stanlib multi-manager consistency is the key to success · • certified shari’ahaccountant and...
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STANLIB Multi-Manager
Consistency is the Key to Success
Investment Conference
October 2018
Agenda
• Welcome and Introduction
• Product Information and Shari’ah Compliance
• About STANLIB Multi-Manager
• Investment Philosophy and Process
• Fund Overview
• Value Proposition
• Underlying Manager Overview
– Kagiso Islamic Balanced
– Old Mutual Albaraka Balanced
– Visio Capital Equity
Product Information and Shari’ah Compliance
Fund Overview
Measure Description
Structure Fund of Funds, CIS
Regulation CISCA, Regulation 28
Mandate Shari’ah Multi-Asset, including global
ASISA sector classification South African Multi-Asset High Equity
ObjectiveCPI+4.5%Outperform Shari’ah balanced peers
Benchmark composite 45% JSE Shari’ah All Share Index35% STeFi Call Deposit (-0.5% p.a.)15% Dow Jones Islamic World Index (ZAR)5% 3-Month USD Libor (ZAR)
Time horizon 5 years or longer
Definition of Shari’ah
• Islamic Law by which Muslim people are meant to live their lives
• Derived from the teachings of Quran and the teaching of the Prophet
Muhammad (pbuh)
• Covers both religious and secular matters
• Two aspects
– Duties towards the Creator (Acts of worship)
– Duties towards the Creation (Business dealings, treatment of animals
and plants, etc)
Islamic commercial law
• Based on the principle of social and economic equality
• Requires a mutually beneficial outcome for all parties
• Requires sharing of risk and reward
• Basic prohibitions
– Ribaa (Interest)
– Gharar (Uncertainty)
– Maysir (gambling or unnecessary risk)
– Trading and dealing in morally unacceptable activates and goods
The prohibition of interest
“trade has been made permissible for you and interest has been made impressible” - Quran
• Interest as per Islamic law is the earning of money on money
• Trade as per Islamic law is the trading of assets
• Islam does not view Currency as an asset but merely as a means ofexchange
• The concept of time value of money is therefore considered to beinterest
• Shari’ah Compliant balanced funds use Islamic fixed term depositsas opposed to conventional interest earning investments
Experienced Advisory Board
Mufti
Shafique Jakhura
Shari’ah Advisor/Chairman
• Advanced Diploma in Islamic
Banking and Finance from the
Centre for Islamic Economics
(Karachi)
• Certified Shari’ah Accountant and
Auditor from the Accounting and
Auditing Organisation for Islamic
Financial
• Aalimiyah Course with distinction
• Specialisation course in Islamic
Jurisprudence (Fiqh and Fatwa)
from Jamia Darul Uloom Karachi
• Shari’ah board member - Old
Mutual Albaraka funds
Suhail Mohamed
Shari’ah Advisor
• Hifzul Quran
• BCom(Hons) (Financial
Management)
• MA (Islamic Banking Management
and Finance)
Mufti
Ahmed Suliman
Shari’ah Advisor
• IFTA- Darul Uloom Zakariya
• Member Shari’ah Board – Element,
Kagiso, Sanlam, Standard Bank
Africa, First Rand, Takafol Africa,
Standard Bank Shari’ah
Shari’ah Compliance
Screen One: Sector Exclusions
Food and beverage related
Sector
• Alcoholic beverages and harmful
drugs
• Pork and pork products
• Tobacco products
Weapons
Sector
• Weapons and defense
Forbidden activities and
conventional finance
Sector
• Casinos
• Illicit materials and activities
• Conventional financial services
(banks, investment services,
insurance, consumer finance,
etc.)
Shari’ah Compliance
Screen Two: Financial Ratios
After excluding impermissible sectors, stocks undergo the following financial
ratio screens:
All the following ratios need to hold true:
1 Total debt divided by company value < 30%
2 Interest bearing assets divided by company value < 30%
3 Total liquid assets divided by company value < 70%
Interest rule:
Interest income as a percentage of sales < 5%
Note: Kagiso and Visio’s Shari’ah Boards use total assets to calculate company’s value while Old Mutual’s Board uses an average 12-month market value
Shari’ah Compliance
Dealing with Non-Permissible Income
• Fund will typically not have any non-permissible income as invested into other CIS
funds
• Portion of gains derived from interest and other sources deemed non-permissible is
removed from the portfolio
• Money is then paid over to charitable organisations
• Different methods applied by different Shari’ah boards
• The methods used by the underlying managers have been deemed acceptable by
STANLIB Multi-Manager’s Shari’ah Advisory Board
About STANLIB Multi-Manager
About STANLIB Multi-Manager
*August 2018
1999
CAPABILITIES
15 Investment team
CONTINUOUSLY
MONITORFund Coverage
MANAGER RESEARCH
LARGESTCIS MULTI-MANAGER
DATE OFINCEPTION
of funds ranked in1st and 2nd quartiles
over 5 years*
ASSETS UNDER STEWARDSHIP
