early July the stock markets rallied a bit, which is a positive, although we remain in the seasonally difficult May to October period (languid summer months offshore). The Euro and Pound are rallying quite strongly against the Dollar after the huge run in the Dollar. At this stage the fund's cash and bond holdings combined are more heavily weighted to the Pound and Euro than to the Dollar (60 to 40), so the fund is benefiting from the move. Although it has been a very difficult couple of months in global stock markets, making forecasting the near future more complex. We are cautiously optimistic that the worst may have been seen and that a so-called "double-dip" recession is unlikely to occur, despite a slow-down in many economies.
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Fund Name Changed
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Thursday, 22 July 2010
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Official Announcement
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The STANLIB Offshore Managed Conservative Fund will change it's name to STANLIB Global Conservative Fund, effective from 22 July 2010
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Stanlib Managed Conservative comment - Mar 10
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Tuesday, 29 June 2010
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Fund Manager Comment
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Fund Review
After a superb recovery in 2009 (up 23.7% in dollars), the fund still managed to record a positive dollar return of around 1% in quarter one of 2010 and a tremendous dollar return of close to 35% for the year ending 31st March 2010. It is interesting that the fund gained 7.1% during the quarter in pound terms and is now at an all-time record high in pounds, some 14% higher than its previous record high. It also gained 6.4% in euro terms during the quarter (31.7% during the twelve months to end March). As usual, we have managed the fund very actively. We started the quarter with just 18% in equities and 0% in property funds because of an anticipation of a stock market correction, which finally occurred on the 21st of January and lasted almost three weeks. Developed markets fell about 8% in dollar terms, although Emerging markets dropped 13% and property markets dropped 9%. Subsequently we raised our equity holding back to the 30% self-imposed limit and the property fund holding back to 8%-plus. Also, we now have 23% of equity invested in the Fidelity Emerging Markets Fund plus almost 5% invested in the Fidelity Australia Fund. Since the low point in February, the property fund is up 15% in dollars, the Emerging Markets fund is up 15% and the MSCI World Index is up 11.5%. All three areas are at new recovery highs and most stock markets have now broken their down-trends on the charts, which by definition means that they are in new bull-trends (up-trends). This implies that, despite possible pullbacks from time to time, markets should go higher.
On the currency front, we stayed overweight the dollar until it reached the $1.35 to the euro area (up around 10% in 3 months), at which time we cut back on our currency bet, by holding half the cash position initially in euros, then subsequently mostly in pounds, because it seems to us as if the pound has bottomed against the euro and should therefore appreciate as the year progresses.
Looking Ahead
Overall, we remain optimistic on the fund's unit price in dollar terms because we expect equities and property funds to continue to appreciate during 2010, albeit with pullbacks along the way.
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Stanlib Managed Conservative comment - Dec 09
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Friday, 19 March 2010
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Fund Manager Comment
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After the superb June quarter, when the fund rose by 23% in dollar terms, the good news continued in the September quarter, with the fund up a further 8.3% in dollar terms. The fund is now up 24% in dollar terms in the first nine months of 2009 and is back at September 2008 levels, having finally recouped all the losses suffered in October 2008 after the collapse of Lehman Bros.
We maintained the maximum 30% equity holding for most of the quarter, although we ended the quarter with 15% in equities because of a perception that markets were overextended and due for a pullback. During the quarter, the MSCI World Index gained 16.9% in dollars, while the Fidelity Global Property Fund did even better, gaining over 20% in dollar terms. The fund's 14% held in property benefited strongly and we then cut the property allocation to 5% at the end of the quarter.
The fund's bond position continued to benefit from a recovery in corporate bond prices. Individual investors offshore, in their rather desperate hunt for yield, have invested billions of dollars in corporate bond funds (more than in equity funds) which is helping drive down bond yields (drive up bond prices).
While the pound sterling had been the best of the big currency funds in the first part of the year, the pound got hammered in the latest quarter, losing 7.3% to the euro. We moved to an overweight position in euros early in the quarter and continued to hold some Aussie dollars, which has been one of the best currencies in 2009.
Although the fund is defensively positioned early in the new quarter, we shall be looking to upweight both equities and property funds when markets show signs of turning positive again.
