Raging Bull Awards 2024

RAGING BULL AWARDS

CREDIT GOES TO…

Personal Finance acknowledges the following people and organisations for their valuable contributions to the success of this year’s Raging Bull Awards: •

Fairtree is investment industry’s new top performer

BY MARTIN HESSE

FAIRTREE, a relatively young asset management firm based in Bellville, Western Cape, has outperformed the more established players in South Africa’s

investment industry to win the coveted South African Manager of the Year trophy at the annual Raging Bull Awards gala dinner, held at the Cape Town International Convention Centre on Monday, March 11 The event recognised outstanding

performance to the end of 2023 by unit trust fund managers in selecting investments for their portfolios, taking into account consistency and risk management. A major objective of the annual awards is to guide investors to funds that deliver

Collecting their awards for South African Manager of the Year from Personal Finance Editor Dieketseng Maleke (third from right) are, from left to right, Olga Jacobs from Boutique Collective Investments (3rd place), John Gilchrist and Anet Ahern from PSG Asset Management (2nd place) and Herman Sandrock and Kobus Nel from Fairtree (1st place). PICTURE: Ayanda Ndamane, INL

reliable, sustainable returns without undue risk, which is in line with the ongoing aim at Personal Finance: to provide readers with credible, jargon-free information on financial services and products to better manage their day-to-day financial affairs and grow their wealth.

The event was sponsored this year by the JSE and PSG Asset Management. ProfileData and its subsidiary, PlexCrown Fund Ratings, were the data providers. The guest speaker at the event was Dr Pali Lehohla, former Statistician-General of South Africa and the head of Statistics South Africa from 2000 to 2017.

Manager of the Year

The Manager of the Year award is based on the risk-adjusted performance of a manager’s suite of qualifying unit trust funds, as determined by the PlexCrown Fund Ratings system, over a five-year period.

This was a first-time overall win for Fairtree, although the firm’s funds have won individual awards in the past – the Fairtree Equity Prescient Fund won the award for Best South African Equity Fund on a Risk-adjusted Basis four years in a row. Fairtree was founded in 2006 by group chairman Andre Malan and group CEO Kobus Nel. It started as a hedge fund management company, but later introduced a range of unit trust funds to its investment offering, in association with administrator Prescient.

Speaking to Personal Finance, Nel said the award represented a combination of hard work, commitment to its values and processes, and dedication to its clients.

“We’ve had a number of Raging Bull Awards in the past, especially on the equity side, which has done very well over long periods, and our fixed-income team has also done well. However, this is the first time we’ve won the Manager of the Year award, which I believe is the culmination of many years of hard work and dedication to generating decent returns for our clients, which is what it is all about, and we’re very thankful for this achievement and the recognition the award brings.

“The significance of the award is that it is not just about how we performed last year; it is over a period of time that we’ve consistently performed well. We have a lot of depth in the business, capable people and well-defined processes. We’re very clear on what we’re doing and why we’re doing it, and we’ve reaped the rewards of that and so have our clients. Values are hugely important to us – integrity, excellence, growth, real authentic relationships and family – and we’ve built a unique culture on that set of values,” Nel said.

The runners-up in the South African Manager of the Year race were last year’s winner, PSG Asset Management, in second place and Boutique Collective Investments in third place, each of which received a certificate.

Last year’s first runner-up, Ninety One, which took the prize in 2021 and 2022, dropped out of the top three.

The Raging Bull Award for Offshore Manager of the Year went to Orbis Investment Management, the offshore investment partner of Allan Gray, based in Bermuda, for its suite of offshore funds marketed to South Africans.

Dieketseng Maleke, content editor of Personal Finance, said: “Heartiest congratulations to Fairtree, which came in just ahead of PSG Asset Management in the PlexCrown company ratings. It’s good to see the better-known, established industry players being challenged by up-and-coming investment firms. The competition is beneficial for investors, keeping costs in check and encouraging portfolio managers to actively seek out worthwhile investment opportunities.”

Fund awards

The other major awards at the event were fund-specific: four for straight performance over three years and four for risk-adjusted performance over five years, to the end of 2023. Thirty certificates in specialised categories related to the Association for Savings and Investment SA classification system were also awarded.

A stand-out among the awards for individual funds was the Investec BCI Dynamic Equity Fund, which won best domestic general equity fund for both straight and risk-adjusted performance.

RAGING BULL CERTIFICATE AND AWARD WINNERS

(for results to December 31, 2023)

RAGING BULL CERTIFICATES

Straight performance over three years

DOMESTIC FUNDS

Best South African Equity Resources Fund

Coronation Resources Fund

Best South African Equity Mid- and Small-Cap Fund

Sanlam Investment Management Small Cap Fund

Best South African Multi-Asset Flexible Fund

Flagship IP Flexible Value Fund

Best South African Multi-Asset Low Equity Fund

Merchant West SCI Stable P&G Fund

Best South African Multi-Asset Medium Equity Fund

GraySwan SCI Moderate Fund of Funds

Best South African Multi-Asset High Equity Fund

PSG Balanced Fund

Best South African Multi-Asset Income Fund

PSG Diversified Income Fund

Best South African Interest-Bearing Short-Term Fund

Truffle SCI Income Plus Fund

Best South African Interest-Bearing Variable-Term Fund

Saffron BCI Active Bond Fund

Best South African Real Estate Fund

M&G Property Fund

SA-DOMICILED GLOBAL AND WORLDWIDE FUNDS

Best Global Multi-Asset Flexible Fund

PSG Global Flexible Feeder Fund

Best Worldwide Multi-Asset Flexible Fund

Blue Quadrant Worldwide Flexible Prescient Fund

OFFSHORE FUNDS (FSCA-APPROVED)

