Fund in Focus: Sanlam Investment Management Top Choice Equity Fund

Fund manager insights:

The Top Choice Equity Fund represents the best ideas of the general equity and sector specialists at Sanlam Investment Management (SIM).

As it is a concentrated offering, investors can see it as their personal account portfolio, says Patrice Rassou, head of equities at SIM and fund manager.

“We aim to scan the universe of some 250 large and small caps and select around 20 of the best ideas that are likely to outperform the market over the long term by leveraging a team of analysts who are experts in their field,” he explains.

“As pragmatic value investors, a rigorous bottom-up valuation process remains our bedrock in order to identify undervalued stocks.”

According to Rassou, investors who want to grow their wealth over the long term should consider the fund, as it has “delivered returns of over 14% per annum in the past five years”.

“We have invested in companies with dominant positions in their industries and diversified geographical footprints. Any dislocation usually presents excellent entry points to pick up quality stocks,” he adds.

Rassou says that although the JSE has hit record levels, they still see pockets of value. 

“However, equity markets are likely to be braced for a potential credit downgrade and the outcome of the ANC policy conference in December. Market reaction is likely to be binary and hinge on political developments.”

The fund has a large exposure to Naspers* and Rassou says through Tencent the company provides a way to gain exposure to the global technology theme and to a wide range of emerging markets, including China and India, without having to use any of one’s annual offshore allowance.

“At the moment Naspers trades at a large discount to the value of the Chinese internet giant Tencent, providing a sufficiently large margin of safety,” he comments.

Rassou says the fund is “still quite nimble” and has been able to gain exposure to some of the less liquid mid-caps, such as Dis-Chem since its listing.

“This is also reflected in the fact that the fund has been in the first- or second- quartile ranking in an extremely competitive category over most short- and long-term periods – testimony to consistent outperformance.”

Why finweek would consider adding it: 

The fund has outperformed the general equity category average by almost 3% a year for the past decade. It is ranked first in the Alexander Forbes Equity Manager Watch in the five years to end September 2017 in the unconstrained category of the Manager Watch. 

The fund has delivered returns well above its peer group while taking risks broadly in line with the peer group, offering a compelling risk-adjusted return since inception.

This article originally appeared in the 16 November edition of
finweek. Buy and download the magazine here.

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