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Stanlib Managed Conservative comment - Sep 09
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Monday, 30 November 2009
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Fund Manager Comment
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After the superb June quarter, when the fund rose by 23% in dollar terms, the good news continued in the September quarter, with the fund up a further 8.3% in dollar terms. The fund is now up 24% in dollar terms in the first nine months of 2009 and is back at September 2008 levels, having finally recouped all the losses suffered in October 2008 after the collapse of Lehman Bros.
We maintained the maximum 30% equity holding for most of the quarter, although we ended the quarter with 15% in equities because of a perception that markets were overextended and due for a pullback. During the quarter, the MSCI World Index gained 16.9% in dollars, while the Fidelity Global Property Fund did even better, gaining over 20% in dollar terms. The fund's 14% held in property benefited strongly and we then cut the property allocation to 5% at the end of the quarter.
The fund's bond position continued to benefit from a recovery in corporate bond prices. Individual investors offshore, in their rather desperate hunt for yield, have invested billions of dollars in corporate bond funds (more than in equity funds) which is helping drive down bond yields (drive up bond prices).
While the pound sterling had been the best of the big currency funds in the first part of the year, the pound got hammered in the latest quarter, losing 7.3% to the euro. We moved to an overweight position in euros early in the quarter and continued to hold some Aussie dollars, which has been one of the best currencies in 2009.
Although the fund is defensively positioned early in the new quarter, we shall be looking to upweight both equities and property funds when markets show signs of turning positive again.
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Stanlib Managed Conservative comment - Jun 09
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Friday, 18 September 2009
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Fund Manager Comment
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We have maintained the holdings in risk assets in the fund (equities, property funds, bonds) that we held at end 2008 - and 2007. The reason is that in our view the risk assets have fallen too far to sell them at these low levels and convert paper losses into actual losses. From here it is going to be a game of patience as we wait for risk assets to recover, bit by bit. We see no alternative to this. Offshore cash or money market is paying an interest rate that is less than1%(0.1% in the case of the dollar). Government bonds are yielding less than 2%.
The MSCI World Index (global mostly developed stock market index) declined sharply in the first couple of months of 2009 to be down 25% in dollar terms by the 9th of March. It then staged a recovery, but still ended down 11.8% for the quarter. Offshore listed property shares fared a lot worse, declining by33%by March 9th, before recovering to be down a still considerable 24.7% in dollar terms during the quarter as the global recession deepened. To add oil to already troubled waters, corporate bonds also declined further, as corporate bond yields rose yet again.
So it was a shocking start to the year. The fund declined by a further 7.1% in dollar terms during the first quarter of 2009. The good news is that since the end of March the fund has risen by 5.5% in dollar terms. It is still slightly down from December's close (1.7% in dollar terms), but we are more hopeful now that global markets are in the midst of a decent rally because there are some initial tentative signs that the global economy may have passed its worst point.
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Stanlib Managed Conservative comment - Dec 08
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Wednesday, 25 March 2009
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Fund Manager Comment
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The September quarter was a very tough one for the fund as the equity markets (MSCI World Index) tumbled by 17% in dollar terms or 12.6% in rand terms and international property fell almost 14% in dollars or9%in rands. Fortunately the bonds in the fund held up well and on the cash side we switched out of the euro and pound into the dollar before the dollar's big gain against these currencies, thereby recouping a portion - albeit small - of the losses seen in the other asset classes. The dollar gained over 12% against the euro during the quarter, which was an amazing move for the biggest currency in the world against the second biggest currency.
We are obviously disappointed to have been "caught" holding equities and property shares during this extraordinary meltdown in the global equity markets, although we are within are equity limit of 30%. The unprecedented nature of the meltdown, whereby the US financial system began unraveling at an alarming rate, was not remotely expected.
The only comfort as I write this is that the massive infusions of capital and energy expended by the governments of the US, UK, Europe and others appear to be helping - finally - although the weak state of the economies (probable recession) is a concern and in fact has caused an extraordinary meltdown of share markets in October (International Property shares were down 30% in dollar terms in October). Clearly the global economy is unable to operate without bank lending and it is imperative that normal bank lending is restored, whereby banks are sufficiently confident to lend to each other and to clients.