➜ R110 billion under management (including R30 billion in global mandates)➜ R65 billion under advisory (excluding assets under pure administration)
DIVERSE INVESTMENT EXPERIENCE
underlying investments,
managers and mandates
➜ SA & global solutions➜ Traditional & alternative investment strategies➜ Portfolio construction & management➜ Strategic and tactical allocation➜ Manager research (incl. buy lists)
90%
1 000+ local75 000+ global
Strategic (exclusive) partnership
with BNP Paribas for global insights
Enhanced focus on
ADVISORY SERVICES and CUSTOMISED SOLUTIONS
1999
RESEARCH TEAMSbased in South Africa and United Kingdom
(Paris and Singapore via BNP FundQuest)
R175 BILLION*
STANLIB Multi-Manager Investment Team
Joao Frasco
Chief Investment Officer
BSc, MBA, CFA, CIPM, FASSA,
FIA, CAIA
14 years experience
Malcolm Holmes
Founder and Head of
Institutional Portfolio
Management
B Com (Hons), CFA
20 years experience
Lubabalo Khenyane
Institutional Portfolio
Manager
BBA, CIPM,
CFA level 2 candidate
11 years experience
Christine Rangasamy
Manager Research
Analyst
B Com (Acc)
9 years experience
Puleng Kgosimore
Manager Research
Analyst
BBA
9 years experience
Sonal Bhagwan
Manager Research
Analyst
BBusSci (Act Sci)
Quants, CFA
10 years experience
Richo Venter
Portfolio Manager
B Com(Hons) (Cum
laude),CFA
13 years experience
Vuyo Mkhathazo
Portfolio Manager
CA (SA)
CFA Level 2 candidate
Jennifer Henry
Head of Retail
Portfolio Management
B Com(Hons),
CFA, FRM
10 years experience
Renate Potgieter
Portfolio Manager
Bsc (Hons), CFA
11 years experience
Kent Grobbelaar
Head of Global
Portfolio
Management
B Com(Hons), ICMQ,
FAUT, IMC
19 years experience
Chris Roelofse
Head of Alternatives
Portfolio Manager
B Com, CFA,
MBA (Cum laude), CFP
12 years experience
Gareth Montana
(Corion Capital)
Thulani Mhlongo
Intern
BSc (Computational
and Applied
Mathematics)
Investment Philosophy and Process
Investment Value Proposition
Deliver superior net investment returns more consistently than through a single asset manager solution
We do not begin with investment
ideologies
We apply curiosity and
critical thinking
We value collective decision-making
We focus on high quality inputs, systems and processes
We considerall sources
of risk and return
We invest in learning and development
2
1
3
4 5
6
Investment Process
A Consistent, Disciplined Approach to Our Investments
➜ Local and Global managers
➜ Rigorous quantitative & qualitative analysis
➜ Operational due diligence
➜ Rated buy/hold/sell
➜ Meeting investment objectives
➜ Portfolio maintenance
➜ Rebalancing
➜ Risk & compliance
➜ Performance evaluation
➜ Risk reporting
➜ Governance
➜ TCF
➜ Tailored to client needs
➜ Combining 1, 2 & 3
➜ Blending of managers
➜ Setting objectives
➜ Agreeing mandate definition
➜ Setting benchmarks (peer, CPI, SAA)
➜ Agree portfolio guidelines & limits
➜ Modelling of assumption sets
➜ Setting SAA
➜ Managing TAA
The Multi-Manager Approach
Single manager A Single manager B
Stability of STANLIB Multi-Manager returns
Single manager volatility
Time
STANLIB Multi-Manager Performance SnapshotPeriod ended September 2018
September 2018
Group Fund 1 Year 3 Year 5 Year 10 Year
Bala
nc
ed
Fu
nd
s
STANLIB MM Absolute Income 2 2 2
STANLIB MM Defensive Balanced 3 3
STANLIB MM Real Return 1 1
STANLIB MM Balanced 1 1 1 2
STANLIB MM Shari'ah Balanced FoF 1 1
Bu
ild
ing
Blo
ck
Fu
nd
s
STANLIB MM Enhanced Yield 2 2
STANLIB MM Flex Property 4 4 3 2
STANLIB MM Diversified Equity FoF 2 1 1 1
STANLIB MM Global Bond (USD) 2 2 1 2
STANLIB MM Global Equity (USD) 2 1 2 2
Ris
k-P
rofi
led
Fu
nd
s
STANLIB MM Low Equity FoF 2 2 2 2
STANLIB MM Medium Equity FoF 4 2 2 1
STANLIB MM Medium-High Equity FoF 3 2 2
STANLIB MM High Equity FoF 4 2 2
64%
86%90%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 Year 3 Year 5 Year 10 Year
SMM funds in 1st and 2nd quartiles relative to peers
Sep-18
➜ Consistent superior SMM
performance
➜ 86%, 90% and 100% of SMM funds
in the top two quartiles over 3, 5 and
10 years respectively
B1 Retail Fee class relative to ASISA Category
Fund Overview
Portfolio Construction
The fund provides a blend of three
complementing managers with varying
investment philosophies and processes,
providing more consistent longer-term
performance.
The BCI Shariah Equity Fund provides us
with additional equity exposure, which we
think is crucial to achieve our long-term
real return objectives.
Kagiso Islamic Balanced Fund
50%
Old Mutual Albaraka
Balanced Fund40%
BCI Shariah Equity Fund (Visio
Capital)10%
Strategic Manager Allocation
Underlying Managers
Kagiso (Balanced)
• Bottom up valuation based.
• Philosophy is based on the
premise that markets are
inefficient as a result of price
fluctuations over the short term.
• The manager seeks to identify
and exploit these opportunities by
focusing on the normalised long
term economics of companies.