Best Offshore Europe Equity Fund

Osmosis Resource Efficient European Equities Fund

Best Offshore United States Equity Fund

Dodge & Cox US Stock Fund

Best Offshore Far East Equity Fund

Franklin India Fund

Best Offshore Global Fixed-interest Bond Fund

Allan Gray Africa Bond Fund

Best Offshore Global Real Estate Fund

Oasis Crescent Global Property Equity Fund

RAGING BULL CERTIFICATE AND AWARD WINNERS

(for results to December 31, 2023)

RAGING BULL CERTIFICATES

Risk-adjusted performance over five years

DOMESTIC FUNDS

Best South African Multi-Asset Low Equity Fund

Amplify SCI Wealth Protector Fund

Best South African Multi-Asset Medium Equity Fund

Southern Charter BCI Balanced Fund of Funds

Best South African Multi-Asset High Equity Fund

Aylett Balanced Prescient Fund

Best South African Multi-Asset Income Fund

Thyme Wealth IP Multi-Asset Income Fund

Best South African Interest-Bearing Short-Term Fund

Oakhaven Core Income FR Fund

Best South African Interest-Bearing Variable-Term Fund

Saffron BCI Active Bond Fund

Best South African Real Estate Fund

Harvard House BCI Property Fund

SA-DOMICILED GLOBAL AND WORLDWIDE FUNDS

Best Global Equity General Fund

Fairtree Global Equity Prescient Feeder Fund

Best Global Multi-Asset Low Equity Fund

Coronation Global Capital Plus [ZAR] Feeder Fund

Best Global Multi-Asset High Equity Fund

Allan Gray-Orbis Global Balanced Feeder Fund

Best Global Multi-Asset Flexible Fund

Global Marathon IP Fund

Best Global Real Estate Fund

Oasis Crescent International Property Equity Feeder Fund

Best Worldwide Multi-Asset Flexible Fund

Blue Quadrant Worldwide Flexible Prescient Fund

RAGING BULL CERTIFICATE AND AWARD WINNERS

(for results to December 31, 2023)

RAGING BULL AWARDS

Straight performance over three years

Risk-adjusted performance over five years

Best South African Equity General Fund

Investec BCI Dynamic Equity Fund

Best South African Interest-Bearing Fund

PSG Diversified Income Fund

Best Global Equity General Fund

PSG Global Equity Feeder Fund

Best Offshore Global Equity Fund

Contrarius Global Equity Fund

MANAGER OF THE YEAR AWARDS

South African Manager of the Year

Fairtree Asset Management

South African Manager of the Year – 2nd Place

PSG Asset Management

South African Manager of the Year – 3rd Place

Boutique Collective Investments

Offshore Manager of the Year

Orbis Investment Management

Best South African Equity General Fund

Investec BCI Dynamic Equity Fund

Best South African Interest-Bearing Fund

PSG Diversified Income Fund

Best Global Equity General Fund

PSG Global Equity Feeder Fund

Best Offshore Global Equity Fund

Contrarius Global Equity Fund

The importance of independent long-term thinking in a risky global environment

THERE can be little doubt that the past few years since the advent of the Covid-19 pandemic has marked some of the most challenging times for investors in recent memory. We believe this is symptomatic of some deep-seated changes taking place in the investment environment.

At their essence, these changes will mean a fundamental recalibration in the returns investors are likely to see from various asset classes over the next decade and perhaps even longer. There are a multitude of reasons for this, but briefly: we are likely to see a period of structurally higher inflation and interest rates, driven by real-world pressures like chronic underinvestment into real assets during the period following the global financial crisis (GFC), the cost-pressures introduced by the urgent need to transition to a green economy, as well as the impact of slowbalisation and the need to develop more resilient supply chains. The result: the environment investors will need to navigate, will be very different in future, and the transition is unlikely to proceed smoothly.

To successfully navigate this changing landscape, investors need to partner with independent thinkers with a proven track record of delivering alpha in the long-term and who can search for opportunities on a

globally integrated basis. Simply trying to replicate the successful strategies of the past will not work. Our proven 3M (moat, margin, management) research process has demonstrated its worth over time, and enables us to identify opportunities that we believe will reward investors well for their patience in this emerging landscape. Because our portfolios are constructed using a benchmark-agnostic, bottom-up stock picking and globally integrated approach, they can look very different from the rest of the pack, offering our clients valuable diversification benefits.

The multiple nominations and awards PSG Asset Management received in this year’s Raging Bull Awards, highlights the success of this approach. It also reaffirms our view that the changing environment will be especially well-suited to stock pickers who

can be selective about the opportunities they pursue, especially since we believe many of these will reside outside the popular indices.