It is possible, that October was the bottom for global equities and hopefully commercial listed property markets. The Japanese equity market was down by a phenomenal 81.6% from its record high of 1989, below the "darkest before the dawn" level during the Iraq War in 2003. Bearing in mind that at its very worst, during the Great Depression the US stock market tumbled by 88% and similarly at its worst after the 2000 bubble burst, the Nasdaq Index lost 80%, one suspects that the Japanese market is a fantastic buy at these levels.
Although markets have tumbled way beyond expectations, one is slightly cheered to see some of the great value managers like Warren Buffett and Anthony Bolton (Fidelity, UK) stepping up to the plate to buy equities and openly commenting on the great values out there.
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Stanlib Managed Conservative comment - Sep 08
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Friday, 14 November 2008
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Fund Manager Comment
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The September quarter was a very tough one for the fund as the equity markets (MSCI World Index) tumbled by 17% in dollar terms or 12.6% in rand terms and international property fell almost 14% in dollars or 9% in rands. Fortunately the bonds in the fund held up well and on the cash side we switched out of the euro and pound into the dollar before the dollar's big gain against these currencies, thereby recouping a portion - albeit small - of the losses seen in the other asset classes. The dollar gained over 12% against the euro during the quarter, which was an amazing move for the biggest currency in the world against the second biggest currency.
We are obviously disappointed to have been "caught" holding equities and property shares during this extraordinary meltdown in the global equity markets, although we are within are equity limit of 30%. The unprecedented nature of the meltdown, whereby the US financial system began unraveling at an alarming rate, was not remotely expected.
The only comfort as I write this is that the massive infusions of capital and energy expended by the governments of the US, UK, Europe and others appear to be helping - finally - although the weak state of the economies (probable recession) is a concern and in fact has caused an extraordinary meltdown of share markets in October (International Property shares were down 30% in dollar terms in October). Clearly the global economy is unable to operate without bank lending and it is imperative that normal bank lending is restored, whereby banks are sufficiently confident to lend to each other and to clients.
It is possible, that October was the bottom for global equities and hopefully commercial listed property markets. The Japanese equity market was down by a phenomenal 81.6% from its record high of 1989, below the "darkest before the dawn" level during the Iraq War in 2003. Bearing in mind that at its very worst, during the Great Depression the US stock market tumbled by 88% and similarly at its worst after the 2000 bubble burst, the Nasdaq Index lost 80%, one suspects that the Japanese market is a fantastic buy at these levels.
Although markets have tumbled way beyond expectations, one is slightly cheered to see some of the great value managers like Warren Buffett and Anthony Bolton (Fidelity, UK) stepping up to the plate to buy equities and openly commenting on the great values out there.
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Stanlib Managed Conservative comment - Jun 08
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Monday, 22 September 2008
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Fund Manager Comment
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The second quarter started with a bang as global equities and property shares bounced back sharply from the woes of the first quarter, while bond values declined as yields rose, all of which we had been expecting. However, all this good news was shoved aside as the oil price ran up relentlessly by an extraordinary 35% in one quarter (from $104 to $142 per barrel). Although economies and markets have done well over the past five years despite a rising oil price, the latest run up has been both excessive and too quick. From May shares and property shares around the world fell sharply as the oil price accelerated. It is possible that a choke point has been reached, where sky high oil prices cause economies to decline rapidly.
Without the soaring oil price, the fund would have done well. One small positive was that we held no government bonds as prices tumbled and then accumulated bonds after the yields had run up strongly to 31% of fund. We have gone overweight Sterling bonds in the belief that that economy is weakening fast, which is good for bonds and the currency fell 17% against the euro and now looks good value. We are also now overweight dollar bonds because of the currency possibly being close to its bottom.
Looking ahead, it all depends on the oil price. If that keeps on rising, then all markets are in trouble, but if the oil price declines by at least another $20, shares should bounce back. So the risks are still high, but so are the opportunities. There is $3.3 trillion (record levels) sitting in US money markets in the US earning very low interest rates. If sentiment improves, there is plenty of buying power.
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Stanlib Managed Conservative comment - Mar 08
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Friday, 11 July 2008
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Fund Manager Comment
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The fund had a good quarter in dollars (up 3%) and an excellent year to end September in dollars (up over 10%). In euros the year was flat, which is fine (holding its own in the strongest currency, despite holding assets in other currencies).