• Asset allocation decisions are
determined using bottom-up
expected returns, but are macro
cognisant.
• Portfolio construction involves
balancing risk, expected return
and liquidity.
Old Mutual (Balanced)
• Systematic quantitative based
approach.
• Strong focus on risk management.
• The Managed Volatility process
aims to optimally account for the
interaction between assets or
factors with the express intention to
reduce volatility.
• This strategy strives to ensure a
smoother return path for investors
through opportunities created by the
mispricing of risk.
• Great diversifier to active stock
picking managers.
Visio (Equity)
• Excellent bottom-up stock pickers,
focusing on buying companies
priced below their fair value.
• They aim to uncover stocks that are
either under-researched or
otherwise those businesses
considered out of favour from time
to time by the investment fraternity.
• Essentially they focus on doing the
hard in-depth analysis and knowing
a company’s management and
operations really well.
Asset Allocation
37,9%38,9%
1,8%0,9% 0,3%
22,2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Domestic Cash & FD Domestic Equity Domestic Property Foreign Cash & FD Foreign Property Foreign Equity
Source: STANLIB Multi-Manager
Domestic Equity and Property Sector Allocations
Industry Portfolio Weight Index Weight Active
Basic Materials 43.6% 68.1% -24.5%
Consumer Goods 13.8% 4.1% 9.7%
Consumer Services 12.4% 3.6% 8.8%
Financials/Property 5.8% 5.4% 0.5%
Health Care 3.2% 3.3% -0.2%
Industrials 12.2% 5.3% 7.0%
Oil and Gas 0.0% 0.2% -0.2%
Technology 3.2% 0.4% 2.8%
Telecommunications 4.6% 9.6% -5.0%
Source: STANLIB Multi-Manager
Top Stock Positions
Source: STANLIB Multi-Manager
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
3,5%
4,0%S
aso
l L
imite
d
BH
P B
illiton
Mo
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i P
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An
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Am
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A E
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imited
Afr
ica
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ain
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AD
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Ba
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Mo
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Eq
uitie
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rop
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New
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old
ing
s
Fund Positioning
• High global equity allocation, providing optimal diversification
• High allocation to resource shares, which has assisted performance
• Fair allocation to technology/ growth shares such as Microsoft and Tencent (0.9%
each)
• Challenges
– Small local stock universe
• Opportunities
– Locally we find that our managers are exploring mid and smaller cap shares to
maximum potential
– Latest Regulation 28 limitations allow for additional global opportunities in the
fund
Excellent Peer Relative Performance
Industry 1 Yr 3 Yr Since inception
STANLIB Multi-Manager Shari’ah Balanced FoF 5.2% 7.8% 5.6%
Shari’ah Balanced Peers 5.4% 7.0% 5.2%
Alpha over Shari’ah peer average -0.2% 0.7% 0.4%
South African MA High Equity Average 3.2% 5.3% 4.2%
As at September 2018
Competitive Fees
TER retail class (excl. adviser fees) Since inception
Average Shari’ah balanced fund (retail) 1.65%
Average balanced fund in industry 1.72%
STANLIB Multi-Manager Shari’ah Balanced FoF 1.50%
Source: Latest available Finswitch
Value Proposition
Benefits
• Consistency in returns
• Two levels of Shari’ah compliance
• Exposure to three top Shari’ah managers in one solution
• Competitive fees
• Shari’ah compliant tax-free savings
• Shari’ah compliant retirement savings
Product Access
STANLIB
• STANLIB Direct (incl. Tax Free Savings), STANLIB LISP
Liberty Individual Arrangement
• Agile 2.0, Gateway, Excelsior, Evolve
Liberty Corporate
• Liber8, Corporate Selection Umbrella Funds (CSUF)
Disclaimer
Information and content
The information and content (collectively 'information') provided herein is provided by STANLIB Multi-Manager as general information for
information purposes only. STANLIB Multi-Manager does not guarantee the accuracy, suitability or potential value of any information or
particular investment source. Any information herein is not intended nor does it constitute financial, tax, legal, investment, or other advice.
Prospective and existing clients should be encouraged to consult their qualified Financial Advisor before making any decision or taking any
action regarding their finances. Nothing contained herein constitutes a solicitation, recommendation, endorsement or offer by STANLIB Multi-
Manager.
Copyright
The information provided herein is the possession of STANLIB Multi-Manager and is protected by copyright and intellectual property laws. The
information may not be reproduced or distributed without the explicit consent of STANLIB Multi-Manager.
Disclaimer
STANLIB Multi-Manager has taken care to ensure that all information provided herein is true and accurate. STANLIB Multi-Manager will
therefore not be held responsible for any inaccuracies in the information contain herein. STANLIB Multi-Manager shall not be responsible and
disclaims all loss, liability or expense of any nature whatsoever which may be attributable (directly, indirectly or consequentially) to the use of
the information provided.