Most importantly, even as we celebrate strong shorter-term performance, we remain focused on achieving our fund objectives over the longer term. We believe our strong team-based approach, in-depth research and independent thinking, drives our ability to look beyond the short-term noise and continue finding investment opportunities for our investors even as conditions change. This provides our portfolios with a long runway to be a valuable alpha-generator and diversifier as a part of an overall balanced client portfolio.

PSG Asset Management manages a focused range of rand-denominated local unit trusts and offers access to global markets through both rand-denominated and foreign currency denominated global funds.

For more information on all funds administered on the PSG Collective Investments (RF) Limited scheme or more information on the awards, visit www.psg.co.za/asset-management

*PSG Asset Management (Pty) Ltd is an authorised financial services provider. FSP 29524

PSG Asset Management won multiple awards across various categories at this year’s Raging Bull Awards.

Anet Ahern, PSG Asset Management CEO

Recognising innovative leaders and pioneering minds

THE annual Raging Bull Awards serve as a platform to recognise the innovative leaders and pioneering minds of South Africa’s collective investment industry. Beyond recognition, however, the awards stand as a moment for us as the JSE to pay tribute to the remarkable feats and triumphs of the leading figures in South Africa’s financial sector, especially in light of the challenges faced by our local capital markets in recent times.

There is no denying that in the last year, a variety of macroeconomic influences have played a significant role in shaping the growth and development of South Africa’s capital markets. However, amidst a constantly evolving and dynamic market environment, those whom the awards honour thrived. Their steadfast resilience, unwavering perseverance and unyielding determination remained strong amidst increasingly difficult conditions. It is in this spirit of excellence that the Johannesburg Stock Exchange (JSE) is a proud gold

sponsor of these awards for the fourth consecutive year.

The JSE appreciates the continued efforts of fund managers as they navigate the markets, and playing a significant role in driving South Africa’s economic growth. It is in this vein, that the JSE has actively collaborated with industry experts to introduce progressive and innovative approaches aimed at enhancing the capabilities and efficiencies of market participants.

After extensive market engagement, we introduced a raft of changes to our listing requirements to create an enabling environment for listed companies and most importantly, to ensure that our Listings Requirements are fit for purpose while ensuring an effective and appropriate level of regulation.

In 2023, we launched a new company called big xyt ecosystems that delivers the innovative Trade Explorer, which enables trading venues to distribute data analytics

solutions to customers in their respective ecosystems.

Building on the colocation infrastructure, the JSE also launched Colo 2.0 – an advanced managed infrastructure as a service (IaaS) solution that provides JSE clients with cloud-based colocation services. The JSE continues on its technology enablement journey and we recently announced our collaboration with Amazon Web Services (AWS) to modernise the exchange’s technology, leverage cloud proximity infrastructure, explore artificial intelligence (AI) to deliver innovative market solutions and drive operational efficiencies. Kickstarting this journey, we will be upgrading our Broker Dealer Accounting (BDA) system.

In essence, the JSE’s approach is meticulously crafted to synchronise with the ever-evolving needs of the market. Our focus lies in tailoring our products and services to not only boost operational efficiency, but to empower stakeholders to excel.

Entertaining guests in the foyer beforehand and in the hall during the gala dinner was vibrant marImba group Marimba Jam.

AYANDA NDAMANE

The master of ceremonies for the evening was the congenial, appropriately attired business development manager for the Raging Bull Awards, Tony Malek.

IAN LANDSBERG

AYANDA NDAMANE

Dr Pali Lehohla, former Statistician General of South Africa and head of StatsSA from 2000 to 2017, gave the keynote presentation at the event. He said scenario planning, a vital part of governance, was being neglected by the South African government.

With their certificates for best performance over three years are: Rahgib Davids and Yusuf Mowlana (M&G Property Fund); and Ané Craig, Lyle Sankar and John Gilchrist (PSG Diversified Income Fund)

IAN LANDSBERG

With their certificates for best performance over three years are: Vanessa van Vuuren and Marlon Scholtz (SIM Small Cap Fund); Niall Brown (Flagship IP Flexible Value Fund); Richard Henwood and Ian Anderson (Merchant West SCI Stable P&G Fund); Lasego Rameni (Coronation Resources Fund); and Duncan and Gregoire Theron (GreySwan BCI Moderate Fund of Funds).

IAN LANDSBERG

With their certificates for best risk-adjusted performance over five years are: Helen Masson (Thyme Wealth IP Multi-Asset Income Fund); Aaliah Kathrada (Aylett Balanced Prescient Fund); Calum Harding and Brandon Quinn (Saffron BCI Active Bond Fund); and Willie Pelser (Harvard House BCI Property Fund).

IAN LANDSBERG

With their certificates for best risk-adjusted performance over five years are: Johan Roos, Linda Nyembezi and Bruce Thistlewhite (Oakhaven Core Income FR Fund); Sophie, Nicole and Marthinus van der Nest and Emma Botha (Amplify SCI Wealth Protector Fund); and Ursula Maritz and Mark Thompson (Southern Charter BCI Balanced Fund of Funds).