After the sell-off in equities in July/August that started with the credit crisis in the US, we reinvested in the Fidelity China Focus Fund (5% of equities or 1.7% of fund) and in the Fidelity South-east Asia Fund (5% of equities or 1.7% of fund). These two funds jumped over12% in September alone.
We also doubled our position in the Fidelity Global Property Fund to 16% of fund after this fund had fallen by 20% since its high in February. Global property shares became undervalued at this stage.
After holding an aggressive position of 0% of cash in US dollars for much of the past few months, we recently cut the anti-dollar bet by including dollars at 39% of the cash holding in the fund (cash is 52% of fund). This is to guard against the possibility of an oversold dollar turning around and rallying. Being a conservative fund, we need to adopt some caution there.
Otherwise we are still at maximum weight in equities (30%) and hold very little in bonds (6% in total in Euro short-dated and Euro High Yield Funds only). This is because we remain concerned about rising bond yields, especially after they fell sharply during the recent sub-prime/credit crisis.
The only part of the equity holdings that is underperforming is the 15% of equities in Japan. Japan has so far been very disappointing, including its currency. We think that it is worth being patient there because both the economy and company earnings continue to do quite well.
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Stanlib Managed Conservative comment - Dec 07
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Thursday, 6 March 2008
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Fund Manager Comment
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The fund had a good quarter in dollars (up 3%) and an excellent year to end September in dollars (up over 10%). In euros the year was flat, which is fine (holding its own in the strongest currency, despite holding assets in other currencies).
After the sell-off in equities in July/August that started with the credit crisis in the US, we reinvested in the Fidelity China Focus Fund (5% of equities or 1.7% of fund) and in the Fidelity South-east Asia Fund (5% of equities or 1.7% of fund). These two funds jumped over12%in September alone.
We also doubled our position in the Fidelity Global Property Fund to 16% of fund after this fund had fallen by 20% since its high in February. Global property shares became undervalued at this stage.
After holding an aggressive position of 0% of cash in US dollars for much of the past few months, we recently cut the anti-dollar bet by including dollars at 39% of the cash holding in the fund (cash is 52% of fund). This is to guard against the possibility of an oversold dollar turning around and rallying. Being a conservative fund, we need to adopt some caution there.
Otherwise we are still at maximum weight in equities (30%) and hold very little in bonds (6% in total in Euro short-dated and EuroHigh Yield Funds only). This is because we remain concerned about rising bond yields, especially after they fell sharply during the recent sub-prime/credit crisis.
The only part of the equity holdings that is underperforming is the 15% of equities in Japan. Japan has so far been very disappointing, including its currency. We think that it is worth being patient there because both the economy and company earnings continue to do quite well.
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Stanlib Managed Conservative comment - Sep 07
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Tuesday, 27 November 2007
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Fund Manager Comment
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The fund had a good quarter in dollars (up 3%) and an excellent year to end September in dollars (up over 10%). In euros the year was flat, which is fine (holding its own in the strongest currency, despite holding assets in other currencies).
After the sell-off in equities in July/August that started with the credit crisis in the US, we reinvested in the Fidelity China Focus Fund (5% of equities or 1.7% of fund) and in the Fidelity South-east Asia Fund (5% of equities or 1.7% of fund). These two funds jumped over12%in September alone.
We also doubled our position in the Fidelity Global Property Fund to 16% of fund after this fund had fallen by 20% since its high in February. Global property shares became undervalued at this stage.
After holding an aggressive position of 0% of cash in US dollars for much of the past few months, we recently cut the anti-dollar bet by including dollars at 39% of the cash holding in the fund ( cash is 52% of fund). This is to guard against the possibility of an oversold dollar turning around and rallying. Being a conservative fund, we need to adopt some caution there.
Otherwise we are still at maximum weight in equities (30%) and hold very little in bonds (6% in total in Euro short-dated and Euro High Yield Funds only). This is because we remain concerned about rising bond yields, especially after they fell sharply during the recent sub-prime/credit crisis.
The only part of the equity holdings that is underperforming is the 15% of equities in Japan. Japan has so far been very disappointing, including its currency. We think that it is worth being patient there because both the economy and company earnings continue to do quite well.