STANLIB Multi-Manager Proprietary Limited
Registration No: 1999/012566/07. A Financial Services Provider licensed under the Financial Advisory and Intermediary Services Act, 37 of
2002. FSP license No. 26/10/763
Kagiso Islamic funds:
Outperformance with compliance
Abdul Davids – Portfolio Manager
Dispelling the myth that all Sharia funds underperform
Who we are
Independent investment firm with a large institutional presence
R37 billion in assets under management
R2 billion in Sharia assets
Best-performing Sharia equity manager over last 3 and 5 years
12% pa net of fees over 3 years
Large, stable investment team with lengthy experience together
Valuation-focused, with a contrarian orientation
What we offer
Integrated consideration of asset class mix – one team
One investment outlook across all funds over the risk spectrum
Deep, bottom-up due diligence on investment opportunities
Ability and willingness to be very differently positioned
The potential for very material outperformance
Diversified blend with large competitor funds
Dispelling the myths:
All Sharia funds underperform conventional funds
Sharia funds are heavily exposed to the Resources sector
Sharia funds are very concentrated and risky
Islamic Equity Fund vs General Equity sector3 years to 30 September 2018
Source: MorningstarBased on initial investment of R1,000
Our recent marketing
Asset allocation evolution
Index concentration
Relative positioning
Concentration of holdings
JSE Small caps – rebounding?
Key views underlying the fund
Global growth is high, but decelerating
Yield curves should rise and steepen – inflation is key risk
Monetary tightening is upon us
Asset prices are high and the cycle has been long
SA has a better future, but is structurally weak and over-owned
Chinese growth slowdown is a key risk
Domestic equities- unusually high expected returns
High mid-cap exposure
Idiosyncratic investment cases
Restructurings, turnarounds, spinoffs
Cyclical upturns
Largely neglected and under-researched
Lower Resources holdings (China risks)
Other than low-cost PGM miners
Wary of over-owned GEM favourites
SA equity68,4%
Top domestic equity holdingsat 30 September 2018
A tale of two miners
Global equities- concentrated mix of diverse investment cases
Mostly developed markets
Sectoral focus areas:
Chemicals
Pharmaceuticals
Ecommerce
European technology leaders
Low exposure:
FANGS
Consumer staples and utilities
Global…
Top global fund holdings
China: 0.3%
30 September 2018
US: 11.8% UK: 2.0%
Japan: 3.6%
Europe: 5.3%
In conclusion
Longstanding performance record from an established team
One, deeply considered investment view
Very unconventional positioning
Exciting expected return prospects
Disclaimer
The Kagiso unit trust fund range is offered by Kagiso Collective Investments Limited (Kagiso), registration number 2010/009289/06. Kagiso is a member of the Association for Savings andInvestment SA (ASISA) and is a registered management company in terms of the Collective Investment Schemes Control Act, No 45 of 2002. Kagiso is a subsidiary of Kagiso Asset Management(Pty) Limited [a licensed financial services provider (FSP No. 784)], the investment manager of the unit trust funds.
Kagiso is GIPS verified by Pricewaterhouse Coopers on an annual basis. A copy of the verification report is available upon request. Kagiso has prepared and presented this report in compliance withthe Global Investment Performance Standards (GIPS).
Kagiso takes no responsibility for any information contained herein or attached hereto unless such information is issued under the signature of a FSB-approved representative or key individual (asthese terms are defined in FAIS) and is strictly related to the business of Kagiso. Such information is not intended to nor does it constitute financial, tax, legal, investment or other advice, includingbut not limited to ‘advice’ as that term is defined in FAIS. Kagiso does not guarantee the suitability or potential value of any information found in this communication. The user of thiscommunication should consult with a qualified financial advisor before relying on any information found herein and before making any decision or taking any action in reliance thereon. Thiscommunication contains proprietary and confidential information, some or all of which may be legally privileged. It is for the intended recipient only. If an error of any kind has misdirected thiscommunication, please notify the author by replying to this communication and then deleting the same. If you are not the intended recipient you must not use, disclose, distribute, copy, print orrely on this communication. Kagiso is not liable for any variation effected to this communication or any attachment hereto unless such variation has been approved in writing by a FSB-approvedrepresentative or key individual of Kagiso.
Unit trusts are generally medium to long-term investments. The value of units will fluctuate and past performance should not be used as a guide for future performance. Kagiso does not provideany guarantee either with respect to the capital or the return of the portfolio(s). Foreign securities may be included in the portfolio(s) and may result in potential constraints on liquidity and therepatriation of funds. In addition, macroeconomic, political, foreign exchange, tax and settlement risks may apply. However, our robust investment process takes these factors into account. Unittrusts are traded at ruling prices and can engage in scrip lending and borrowing. Exchange rate movements, where applicable, may affect the value of underlying investments. Different classes ofunits may apply and are subject to different fees and charges. A schedule of the maximum fees, charges and commissions is available upon request. Commission and incentives may be paid, and ifso, would be included in the overall costs. All funds are valued and priced at 15:00 each business day and at 17:00 on the last business day of the month. Forward pricing is used. The deadline forreceiving instructions is 14:00 each business day in order to ensure same day value.
Performance is based on a lump sum investment into the relevant portfolio(s) and is measured using Net Asset Value (NAV) prices with income distributions reinvested. NAV refers to the value ofthe fund’s assets less the value of its liabilities, divided by the number of units in issue. Figures are quoted after the deduction of all costs incurred within the fund. Individual investor performancemay differ as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. Kagiso may close a portfolio to new investors in order to manage it moreeffectively in accordance with its mandate. Please refer to the relevant fund fact sheets for more information on the funds by visiting www.kagisoam.com.
