No negative returns since inception

Fund manager insights:

Fairtree’s Prescient Equity Fund actively pursues local general equities across all sectors of the JSE, with a long-term focus on maximising total returns for their clients – which they’ve consistently achieved annually since inception in 2011. The fund reported a 19.72% total return in the previous year and is now measuring a little over R8bn in assets under management. 

One of the fund’s managers, Cor Booysen, attributes the positively consistent track record (not a single year with performance below 6.5%) to the investment team’s extensive experience in asset management. Both Booysen and co-manager Stephen Brown are RMB asset management alumni. 

The fund does not shy away from having large active positions compared to the benchmark but remains well-diversified with a focus on liquid large and mid-cap holdings.

This allows the fund to achieve their objective of outperforming the benchmark consistently over time without the risk of having periods of large out- or underperformance versus the market.

While some investment managers are either diluting positions in resources or pulling out entirely, the fund is heavy on the sector with a 31.5% allocation, followed by 29.4% in financials and 23.3% in consumer services. 

“The market is valuing resource companies very conservatively by not taking current spot prices into consideration when conducting valuations, making resource companies look attractive,” says Booysen, adding that the global economic environment is still supportive of robust commodity prices.

It also holds listed property shares Fortress and Resilient. Both are trading at very attractive dividend yields, according to Booysen, compared to their peers. 

Although up to 25% of the fund may be invested in foreign securities, it believes it can get offshore exposure by investing in JSE-listed companies such as Naspers, Richemont and Old Mutual’s Quilters. “We don’t think it’s necessary for us to try and find offshore-listed companies that we don’t know well,” holds Booysen. 

Why finweek would consider adding it:

The fund sets out to offer medium to long-term capital growth by actively investing in equities with a level of capital appreciation and income potential which is above the FTSE/JSE Capped Shareholder-Weighted All Share Total Return Index (Capped Swix). Despite being a small asset manager and having started out with virtually no track record, it got traction from the get-go by outperforming the benchmark in the  first three critical years.

 

This article originally appeared in the 2 August edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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