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Stanlib Managed Conservative comment - Jun 07
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Thursday, 27 September 2007
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Fund Manager Comment
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The fund did well to generate a positive dollar return during the quarter ended June 2007 and had a very good year to end June (over10%in dollars).
The fund continues to hold nothing in regular bonds because of rising bond yields (causing capital losses for bonds). We hold a small amount in European High Yield bonds (3% of fund) and 8.7% of fund is invested in a short-dated European bond fund, which is holding its own. Otherwise we retain 11% of fund in the Fidelity Global Property Fund, even though this fund has struggled since peaking in February. It is down 11% in dollars after previously appreciating by 75% in dollars. We believe it still makes sense to allocate a portion of the fund to listed property shares offshore because of strong global economic growth and growing employment, despite the increase in bond yields and short term rates in some countries.
On the equity side we continue to hold the maximum allowed in equities of 30% of fund, with an overweight holding in European equities (34% of equities), partly because of the strong currency helping overall returns and partly because of their undervaluation.
Cash remains the biggest asset class in the fund (47.7%) because of the low holding in bonds. As of early July the fund holds nothing in dollar cash, having switched this holding into Australian dollars (29% of the cash holding). This is our first holding in Aussie dollars, which has been one of the strongest currencies in the world (6.5% official interest rate combined with commodity boom). The other 71% of cash is held mostly in sterling (60%) because of the higher interest rates there and euros (11%).
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Stanlib Managed Conservative comment - Mar 07
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Thursday, 24 May 2007
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Fund Manager Comment
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In dollar terms the fund's unit price was flat during the 1st quarter, but rose well during the year to end March by 9.5%, which is just below the fund's best annual return of 9.7% recorded in the 2006 calendar year. However, it is true that the dollar declined by 10.2% versus the euro and 13% versus the pound, so in euro and pound terms the performance was slightly negative. The year before it was different, though, because then the dollar outperformed the others. During the year the Fidelity Global Property Fund (holding offshore listed property shares) did best of all the asset classes, with a return of 24% in dollar terms. This fund is currently 11% of assets of your fund. Although property has quietened down over the past few months, it is only 4% below its record high in dollars. As long as the big economies continue to grow and generate new employment, the demand for commercial property should remain underpinned. The property fund manager's expectations are for 7-9% annual returns in dollars from the portfolio, which is modest but realistic. However, he acknowledges that the global reallocation of portfolio assets to property is still underway and this could still drive prices higher. The fund is low in bonds (11.6%) as bond yields remain in a gently rising trend, which is negative for values. So 48% of the fund is currently in cash or money markets, with the bulk in pound sterling (63% of total cash) and euros (22% of total cash), with only 15% in dollars. Although the down-trend of the dollar relative to most currencies remains intact, we are cautious over the short-term because there is excessive bearishness towards the dollar and this can sometimes cause the market to reverse and go the other way.
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Stanlib Managed Conservative comment - Sep 06
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Monday, 26 March 2007
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Fund Manager Comment
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In the last quarter (to end June), we said we were optimistic that the fund's value would bounce back and so it has. The quarter to end September was a lot better, with the fund up some 3.7% in dollar terms as offshore property shares recovered strongly and as equities recovered nicely from the mid-year dip. Bonds also did well. As usual, we have been active in our management of the fund, raising the bond holding from 5% of fund to over 40% of fund to take advantage of falling global bond yields (rising bond prices) as the big drop in the oil price fed through to lower inflation and as US economic growth slowed down (usually good for bonds). In October we took profits in bonds and cut them back towards the 20% level. The best holding in the fund during the quarter was the investment in the Fidelity Global Property Fund (12.9% of fund), which jumped by 10% in dollars during the quarter as investors around the world added this "newish" asset class to their portfolios, including a number of pension funds.
As long as more jobs are being created in the US, Europe, Japan, the UK etc then there should be more demand for space. Property earnings and dividends are growing by around 6-7% annually which is good in environments where inflation is around 2%. The best investment on the equity side has been the 4% of equities invested in China via the Fidelity China Focus Fund, which rose almost 5% during the quarter, continuing its strong performance in 2006 (one of the best in the world). We remain fully invested in equities, even though there is always the possibility of a correction after the very decent rally of the past few months. Only the Japanese stock market is disappointing in 2006, after such a great run last year. We think its worth persisting there even though the economy is patchy and quite reliant on exports for growth at this stage. On the cash front, we were overweight the dollar for a period but have since changed to overweight the euro and sterling as signs emerge that the dollar is perhaps heading for a renewed bout of weakness, taking it back into the $1.30's to the euro and possibly toward the $2 to the pound level for the first time in 25 years.