Kagiso Asset Management (Pty) Ltd, Fifth Floor, MontClare Place, Cnr Campground and Main Roads, Claremont 7708, PO Box 1016 Cape Town 8000, Tel +27 21 673 6300, Fax +27 86 675 8501,Email: [email protected], www.kagisoam.com.
Unconventional thinking
Appendix
Performance record
Kagiso Islamic Equity Fund – peer mean benchmark
YearNet of fees
return1
Benchmark return1, 2
Standard deviation3Number of portfolios
Internal dispersion
Total composite assets (ZAR)
Total firm assets (ZAR)Fund Benchmark
2003 R601,315,574
2004 R1,910,903,589
2005 R4,607,698,321
2006 R5,055,977,879
2007 R11,044,952,842
2008 R8,880,253,313
2009 R8,462,669 R17,724,883,532
2010 22.2% 18.3% 1 - R64,126,464 R28,182,015,250
2011 3.0% 3.2% * * 1 - R124,677,496 R34,476,214,389
2012 11.0% 21.2% 8.9% 10.3% 1 - R168,697,764 R46,579,313,698
2013 20.8% 19.4% 9.5% 9.1% 1 - R332,549,954 R63,042,358,460
2014 7.0% 10.4% 9.1% 8.0% 1 - R752,745,740 R66,310,322,127
2015 -7.4% 1.4% 10.8% 9.5% 1 - R654,198,427 R50,352,387,592
2016 17.7% 2.8% 10.4% 8.7% 1 - R593,466,647 R39,646,486,761
2017 11.1% 12.6% 11.2% 9.5% 1 - R691,394,298 R40,202,536,008
1 Annualised; Inception date: 13 July 2009; 2 Average performance in South African Equity General unit trust universe;
3 Standard deviation annualised over previous 3 years; * Fund track record <3 years; Performance is expressed in South African rand
Figures to 31 December 2017 net of management fees, net of all applicable withholding taxes, trading expenses and custodial fees and gross of SA capital gains taxes
The retail management fee is: flat fee of 1.25% pa
Prepared and presented in compliance with the Global Investment Performance Standards (GIPS), independently verified
Source: Kagiso Asset Management
Performance record
Kagiso Islamic Balanced Fund – peer mean benchmark
YearNet of fees
return1
Benchmark return1, 2
Standard deviation3Number of portfolios
Internal dispersion
Total composite assets (ZAR)
Total firm assets (ZAR)Fund Benchmark
2003 R601,315,574
2004 R1,910,903,589
2005 R4,607,698,321
2006 R5,055,977,879
2007 R11,044,952,842
2008 R8,880,253,313
2009 R17,724,883,532
2010 R28,182,015,250
2011 - - * * 1 - R43,853,997 R34,476,214,389
2012 9.5% 15.6% * * 1 - R452,401,482 R46,579,313,698
2013 18.1% 18.1% * * 1 - R176,861,841 R63,042,358,460
2014 7.6% 9.5% 7.8% 5.2% 1 - R395,784,988 R66,310,322,127
2015 -2.5% 7.6% 8.9% 6.1% 1 - R426,086,739 R50,352,387,592
2016 10.4% 1.4% 7.2% 5.5% 1 - R494,092,042 R39,646,486,761
2017 9.1% 10.0% 7.7% 6.2% 1 - R755,169,583 R40,202,536,008
1 Annualised; Inception date: 3 May 2011; 2 Average performance in South African Multi Asset High Equity unit trust universe;
3 Standard deviation annualised over previous 3 years; * Fund track record <3 years; Performance is expressed in South African rand
Figures to 31 December 2017 net of management fees, net of all applicable withholding taxes, trading expenses and custodial fees and gross of SA capital gains taxes
The retail management fee is: flat fee of 1.25% pa
Prepared and presented in compliance with the Global Investment Performance Standards (GIPS), independently verified
Source: Kagiso Asset Management
Fund descriptions
Fund Description
Kagiso Islamic Equity Fund A Sharia-compliant fund that aims to provide steady capital growth and a total return that is betterthan the average general equity fund.The underlying investments will comply with Sharia requirements as prescribed by AAOIFI.
Kagiso Islamic Balanced Fund A Sharia-compliant balanced fund that aims to provide steady long-term returns and capital growth.The underlying investments will comply with Sharia requirements as prescribed by AAOIFI.