IAN LANDSBERG

With their certificates for best risk-adjusted performance over five years are: Insaf Kamish (Coronation Global Capital Plus [ZAR] Feeder Fund); and Cornelius Zeeman and Jacques Haasbroek (Fairtree Global Equity Prescient Feeder Fund).

IAN LANDSBERG

INVESTEC BCI DYNAMIC EQUITY FUND

• Raging Bull Award: Best South African Equity General Fund for Straight Performance over Three Years to December 31, 2023

• Raging Bull Award: Best South African Equity General Fund for Risk-Adjusted Performance over Five Years to December 31, 2023

THE Investec BCI Dynamic Equity Fund is one of a suite of domestic and offshore funds offered by Investec Investment Management and administered by Boutique Collective Investments (BCI). It is fully invested in the domestic market with no offshore component (in December its allocation was 93.4% equities, 4.9% listed property and 1.7% cash). Its benchmark is the FTSE/JSE Capped Shareholder Weighted All Share Total Return Index (Swix), which it outperformed over one-, two-, three- and five-year periods and from its inception in November 2015 to the end of 2023.

In December, the fund’s top five holdings were Montauk Renewables, Anglo American, Reunert, Pan African Resources and Hosken Consolidated Investments. Despite the preponderance of resources stocks in the top five, its biggest sector allocation is to financials (25%).

Personal Finance asked portfolio managers Barry Shamley and Peter Vogel about how they manage the fund.

PF: What is the objective of the fund and your investment approach in achieving that objective?

BS & PV: The objective of the Investec BCI Dynamic Equity Fund is to provide investors with capital growth and income over the long term. The fund employs a primarily “bottom-up” investment approach, attempting to identify equities that offer above-average returns. While we invest across the full spectrum of the JSE, we place emphasis on identifying emerging companies. Our focus on the distinct merits of each company often leads to weights that are materially different from our benchmark, the Swix. We have a value bias but are style agnostic and prefer buying companies where there is a large

margin of safety in the valuation. We do invest in growth companies, but we are price sensitive (we do not like to pay up for growth). We invest across the market-cap spectrum, with the flexibility to invest in smaller companies that are generally under researched and often undervalued.

PF: To what do you attribute your fund’s excellent performance over the last five years?

BS & PV: The fund has a very high active share and a strong focus on valuation. Our flexibility in terms of adjusting our small, medium, and large capitalisation exposure and our nimble approach have both added value over the long term. A key contributor to our performance has been our ability to identify some of South Africa’s top capital allocators. Names that spring to mind include Copelyn, Mouton and Seabrooke. Our highly experienced equity research team with over 200 years of experience provides a robust platform from which we can navigate the ever-changing South African investment landscape.

PF: Which counters have stood out for the fund in the past few years?

BS & PV: Our top contributor to the overall return over the past few years was

Montauk Renewables. This is a R15bn JSE and Nasdaq-listed company that produces renewable natural gas (from landfill sites in the US). It operates within a complicated legal framework. We believe the complexity of this framework precluded many local fund managers from owning or even considering it. While we reduced our holding on valuation concerns, we still recognise a long runway of growth for this business as they develop and expand their manure digester business. Other notable contributors were Naspers and, in the precious metals space, Pan African Resources, Royal Bafokeng Platinum, Impala and Gold Fields. Several investment holding companies contributed substantially to our gains, notably HCI and Sabvest, led by two of South Africa’s top capital allocators, Johnny Copelyn and Chris Seabrooke. Lastly, we benefited from a number of our companies being taken private at premiums to market. These include Distell and Long4life.

PF: How are you positioning the fund going forward, considering adverse local economic conditions, though a possible easing of inflation and interest rates?

BS & PV: We are coming out of a perfect storm for SA businesses. Stubbornly high inflation, extraordinarily high interest rates and poor operational performance at Eskom and Transnet have all taken their toll on growth and confidence. This is this sort of environment that as contrarians gets us quite excited about pure play SA companies which are trading at extremely depressed valuations. While the headwinds above may impact another reporting period, our research team have concluded that based on past cycles, SA Inc tends to outperform in the period post the interest rate cycle peak.

Barry Shamley and Peter Vogel from Investec Investment Management collect their Raging Bull Award from Personal Finance editor Dieketseng Maleke. PICTURE: Ayanda Ndamane, INL

SALVO PRIME DYNAMIC FLEXIBLE FUND

• Raging Bull Award: Best South African Multi-Asset Flexible Fund on a Risk-Adjusted Basis over five years to December 31, 2023

SALVO Investment Managers is a discretionary fund manager based in Bloemfontein whose core functions include managing unit trust funds and private client portfolios, and advisory and intermediary services. The firm manages three retail domestic funds in association with Prime Collective Investment Schemes Management Company: the Salvo Prime Dynamic Flexible Fund, the Salvo Prime Income Fund and the Salvo Prime Absolute Retail Hedge Fund. It also runs an offshore fund denominated in US dollars.

The Salvo Prime Dynamic Flexible Fund, launched in 2017, has the flexibility under Asisa’s South African multi-asset flexible category mandate to invest in any asset class in any proportions, with the proviso that not more than 45% is invested offshore. Its benchmark is the FTSE/JSE Capped Shareholder Weighted All Share Total Return Index (Swix).