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Stanlib Managed Conservative comment - Dec 06
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Monday, 26 March 2007
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Fund Manager Comment
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The fund had another good quarter, returning over 5% in dollar terms. The 2006 year was the best calendar year for the fund (9.7% return in dollars). The best contributor to the fund's return in both the quarter and the year was the Fidelity Global Property Fund that did 15% in dollars in quarter and 34% over the year. This was one of the best years for global property shares. The best returns came from the UK shares (up 50%). The managers of the fund, Fidelity, believe that the demand/supply fundamentals remain positive for property shares, but caution that because the sector is so hot it has attracted hedge fund players, so volatility is very high. Accordingly, we have reduced the fund's holding in property from 13% to 8.5% to take profits and lower the risk of a pullback in this asset class. We maintained a full 30% weighting in equities throughout the year and continue to favour global equities, even though they could be due for a pullback after rising by almost 22% since the last correction in June. The worst performer last year was the Japanese market (after a great 2005), but we are hopeful that 2007 will be a lot better. The Japanese market (5% of fund) seems close to breaking through a key resistance level that has rebuffed the index 6 times over the past 13 years. The index is still at 1987 levels. Otherwise we have reduce our weighting in bonds to just 12% (all in euros), as yields have risen of late. On the cash front, we are overweight sterling firstly, followed by the euro and have just 23% of cash in the dollar.
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Stanlib Managed Conservative comment - Jun 06
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Tuesday, 28 November 2006
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Fund Manager Comment
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After an excellent quarter to end March, the June quarter was a tough one as equity, property and bond markets headed south. In fact the best place to be was in sterling cash, followed by euro and then dollar cash. The dollar weakened by close to 4% against the euro and by 5.5% against sterling.
The fund had over 50% effectively in cash/near cash, with less than 25% of this in dollar cash and the balance in euro cash (including short-dated euro bonds) and some in sterling too. Another smallish amount (around 5%) was in the Fidelity Euro High Yield Fund that was holding its own very well (not declining in value like the government high grade bonds, where yields were rising).
The 10% invested in offshore property shares also declined during the quarter, by around 3% in dollar terms as these shares also had a correction, which was not bad under the circumstances where most equity-related assets took a knock after new Fed Governor Bernanke's "warlike" anti-inflation speech that sent global markets tumbling.
The 30% invested in offshore equities was actually up slightly during the quarter in dollar terms largely because of the big holding in US equities (46%), which held up much better than anywhere else partly because they had risen by less in the first place. The 4% invested in China (1.2% of total fund) held up well too, while the 8% invested in south-east Asia took a big knock, down 12%.
We are optimistic that the fund's dollar value should bounce back as the year progresses, with equities, bonds and property shares rallying back to potentially new highs for 2006. We have begun upweighting our government bond and high grade corporate bond holdings for the first time in a few years in anticipation of a good counter rally in bonds, with yields finally declining a bit.
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Stanlib Managed Conservative comment - Mar 06
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Friday, 25 August 2006
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Fund Manager Comment
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The fund had a good year to end March 2006. To put the return in context, the STANLIB Euro Currency fund did - 5.7% for the same period in US dollars, because the euro was weak against the dollar, as was the pound. The STANLIB US Dollar fund did 2.5% and the US Dollar Bond fund did 0.7%. The fund would have done a lot better if we had been able to hold the Fidelity Global Property fund during the period, because this fund did 35%, but it was not available offshore until very recently.
We have cut the exposure to bonds because of rising yields (falling values) and hold only the Euro High Yield fund and Euro short-dated fund. The equity holding remains at the maximum 30%, meaning we are still positive towards equities, although a tad less so because of the big jump in bond yields (a negative for economies and markets because they are essentially medium to long-term interest rates) and because of the new highs in oil prices.
