Tracking a formidable market operator

Bruce Ackerman, Manager of the Sasfin Global Equity Fund.
Bruce Ackerman, Manager of the Sasfin Global Equity Fund.

Bruce Ackerman has a wealth of experience in global asset management and is one of the industry’s most successful. He manages the Sasfin Global Equity Fund and sees strong economic recovery next year.

Little is generally known about the Sasfin BCI Global Equity Feeder Fund, but one of its greatest attributes is that its underlying offshore fund is managed by Bruce Ackerman, one of the global asset management industry’s most experienced and successful operatives.

Son of Ackermans stores patriarch Gus Ackerman and brother of Pick n Pay founder Raymond, Bruce was born in Cape Town in 1944, graduated with economics and MBA degrees at UCT in the late-1960s, and then headed to the UK where he managed some of the country’s biggest and most successful funds.

This included 24 years with Lloyds Bank’s institutional investment arm in London as a fund manager, also fulfilling the roles of its chief investment officer and joint managing director from the early 1980s until his return to SA in 1994.

During this time Ackerman was also executive director of five listed European and Asian country funds. He then joined Foord Asset Management in 1994 and co-managed the highly-acclaimed Foord International Trust from 1997 to 2011.

In 2014 Sasfin set up a model portfolio as guidance for its portfolio managers whose clients sought overseas leads and exposure, and Ackerman was invited to advise on it together with its investment research head, Bradley Mitchell.

Sasfin drew confidence from its significant outperformance of the world equities index and so launched its global equity fund in June 2017 and then its local feeder fund in October that year. It’s particularly suitable for those with longer-term investment horizons who wish to gain non-SA equity exposure.

Domiciled in well-regulated Luxembourg, the fund’s underlying portfolio invests in high-quality global equities. In rand terms it has generated 33.3% since inception, returned 24.5% last year, and 16.1% this year to July. Its performance benchmark is the MSCI All Country World Index.

Reasons to invest in it are that there are few international equities managers with the assistance of two in-house analysts, Mitchell having departed earlier this year.

It has a low portfolio turnover despite being actively, albeit conservatively, managed. It is concentrated with less than 30 stocks and doesn’t typically have significant cash given its objectives.

The Luxembourg fund’s current portfolio value is over R500m. From a risk perspective,

Ackerman points out, the portfolio tends to have relatively high  shorter-term volatility because of its exposure to international  equity markets and currencies; but the potential long-term returns are expected to be rewarding, especially for rand-based investors.

The geographical exposure at present, he says, is the US at 53%, Europe  28%, and Asia ex Japan 12%, with largely US dollar cash at 7%. “We also look at it from the point of economic exposure, and though over half the portfolio is in the US, it doesn’t mean that our exposure there is over half economically – many of the stocks are multinationals.”

A sectoral breakdown currently shows tech stocks at 32% (these include Amazon and the like), consumer stocks 32%, healthcare 16%, financials 12%, and industrials 8%. The five largest holdings are Amazon, Alphabet, Visa, Microsoft and Roche, with the next largest being Home Depot, Alibaba, AIA, Philips and LVMH.

The fund’s stock selection is heavily influenced by its thematic approach, seeking to benefit from long-term trends such as population ageing, clean energy, urbanisation in emerging economies, shopping digitalisation, industrial automation and cybersecurity, as well as how the pandemic will affect consumer behaviour and workplace location.

“We focus on quality global companies,” says Ackerman. “Some investment funds are growth-oriented irrespective of valuation, but the Sasfin fund is not that. A company might be best of breed in its sector but its value at any point in time is critical in garnering outperformance. Earnings in the longer term dictate how well a stock performs, assuming that it was fairly valued when purchased.”

Looking forward, Ackerman maintains that markets seem quite elevated now, boosted by unusually low bond yields caused by aggressive central bank monetary accommodation. US equity valuations seem particularly elevated compared with other countries’ markets, but this can be justified by their high technology weighting.

There is an apparent disconnect between equity markets and pandemic-affected economies. Equity markets appear to be looking past the Covid-19 pandemic and the market assumption is that everything will return to normal within a year – that is if a successful vaccine is developed and used.

Earnings visibility is currently quite good for companies not oversensitive to the elements outside their control, like the oil price or being dependent on travel and leisure activities, for example.

Ackerman believes that there will be a strong economic recovery next year, but he doesn’t foresee economies returning to where they were a year ago.

“There are too many labour-intensive areas that will not recover fully and much of the level of current huge fiscal stimuli will soon expire. My overall view, therefore, is that corporate earnings will recover and can provide a justification for highly-valued markets, especially in the US, notwithstanding the presidential election and pervasive geopolitical uncertainties.”

Had you been advised to follow the investment leads of Jack Bogle, Warren Buffett, Benjamin Graham or John Templeton in the navigation of your global investments, you probably wouldn’t flinch. There is arguably a case here to follow this homegrown boy, Bruce Ackerman.

Like them, he has made significant amounts of money by sticking to a solid investment approach. If you look at his strategies as well, they aren’t very difficult or complex. They stick to basic principles and look for value at reasonable prices in relation to anticipated corporate earnings growth. And if he believes there is value, he invests and produces strong performance.

Read more
This article originally appeared in the Fund Focus supplement in the 10 September edition of finweek. You can buy and download the magazine here.
finweek, september, finsep

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