According to the fund fact sheet, it returned an annualised 12.16%, net of fees, over five years to the end of December 2023, more than three percentage points above the benchmark of 8.97% and at lower downside risk than peer funds in the category.

Personal Finance spoke to fund managers Arné Botha and Ruan Marais.

PF: Please state the fund objective and your investment strategy in achieving that objective.

AB & RM: The fund uses a dynamic risk allocation process to allocate capital to opportunities we deem as attractive. The objective of the fund is to outperform local equities over the long term by using a multi-asset and multi-manager approach. We believe that equities offer a long-term risk premium compared to other assets, but that it is not always necessary to be fully invested in equities in order to outperform. The fund is primarily used by

investors as a building block that aims to achieve capital growth in excess of local growth assets (equities and property) but at a lower risk (standard deviation and drawdowns). We believe the fund is unique in its approach due to the dynamic/tactical positioning between opportunities.

PF: Your portfolio is invested both in other flexible funds and directly in bonds and shares. How do you go about asset selection?

AB & RM: There are many layers to the process but, in essence, we make use of a tactical asset allocation process to identify periods in the business cycle when it makes sense to increase or decrease beta exposure (exposure to higher-volatility assets). Unit trust funds and exchange-traded funds are also used to gain exposure to specific geographies, asset classes or investment philosophies. We outsource 75% of security selection to specialist managers with the remaining 25% allocated to specific tactical opportunities.

PF: Over one-, three- and fiveyear periods you have consistently outperformed your benchmark. To what do you attribute your fund’s excellent performance?

AB & RM: Active management from our underlying managers as well as active allocation management between managers and opportunities have greatly contributed to the fund’s performance in recent years. The last five years have been particularly exciting from an allocation perspective due the volatility in global markets. Being active has allowed us to exploit short-term opportunities that more static strategies have missed.

PF: How are you positioning the fund for the next year or two, considering the various geopolitical and economic risks we face?

AB & RM: Geopolitical outcomes are very difficult to predict, and our positioning won’t reflect what we expect from such outcomes. However, we do consider the long-term impact from political, fiscal and monetary policies that are implemented as a result of such events. Regarding economic risks, we look at what markets are pricing in and whether this is adequate given our expectations of the underlying economic environment. Ultimately, we look to put any emotion aside and try to determine the attractiveness of assets based on relative risk premiums and longterm expectations of growth, value and quality.

Ruan Marais, Theodore Oosthuizen and Arné Botha from Salvo Investment Managers collect the Raging Bull Award from Personal Finance editor Dieketseng Maleke (second from right).

PICTURE: Ayanda Ndamane, INL

PSG DIVERSIFIED INCOME FUND

• Raging Bull Certificate: Best South African Multi-Asset Income Fund for Straight Performance over Three Years to December 31, 2023

• Raging Bull Award: Best South African Interest-Bearing Fund for Straight Performance over Three Years to December 31, 2023

THIS is the second year in a row that the PSG Diversified Income Fund has won the trophy for Best South African InterestBearing Fund. Launched in September 2013, it is aimed at investors wanting a steady above-inflation income from their investment without the risk of capital loss. Over three years to the end of last year it provided an annualised net return of 9.10%, over 3% more than average Consumer Price Index (CPI) inflation of 6.13%. Its benchmark is CPI+1%.

Personal Finance interviewed Lyle Sankar, Ané Craig and John Gilchrist, who

jointly manage the fund.

PF: The Asisa multi-asset income category mandate limits the fund to 10% equities and 25% listed property. How do you work within these limits to accomplish the fund’s objectives?

LS, AC & JG: The PSG Diversified Income Fund holds in excess of 90% local fixedincome/interest-bearing assets over time, making it suitable as a core income portfolio. We follow a globally integrated investment process and are able to use the full spectrum of interest-bearing

assets, extracting value from money markets, government and corporate bonds, both locally and offshore.

Capital preservation is one of the fund’s key objectives, thus we typically hold less than 10% exposure to property, preference shares and equity holdings in totality. The fund’s expanded investment toolkit provides additional avenues to mitigate risk and also provides additional sources of returns. The objective of this component of the portfolio is to add 0.5% to returns annually, rather than drive the performance of the fund.

Lyle Sankar, Ané Craig and John Gilchrist from PSG Asset Management collect the Raging Bull Award from Personal Finance editor Dieketseng Maleke (second from left).

PICTURE: Ayanda Ndamane, INL

PF: What is your strategy regarding your allocation to bonds and cash instruments?

LS, AC & JG: When considering allocations across asset classes, PSG Asset Management starts with cash as a default position. We do not follow a strategic asset allocation framework. We consider this a key strength, as we only allocate away from cash into opportunities that meet our required real returns, buying only when we see sufficient margin of safety against permanent capital losses. This has enabled us to avoid the costly pitfalls of permanent capital loss. For example, we have not had a default (such as a Steinhoff or African Bank) and have typically bought government bonds only when real yields are sufficiently wide to protect client capital.

PF: To what do you attribute the fund’s superior performance over the last few years?