The equity position is 48% in the US which is holding the fund back in the short-term because the US is underperforming while their short-term rates rise. We anticipate that the US will finally cease raising rates perhaps by June, which should finally allow their market to perform. Meanwhile we have made our first investment directly in China (4% of equity, 1.2% of fund), via the Fidelity China Focus Fund. This market appears to have turned the corner after 4 years of poor performance (down 50%!)
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Standard Bank Managed Conservative comment -Sep 05
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Tuesday, 20 December 2005
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Fund Manager Comment
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The fund had a small negative rand return for the quarter to end September because of rand strength. The rand gained 5% against the dollar, 6.5% against the pound and 5.3% against the euro during the 3 months to end September. During the year to end September, the fund recorded a positive 3.2% rand return, despite the rand gaining against the three big currencies (2.3% up against the dollar, 4.6% against the pound and 4.8% against the euro). More important was that the fund gained in dollars during the quarter on the back of stronger equity markets, with the overweight position in Japan finally paying off as the Japanese stock market gained 17%in yen Over the twelve month period the fund gained 5.1% in dollars, which was partly due to strong equity markets and increasing our equity holding from 10% maximum to 30% maximum in December and partly because of some reasonably good currency positions, ie being in the better currency on average over the year (underweight the dollar and overweight the pound until end 2004, then overweight the dollar for the early part of 2005)
The only equity change during the quarter was to reduce our holding in the Fidelity America Fund, fortunately just ahead of hurricane Katrina that has caused so much trouble for the market in the US. Weinstead invested 2%of fund in our first ever holding in an emerging market outside of south-east Asia, namely the Fidelity Latin America fund, which is almost entirely invested in Brazil and Mexico. Brazil is to some extent an option on China because of the big exports of iron ore, copper etc that Brazil sells to China. Also their official interest rates are 19% and have just started to decline, with the stock market on an attractive forward PE ratio of 7…and a strong currency. We started the new quarter underweight the dollar, but in early November have changed that position to overweight the dollar as the dollar seems set to continue to outperform the pound and euro for the foreseeable future.
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Standard Bank Managed Conservative comment -Jun 05
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Thursday, 17 November 2005
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Fund Manager Comment
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The fund was about flat in dollars during the quarter ended 30th June 2005, which pleases us as the dollar ran strongly during the quarter.
The fund gained over 6% in euros during the quarter!! Can you believe it? In other words, it makes such a difference what currency you're using to measure performance. In sterling, the fund's return during the quarter was 4.5%.
The major development during the quarter was the sharp appreciation of the US dollar against the euro and pound, amongst many other currencies. Once the dollar broke through the 1.28 dollars to the euro level, we made the big assumption that the huge dollar down-trend of the previous 3 years was over and quickly switched out of most of our euros and pounds into the dollar. Simultaneously we went overweight the US in our equity holdings for the first time in 3 years, acknowledging the material effect that currency moves have on stock market returns, when measured in a common currency. We raised the US holding to 59% of the equity portion of the portfolio (30% maximum), somewhat higher than the 52%weighting in the benchmark MSCI World Index.
The move was fortuitous as within one month the dollar had run to $1.20 to the euro, having started the year at $1.36 to the euro. So the world's biggest currency had gained 12% against the world's 2nd biggest currency in 6 months, completely the opposite of most predictions. While we have built up a stake of around 14% of the rand-based STANLIB International Conservative fund in the STANLIB International Property fund (offshore listed property shares), we are as yet unfortunately not able to buy into this fund for the offshore Managed Conservative fund. Hopefully this avenue will open up early next year.
During the year ended June the fund delivered a US dollar return of 3.2%. We're reasonably happy with this return, even though it is lower than the average of 6.6% per year in dollars over the past 3 years. The point is that the return was achieved at considerably lower risk than the 11% return for global equities over that period; and the dollar gained a bit against the pound over the year and was only slightly down against the euro, making it more difficult to make money from a weaker dollar. Also, our overweight tilt in the Japanese equity market has not yet paid off as this market underperformed over the past year.
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Standard Bank Managed Conservative comment -Mar 05
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Friday, 1 July 2005
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Fund Manager Comment
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The return during the quarter was a small negative owing to the strength of the dollar against most currencies and also the slightly weaker equity market. For the year to end March the fund returned 4% in dollars (3.98%), having been negatively affected by the underweight in dollars during the last quarter.