Long term perspectives
Saliegh Salaam
Lessons from History
0%
SA
Eq
uity
Glo
ba
l Eq
uity
(ZA
R)
Ma
cro
So
lutio
ns
Ba
lan
ce
dIn
de
x
Source: OMIG Macrosolutions Source: OMIG Macrosolutions
Go
ld(Z
AR
)
Glo
ba
lBo
nd
s
(ZA
R)
SA
Bo
nd
s
SA
Ca
sh
2%
4%
6%
8%
Annualised real returns in randterms(December 1929 - December2017)
Performance over 88years(nominal returns)
EQUITIES ARE BEST PERFORMING ASSET
CLASS
SA BONDS
SA CASH
SA EQUITY 14% a year
7.8% a year
6.9% a year
Inflation 6.2% a year
-50%
-60%
-70%
Drawdowns of SA Equity Source: OMIG Macrosolutions
December 1924 - December 2017
0%
-10%
-20%
-30%
Great Depression
-40%
Post World WarII*
1969Crash*
1987Crash
1998AsianCrash 2008
FinancialCrisis
1924 1929 1934 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014
Initial loss Required gain
10% 11%
20% 25%
30% 43%
40% 67%
50% 100%
VOLATILITY IS A CHALLENGE THAT NEEDS TO BE
MANAGED…
44%
R1951
42%
R1071
38%
R662
30
%
R438
20%
R3076%R220 R161
0% 0%
Fully Invested
Source: Old Mutual Investment Group, MacroSolutions Length of time invested in the FTSE/JSE All ShareIndex
Source: Old Mutual Investment Group, MacroSolutions Graph shows the value of R100since 1997 and the annualized percentage return under each scenario
1 Day 1 Week 1 Month 1 Quarter 1 Year 3 Years
1 day and 1 week: Rolling total returns, June 1995 to December 2017
1 month to 10 years: Rolling total returns, January 1960 to December2017
5Years
Missed 10 Missed 20 Missed 30 Missed 40 Missed 50 Missed 60 Best Days Best Days Best Days Best Days Best Days Best Days
10Years
PROBABILITY OF LOSINGMONEY:TIME IS YOUR FRIEND
MARKET TIMING IS DANGEROUS
STAY INVESTED FOR THE LONG TERM
S A B R
DIVERSIFICATION IS
ESSENTIAL
Source: OMIG Macrosolutions
BondReturns
EquityReturns
Balanced IndexReturns
-50%
0%
50%
100%
17%
84%
48%
14%
5%3%
-20%
-8% -
17%-22%
-1%
-1%
-31%
-22% -
31%
-19%
-45%
-30%
Great Depressio
nAug 1929 - May1932
South African DebtMoratorium
Aug 1980 - Aug1985
1987 Stock MarketCrash
Aug 1987-Nov1987
Asian Financial
CrisisJuly 1997 - Dec1998
Global Financial
CrisisOct 2007 - Feb2009
US Fed ChairmanVolcker hikes interest
ratesJuly 1979 - May 1981
ASSET CLASSES HAVE REBOUNDED STRONGLY POST GLOBAL FINANCIALCRISIS
300%
250%
200%
150%
100%
50%
0%
SA
JSE
ALS
I
US H
YC
orp M
SC
IEM
US IG
Co
rp
Eu
rop
ea
n
HY
Co
rp
MSC
IW
orld
EM
De
bt Go
ld
S&
P5
0
0
TOP
IX
SA
Bo
nd
US
Bo
nd
US
GD
P
Jap
an
Bo
nd
WO
RLD
GD
P EZ
Wa
ge
s
US
Wa
ge
s
EZ
CP
I
US D
olla
rIn
de
x
Co
mm
od
ity
Pric
es
US H
om
eP
ric
es
EZ
GD
P
US
CP
I
ASSET PRICES ASSETINFLATION
REAL ECONOMY PRICES REAL ECONOMYDISINFLATION/DEFLATION
Source: BBG, Nedbank CIB (total return performance in local currency)
GLOBAL FINANCIAL CRISIS WAS ALSO A CRISIS OF…
GLOBAL DEBT IS HIGHEST SINCE WORLD WAR 2…
25
18
64
37
31
97
41
32
105
42
33
110
40
43
33
117
50
52
36
139
54
56
38
148
56
61
39
157
59
65
42
166
21 29 32 36
2000 07 08 09 10 13 14 15 16 H12017
198 207 213 226 224 227 232 234 237 236
60
66
43
169
Households
Nonfinancial Corporates
Government
Global debt has continued to swell since the crisis but has remained stable relative to world GDP since 2014.Total debt outstanding1 $ trillion, constant H1 2017 exchange rate
Change, 2007-H12017
Percentage points
Totaldebt toGDP1
%
1 Includes household, nonfinancial corporate, and government debt; excludes debt of the financial sector. Estimated bootm up using data for 43 countries from
Bank for International Settlements (BIS) and data for eight countries from McKinsey’s Country Debt Database. NOTE: Figures may not sum to 100% because of
rounding.Source: Bank for International Settlements (BIS); McKinsey Country Debt Database; McKinset Global Institute analysis
EXCESSIVE LEVERAGE IS FROWNED UPON IN SHARI’AH
INVESTING
HIGHER COSTS MEANS LOWER NET RETURNS…
SHARI’AH INVESTING
CREATES WEALTH
LOCALLY
R33.2MVS
R27.7M**R1million invested since inception July 1992 in the Old Mutual Albaraka Equity Fund vs
General equity peer group to 31 Aug-18
SHARI’AH INVESTING
CREATES WEALTH
GLOBALLY
$63 945VS