LS, AC & JG: We have an explicit focus on protecting capital but are willing to consider periods of extreme market pessimism as buying opportunities. This is a key behavioural differentiator in the market. In addition, we have a dynamic asset-allocation process and

focus on the best risk-adjusted ideas across various buy lists. This allows us to use a broader range of assets than the typical multi-asset fixed income fund, at various periods in the cycle.Our team-based decision-making framework allows portfolio managers the freedom to express ideas best aligned to the fund’s objectives. In the case of the PSG Diversified Income Fund, the objectives are both generating high levels of income and maintaining a high degree of capital preservation.

PF: The global interest-rate/inflation environment appears to have eased. How do you see prospects for incomefocused investments panning out in the next year or two?

LS, AC & JG: We believe the sharp moderation in developed-market inflation in 2023 will result in short-term inflation reaching the US Federal Reserve’s 2% target during 2024. However, over the long term we believe a re-emergence of inflation poses the risk of disappointing market expectations of significantly lower interest rates. Against this backdrop, the Fed is likely to take a more balanced approach and we do not expect as many

rate cuts as what is currently priced into developed-market curves. The local backdrop, however, is significantly different, as South Africa is entering a phase where rate cuts are now possible. In a low-growth environment and with SA’s inflation likely to remain within target for the foreseeable future, the South African Reserve Bank is likely to commence its rate-cutting cycle during 2024.

We continue to believe the best riskadjusted opportunities lie in government bonds and bank funding curves, which come at low risk of default. These assets offer very attractive yields and will benefit from the tailwind of interest rate cuts. In contrast, we see the corporate bond market as holding greater risk to investors than commonly perceived with corporates and the consumer struggling in the current economic environment. As a result, the fund is predominantly invested in government bonds and bank funding instruments with very low exposure to corporate bonds. We expect that in the prevailing environment, investors should expect healthy inflationbeating returns with a high degree of capital preservation.

PSG GLOBAL EQUITY FEEDER FUND

• Raging Bull Award: Best (SA-Domiciled) Global Equity General Fund for Straight Performance over Three Years to December 31, 2023

THE PSG Global Equity Feeder Fund is a randdenominated fund that invests solely into the PSG Global Equity Sub-Fund, a sub-fund of PSG Global Funds, denominated in US dollars. The underlying sub-fund invests mainly in global listed securities and aims to outperform its benchmark, but at lower risk. The fund nonetheless sits at the top end of the riskreward spectrum, and investors should be comfortable with fluctuations in global equity markets and currency exchange risk. It is suitable for investors who want exposure to global equities without expatriating rands and who have a longterm investment horizon of seven years and longer.

The fund’s benchmark is the MSCI Daily Total Return Net World Index (US dollars) after conversion to rands. Over three years the fund has delivered far better annualised performance than its benchmark: 23.33% versus 15.40%.

Personal Finance interviewed the fund’s managers, Greg Hopkins, Philipp Wörz and Justin Floor, on how the fund operates and their views of the global equity market.

PF: Can you outline your investment process, referring to stock selection and regional allocation?

GH, PW & JF: We select stocks using our 3M investment process through which we evaluate both quality (the evidence of a competitive advantage that serves as a Moat and the strength of Management) and price (Margin of Safety). Essentially, this process aims to uncover an inherent

quality that the market is missing, or at the very least, underappreciating. The fund invests into the best risk-adjusted opportunities across geographies.

PF: The year 2023 was a good one for the global equity market, with the MSCI World Index returning almost 24% in US dollars, while 2022 was awful. How have you navigated the market over the last three years?

GH, PW & JF: At PSG Asset Management, we remain focused on achieving the fund’s long-term objectives, despite the shortterm ups and downs of the market. Global returns in 2023 were dominated by a handful of stocks, mainly the Magnificent 7 (Apple, Amazon, Alphabet, Microsoft, Meta Platforms, Nvidia, and Tesla), which contributed to about half of the index’ return. With market returns this narrow and our focus on investing at a margin of safety, it came as no surprise that last year was a challenging one for the fund from a performance perspective. While 2022 was an awful year for global equity returns, losing 18%, our fund outperformed the market by 25% in 2022 and delivered positive returns for our investors.

As a result, the fund’s three-year returns were well ahead of the market. We believe this focus on longer-term outcomes is appropriate, given the time horizon of this fund.

PF: Which counters stood out for you in 2023?

GH, PW & JF: A diverse range of sectors and geographies contributed to performance in 2023. The fund’s top contributors to performance were US pension provider Jackson Financial (+58%), UK defense contractor Babcock International (+48%), Canadian gold royalty company Wheaton Precious Metals (+28%), offshore oil and gas driller Noble Corporation (+30%) and the Canadian uranium producer Cameco Corporation (+90%). The percentages represent total returns in US dollars.

PF: How are you positioning the fund going forward, and what is your outlook for global equities over the next year or two?

GH, PW & JF: While the global equity market has been marking record highs, largely driven by a compelling artificial intelligence (AI) narrative and strong earnings growth in the technology sector, we are positioning the fund into attractive areas that the market is currently neglecting. These opportunities tend to be outside the popular indices and largely outside the United States, and trading at a significant valuation discount to the overall market, which supports our positive view on fund returns going forward.