The fund was overweight sterling cash and held no dollar cash at the end of the quarter. Equities were upweighted to the maximum allowable of 30% of fund during the quarter as the soaring oil price (up 40% during the quarter) negatively affected the offshore share markets, ie equities were upweighted to take advantage of the lower stock market. Although the fund was still overweight equities in Japan and Europe, the underweight in the US was narrowed as the dollar showed signs of fighting back. Bond holdings remained restricted to the 12% holding in the euro short-term bond fund. We are hoping to take a position in the new STANLIB International Property fund (86% invested in commercial property in 12 countries) but have to deal with the logistical problem where this fund is registered and based in SA rands and not yet on the offshore platform. So investment may not be possible.
We are watching dollar movements closely and may need to switch back into dollars in the near future if the dollar breaks the important $1.275 level to the euro, which would probably indicate an end to the three-and-a-half down-trend for the dollar.
Although we are concerned about the effects of the very high oil price on the equity markets, we are hopeful of a fall in the overpriced oil market and in a recovery in equities, which still look undervalued, especially relative to bonds.
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Standard Bank Managed Conservative comment Dec 04
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Thursday, 17 March 2005
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Fund Manager Comment
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During the quarter the fund gained nicely in dollar terms and during the year the return was 6.3 %. Being that the Standard and Poors 500 share index in the US returned 9.2% over the quarter and 10.9% over the year (with much higher risk), we're happy with the fund's dollar return. The 3 year average annualised return is 9.4% in USD, beating many hedge funds, especially the conservative ones.
As managers, we had a busy quarter. Firstly, the dollar finally broke out of its narrow trading range against the euro (at $1.24 to the euro), so having been 50% in dollars and 50% in euros for a few months until that point, we then went 75% into euros and 25% into dollars. At 1.29 we sold all our dollars and rode that up until 1.32, when we bought back some dollars ( 42% of cash holdings ). We currently prefer the pound to the euro, so the other 58%is in sterling.
On the equity side, we decided to upweight offshore equities from the previous maximum 10% to 20% to move more into line with normal practise, where aggressive funds are typically 75-100% in equities, balanced funds are typically 50-65% in equities and conservative funds are typically 0-30% in equities. We have changed our internal mandate to allow for a maximum of 30% in equities, but out of respect for the more cautious unitholders, we are moving gradually. We do reserve the right at any time to reduce equities to any lower percentage, including 0%.
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Standard Bank Managed Conservative comment -Sep 04
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Monday, 29 November 2004
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Fund Manager Comment
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The fund's unit price has drifted sideways during 2004-to-date, having appreciated quite sharply last year. This lack of appreciation of the fund has to do with the nature of markets so far in 2004: they've gone nowhere in a hurry, except sideways, including the big currencies, the bonds and equities. Only oil prices and other commodities have shown any discernible trend, soaring ever upwards. We made a few changes during the quarter. One was to switch out of the euro high yield bonds - taking a profit, as they had appreciated nicely in euros - and place half of those proceeds (4.7% of fund) in a relatively new Euro short dated bond fund, thereby lowering the risk profile of the fund a little. We placed the remaining proceeds (4.75%) into a US High yield fund. This switch from euros to dollars was part of an exercise at the end of the quarter to neutralise movements in the dollar/euro rate. Previously we had been overweight euros at the expense of both the pound and the dollar. This benefited the fund marginally, especially against the pound, which has lost ground against the euro as currency traders sense that interest rate hikes may be coming to an end in the UK. However, as of the 12th of October we were 50/50 in dollars and euros/sterling as we awaited final resolution by the market of this very narrow trading range between the dollar and euro (1.20 to 1.24 for many months). Then all of a sudden the dollar broke out on the weak side, i.e. above 1.24 and as indicated we have followed the market, meaning we have gone underweight dollars, overweight euros again, as it now looks likely that the dollar will revisit the 1.293 dollars to the euro mark of February this year. We have maintained our equity weighting at 9-10% for most of the quarter in the belief that stock markets are increasingly looking good value, despite the obvious threat and challenge posed by the soaring oil price. The one area where we could have obtained a little extra return is the bond market, which has continued to confound the sceptics and has performed quite well despite the world being on track to show its fastest economic growth rate in 30 years of 5% in 2004!
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