$55 777**$10 000 invested since inception Dec 1995 in the Dow Jones World Islamic
Index vs S&P Global BMI Index to 31 Aug-18
HOW WE MAKE MONEY FOR OUR INVESTORS
SHARI’AHCOMPLIANT
ESGBIAS
MANAGE
VOLATILITY
VALUATION SENTIMENT
ESG IS TAYYIB IN INVESTING CONTEXT…
Quran: Sura 2:168” O ye people! Eat of what is on earth, Halal and Tayyib…
BRAND VALUE
REPUTATION R&D PIPELINE
CUSTOMER SATISFACTION
HEALTH & SAFETY
ENVIRONMENTAL PERFORMANCE
SOCIAL LICENSE TO OPERATE
GOVERNANCE ACOUNTING & GOVERNANCE RISK
CONTROVERSIES
THE COSTS OF IGNORING ESG
THE BENEFITS OF CONSIDERING ESG
31,32%
26,02% 26,34%
17,40%
13,11%
0%
5%
10%
15%
20%
25%
30%
35%
QUARTILE 1 QUARTILE 2 QUARTILE 3 QUARTILE 4 QUARTILE 5
ESG
LEADERS
25.8%
MSCI
ACWI
25.8%
TIMESERIES: 30TH JUNE 2015 – 31ST AUGUST
2018
Source: OMIG, MSCI
PORTFOLIO: PREMIUM ESG RATING
IVASCORE
IVASCORE
IVASCORE
6.15 6.87
A A
5.58 5.59
BBB A
Local Equity
Global EquityFTSE/JSE All Share
S&P Global L&M Shari’ah Cap
IVASCORE
Source: OMIG, MSCI
BENEFITS OF SABR: LONG TERM WEALTH CREATION
Old Mutual Albaraka
Balanced Fund
R1.84m
vs
R1.72m*
*Morningstar: R1million invested since 7 years ago October 2011 to 30 September in the Old Mutual Albaraka Balanced Fund vs the closest
Shari’ah Balanced competitor
Old Mutual Albaraka
Equity Fund
R2.65m
vs
R2.13m*
*Morningstar: R1million invested since 10 years ago October 2008 to 30 Septmeber in the Old Mutual Albaraka Equity Fund vs the closest
Shari’ah Equity competitor
Old Mutual Global
Islamic Equity Fund
$172.08k
vs
$164.11k*
*Morningstar: $100 000 invested since 5 years ago October 2011 to 30 September in the Old Mutual Global Islamic Portfolio vs the closest Global
Shari’ah Equity competitor
A LOCAL STOCK PICK
0
1
2
3
4
5
6
7
8
9
10
Ju
n-1
5
Au
g-1
5
Oc
t-1
5
De
c-1
5
Fe
b-1
6
Ap
r-1
6
Ju
n-1
6
Au
g-1
6
Oc
t-1
6
De
c-1
6
Fe
b-1
7
Ap
r-1
7
Ju
n-1
7
Au
g-1
7
Oc
t-1
7
De
c-1
7
Fe
b-1
8
Ap
r-1
8
Ju
n-1
8
Au
g-1
8
ESG PROFILE SCORE: MONDI VS SWIX
ESG PROFILE RANKING SWIX AVERAGE1-10 11-30 31-70 71-90 91-100
Price Momentum
Analyst Revision
Intrinsic Valuation
Relative Valuation
Earnings Quality
Smart Holdings
Components
In Global Emerging Markets
In South Africa
9
490
Percentile Keys
MODEL SUMMARY
COMBINED ALPHA MODEL
Source: OMIG, Thomson Reuters, MSCI
DOMESTIC TOP 10
Source: Old Mutual Investment Group – 30 September 2018
A GLOBAL STOCK PICK
0
1
2
3
4
5
6
7
8
9
10ESG PROFILE: HEWLETT PACKARD VS ACWI
ESG PROFILE RANKING ACWI AVERAGE1-10 11-30 31-70 71-90 91-100
Price Momentum
Analyst Revision
Intrinsic Valuation
Relative Valuation
Earnings Quality
Smart Holdings
Components
In North America
In United States of America
9
395
Short Interest
Insider
Percentile Keys
MODEL SUMMARY
COMBINED ALPHA MODEL
Source: OMIG, Thomson Reuters, MSCI
GLOBAL TOP 10
Source: Old Mutual Investment Group – 30 September 2018
Need Equities
Sabr: Stay invested
Diversify
Manage costs
Shari’ah
ESG
Solid track record
Co- invest
BRINGING IT ALL TOGETHER: WEALTH CREATION REQUIRES
PARTNERSHIP
“WE’RE INVESTED IN A FUND THATAIMS TO CREATE WEALTH IN LINE WITH
OUR SHARED BELIEFS, FOR OVER 25YEARS.”
INVEST WHERE THE FUND MANAGERS INVEST
Saliegh SalaamFund ManagerOld Mutual Albaraka Shari’ah Funds
Maahir JakoetInvestment
AnalystOld Mutual Albaraka Shari’ah Funds
REGULATORY INFORMATION
• Old Mutual Customised Solutions (Pty) Ltd (Reg No 2000/0289675/07) is a licensed financial services provider, FSP 721, approved by the Registrar of Financial Services Providers (www.fsca.co.za) to provide intermediary services and advice in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. Old Mutual Customised Solutions (Pty) Ltd is wholly owned by the Old Mutual Investment Group Holdings (Pty) Ltd and is a member of the Old Mutual Investment Group.
• Market fluctuations and changes in rates of exchange or taxation may have an effect on the value, price or income of investments. Since the performance of financial markets fluctuates, an investor may not get back the full amount invested. Past performance is not necessarily a guide to future investment performance.