Philipp Wörz from PSG Asset Management receives the Raging Bull Award from Personal Finance editor Dieketseng Maleke. PICTURE: Ayanda Ndamane, INL

Coronation’s global asset allocation and fixed income capabilities recognised

• Raging Bull Award: Best (FSCA-Approved) Offshore Global Asset Allocation Fund on a Risk-Adjusted Basis

CORONATION Global Capital Plus Fund won the Raging Bull Award for Best (FSCAapproved) Offshore Global Asset Allocation Fund for risk-adjusted performance on a five-year basis. The fund was launched in 2009 as a moderate-risk global multi-asset fund, suited to investors who require conservative exposure to offshore markets over at least three years and do not require an income from their investment.

Personal Finance spoke to Neil Padoa, Coronation’s Head of Global Developed Markets and portfolio manager of the fund.

PF: Outline the fund’s objectives and investment/ asset allocation strategy.

The fund has a multi-pronged objective, aiming to deliver returns that can beat cash alternatives and inflation while also providing a measure of capital stability.

over 20% for the year. Our fixed-income holdings returned over 7% (compared to the benchmark return of 5.7%) as we took advantage of the panic in the US regional bank sector and the UBS-Credit Suisse merger, which pushed yields on high-yield bank bonds over 10%. We also extended the duration of the portfolio’s nominal and inflation-linked bonds, benefiting the fund later in the year.

How do you see investment prospects over the next year or so in equities and fixed income?

We aim to own attractively priced securities across a range of asset classes and intelligently allocate to a balance of traditional equity and fixed income, listed infrastructure, convertible bonds, and real estate investment trusts (Reits).

What contributed to the fund’s solid low-risk return in USD of 4.6% annualised over the last five years?

The fund’s returns over the five years to end-2023 have been driven by each of these asset classes, with our positioning in each asset class adding value. Our

conservative positioning and good security selection delivered returns over 3% ahead of this benchmark. The balance of the fund, a diversified mix of less correlated assets such as gold and listed infrastructure, also contributed solid positive returns.

How did you navigate 2023, which turned out better than expected (your fund returned an excellent 9.3%), considering the high-interest-rate environment?

The fund’s return was again driven by various asset classes. Our equity holdings, infrastructure and REITs all delivered

Some volatility is par for the course when investing to generate returns ahead of cash, and investors should expect this. Today, the starting point for fixed-income markets is far more attractive than five years ago and forms the bulk of the fund’s current exposure. Yields of around 6% are achievable without taking meaningful risk.

Recent equity market returns have been solid, and should not be extrapolated. However, these returns have been driven by a relatively narrow cohort of some of the biggest stocks, and our team continues to find attractive opportunities outside of the megacaps in areas of the market that remain heavily discounted. We remain excited about the portfolio of companies that we are invested in.

Please read the detailed fund fact sheet for more details on the Coronation Global Capital Plus Fund.

Neil Padoa, Head of Global Developed Markets, Coronation Fund Managers

AYLETT BALANCED PRESCIENT FUND

• Raging Bull Certificate: Best South African Multi-Asset High Equity Fund on a Risk-Adjusted Basis over five years to December 31, 2023

• Raging Bull Award: Best South African Multi-Asset Equity Fund on a Risk-Adjusted Basis over five years to December 31, 2023

AYLETT & Co Fund Managers is a boutique asset management firm based in Claremont, Cape Town, founded by Walter Aylett in 2005. The company runs three retail domestic funds and a hedge fund, in association with Prescient, and an offshore global equity fund. It also manages Nedgroup Investments’ Bravata Worldwide Flexible Fund.

The certificate and award-winning Aylett Balanced Prescient Fund is benchmarked against the Asisa South African Multi Asset High Equity category average. Personal Finance spoke to portfolio manager Dagon Sachs.

PF: Please explain your philosophy regarding asset allocation, offshore exposure and security selection at asset-class level. You were roughly 70% equities, 23% bonds and the rest cash at the end of 2023. Has this allocation been relatively consistent?

DS: It’s important to understand that our approach is different from many. We are fundamentally bottom-up stock/ asset pickers, and as such, we assess each asset’s activeness based on its own merits. We are benchmark agnostic, and this results in our asset allocation largely reflecting where we have found attractive assets. We are not momentum, macro, or theme driven investors. Said differently, we build the portfolio bottomup and worry top-down … taking care to avoid concentration risks that make us uncomfortable.

The allocation has been consistent over the last year with not much change. However, the standout feature over the past five years is that we have gone from holding no bonds to holding 26% bonds at one point. This is probably a good

Aaliah Kathrada from Aylett & Co Fund Managers receives the Raging Bull Award from Personal Finance editor Dieketseng Maleke.

reflection of how we are prepared to use the full ambit of the mandate. Regarding offshore exposure, we have followed a similar philosophy of allowing the money to flow to where we find the best ideas. This occurs on a riskadjusted basis, and we do so by altering the discount rate to reflect the risks that are inherent in any particular region or country.

PF: To what do you attribute your annualised performance of 13.4% over five years, nearly three percentage points above your benchmark, with less volatility risk than many balanced-fund peers?