• Disclosures: Old Mutual Investment Group is a member of the Old Mutual Group. Accordingly, Old Mutual plc and Nedbank are related entities. We outsource investment administration of our local funds to Curo Fund Services (Pty) Ltd, 35% of which is owned by the Old Mutual Investment Group. All inter-group transactions are done on an arms length basis Personal trading by staff is restricted to ensure that there is no conflict of interest. All directors and those staff who are likely to have access to price sensitive and unpublished information in relation to the Old Mutual Group are further restricted in their dealings in Old Mutual shares. All employees of the Old Mutual Investment Group are remunerated with salaries and standard incentives. Unless disclosed to the client, no commission or incentives are paid by the Old Mutual Investment Group to any persons other than its representatives. The investment portfolios may be market-linked or policy based. Investors’ rightsand obligations are set out in the relevant contracts. In respect of pooled, life wrapped products, the underlying assets are owned by Old Mutual Life Assurance Company (South Africa) Limited who may elect to exercise any votes on these underlying assets independently of Old Mutual Investment Group. In respect of these products, no fees or charges will be deducted if the policy is terminated within the first 30 days. Returns on these products depend on the performance of the underlying assets.
• Disclaimer: The contents of this document and, to the extent applicable, the comments by presenters do not constitute advice as defined in FAIS. Although due care has been taken in compiling this document, Old Mutual Customised Solutions does not warrant the accuracy of the information contained herein and therefore does not accept any liability in respect of any loss you may suffer as a result of your reliance thereon. The processes, policies and business practices described maychange from time to time and Old Mutual Customised Solutions specifically excludes any obligation to communicate such changes to the recipient of this document.
• This document is not an advertisement and it is not intended for general public distribution. The recipient is advised to assess the information with the assistance of an advisor ifnecessary, with regard to its compatibility with his/her own circumstances in view of any legal, regulatory, tax and other implications. The information herein does not constitutean offer to sell or a solicitation of an offer to buy any securities. This document is expressly not intended for persons who, due to their nationality or place of residence, are notpermitted access to such information under applicable law.
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• Old Mutual Customised Solutions (Pty) Limited Physical Address: Mutualpark, Jan Smuts Drive, Pinelands, 7405Telephone number: +27 21 509 5022• Contact: Theresa Delcarme
VISIO CAPITAL SHARI’AH EQUITY UPDATE PRESENTATION
October 2018
86
AFRICAN EAGLE OWL
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•
•
•
87
EXECUTIVE SUMMARY
89
BCI SHARI’AH EQUITY FUND- PORTFOLIO TOP 10
TICKER MARKET CAP (Rbn) FUND WEIGHT
90
BCI SHARI’AH EQUITY FUND- SECTOR EXPOSURES
91
BCI SHARI’AH EQUITY FUND- PORTFOLIO MIX
Ticker Sector % of fund
•
92
SHARI’AH EQUITY MANDATE- PERFORMANCE SINCE INCEPTION
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTAL FTSE/JSE Shari'ah Index
2018 -0,2% -2,1% -3,9%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTAL FTSE/JSE Shari'ah Index
2012 -0,2%
2013 -1,8% -4,5% -0,4%
2014 -1,7% -2,3% -0,5% -0,8%
2015 -1,8% -1,6% -0,6% -3,2% -0,5%
2016 -4,1% -2,0% -3,0% -3,0% -0,3% -1,0%
2017 -0,1% -0,7% -2,1% -0,7% -1,5% -2,3%
2018 -3,9% -1,2% -0,3% -1,9% -3,8%
93
ADVTECH: PRIVATE EDUCATION GROWTH OPPORTUNITY
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Schools Capacity 2014 2015 2016 2017
Students Enrolled ('000) 13.5 22.9 24.2 27.4
Existing Building Capacity ('000) 16 26.9 28.6 33.0
% Existing Building Capacity Utilised 84% 85% 85% 83%
Ultimate Potential Site Capacity ('000) 20.5 34.3 37 45.2
% Ultimate Potential Site Capacity Utilised 66% 67% 65% 61%
DIS
TAN
CE
Tertiary Full Qualification Enrolment History
94
ADVTECH: RECOGNISABLE & REPUTABLE BRANDS
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95
BCI SHARI’AH EQUITY FUND- BOARD OF TRUSTEES
•
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•
96
VISIO SHARI'AH CAPABILITY
PRIMARY OBJECTIVE
97
GENERATE ABSOLUTE RETURNS WITH LOW RISK OF CAPITAL LOSS
•
•
•
•
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•
CONSISTENT INVESTMENT APPROACH – KEEP IT SIMPLE!
98
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KEY DIFFERENTIATORS TO OUR PEERS
99
RIGOROUS ONGOING RESEARCH
GATHER INDUSTRY INFORMATION
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REGULAR MANAGEMENT CONTACT
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TRAVEL OUTSIDE RSA
•
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100
APPENDIX A - TEAM MEMBERS
PATRICE MOYAL
PAUL SUNDELSON
KERRIS FOSTER
DOUGLAS WALLACE
101
TEAM MEMBERS
OFRI KAHLON RONALD CHABVONGA
NAEEM BADAT PHIHLELO MATJEKANE
102
TEAM MEMBERS
MARK WADLEY TASSIN MEYER
KATHRYN ROBINSON
•
•
•
SINDISO MUJAJI
•
103
TEAM MEMBERS
ALTHEA MODISELLE
ULRIKE ENGLING
•
PUMLA MOLOPE
CRAIG FRENCH
104
TEAM MEMBERS
LEBO GALEBOE MAUD MOTIMELE
HENDRICKA BUYS SU NCALA
105
TEAM MEMBERS
JHB
CONTACT DETAILS
106
CPT
107
DISCLAIMER