DS: Since inception the biggest thing we have got right is avoiding significant mistakes. We are risk-averse and spend most of our time worrying about the downside. That is not to say that we have always got it right, but it has been the differentiator over time.

Being benchmark agnostic gives us the flexibility to invest when we see an opportunity and to pull back when the odds are not in our favour. In other words, there is less temptation to follow the herd.

PF: Are there any specific investments that have stood out for you?

DS: At a stock-specific level, Royal Bafokeng Platinum (RBP) and Reinet Investments have been the standout performers for us over the last five years. We do not tend to trade very much, and those two investments have been big holdings for a large portion of that time (at least until RBP was bought from us).

The other standout performer has been the selective ownership of South African government bonds at times when they presented attractive yields with limited downside.

PF: How do you see investment prospects over the next year or two, both locally and globally?

DS: Crystal ball gazing has never been our strength; however, it would be fair to say that we have measured expectations for South Africa over the next year or two. The positive developments on the energy front need to be weighed against Transnet’s declining performance and an election year that always brings about volatility.

Globally, it appears that inflation is more under control than was feared a couple of years ago. However, we do have concerns that the market is too optimistic about the quantum and speed of rate cuts. Our job is to think about the downside, and it is not impossible that we see rates staying higher for longer, something that would disappoint the market.

CONTRARIUS GLOBAL EQUITY FUND

• Raging Bull Award: Best (FSCA-Approved) Offshore Global Equity Fund for Straight Performance over Three Years to December 31, 2023

CONTRARIUS Investment Management is based in Jersey, with offices in Bermuda and South Africa. It was founded in 2008 by former Allan Gray chief investment officer Stephen Mildenhall.

The firm’s global equity fund, which is domiciled in Ireland, is denominated in US dollars. Launched in 2009, its benchmark is the MSCI World Index. At the end of last year, according to its December 2023 fund fact sheet, 80% of the fund was invested in the United States, 10% in Asia (ex-Japan), and 9% in Europe. It had no exposure to Japan.

Personal Finance asked Mildenhall how the fund operates.

PF: Please explain the fund’s investment philosophy/strategy regarding stock selection and market sector and geographical allocations.

SM: Contrarius is a contrarian, valuationbased investment manager and is happy to invest in value- and growth-oriented shares provided they are trading below an assessment of their intrinsic value. The fund’s stock selection is based on detailed fundamental research and the investment philosophy is not benchmark cognisant. As a result, the fund’s individual share holdings, sector and geographic exposures can vary materially from the benchmark index.

PF: To what do you attribute the fund’s outstanding performance over the three years to December 2023 – an annualised return in US dollars of 21.4%, compared with the MSCI World Index’s 7.3%?

SM: The fund’s performance for the three-year period benefited from being overweight in selected holdings within the energy, consumer discretionary and materials sectors. Many of these shares recovered from very attractive levels following the pandemic. While this was a very good three-year period for the fund,

Contrarius Investment Management director Heaton van der Linde accepts the Raging Bull Award from Personal Finance editor Dieketseng Maleke.

December 31, 2023 also marked 15 years since the inception of the fund on January 1, 2009 and it is pleasing that Contrarius’s contrarian, valuation-based approach has also delivered long-term outperformance, with the fund outperforming the MSCI World Index, the average global equity fund, the MSCI World Value Index and the MSCI World Growth Index since its inception.

PF: What stocks have stood out for you over the past three years (and what stocks have perhaps not performed as well as expected)?

SM: Three of the largest positive contributors over the three years were Teck Resources (materials), Signet Jewelers (consumer discretionary) and Valaris (energy). Signet Jewelers traded at about US$27 in February 2020, before the impact of the pandemic, then fell to less than $6 in March 2020 and ended 2020 at about $27. It ended 2023 at about $100, but still trades on less than 10 times earnings. We are, however, now finding better value elsewhere and the fund no longer holds Signet Jewelers and has also substantially reduced its exposure to the energy and materials sectors.

The fund’s media-related shares have not performed well over the last three years, in particular Warner Brother Discovery and Paramount Global. These shares have detracted from the fund’s performance. However, we continue to find them very attractive and they continue to be among the largest holdings in the fund. They have very valuable content but are undergoing a transition from linear television (cable and broadcast) to streaming. We believe that they are nearing an inflection point in this transition over the next couple of years and that patient investors with a longer term outlook will be rewarded.

PF: What is your outlook for the fund (and global equities in general) over the next year or two?

SM: Over the past year the fund has meaningfully reduced its exposure to energy. As contrarian, valuation-based investors we have been finding extremely compelling opportunities outside of energy. Many of these opportunities are in high-margin, long-term growth-oriented companies. We noted last year that after an extended period of value-oriented stocks underperforming growth-oriented stocks it may be tempting for traditional “value” investors to argue that we are in a bubble and that it is “value’s” turn to outperform. We continue to believe that this may not prove to be wise. If artificial intelligence (AI) is indeed a transformational event, price movements to date would probably not suggest a bubble for the overall market, even though certain parts may have run ahead of fundamentals. Fortunately, we are finding significant value in a broad range of stocks. These include both valueoriented stocks and growth-oriented stocks, some of which we believe are likely to be meaningful long-term beneficiaries of advances in AI.

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