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10 months ago

Blue Chip Issue 82

  • Text
  • Financial
  • Advisors
  • Investments
  • Equity
  • Wealth
  • Offshore
  • Asset
  • Portfolio
  • Investing
  • Global
  • Momentum
Welcome to our Investing Offshore Special Edition of Blue Chip. a quarterly journal for the financial planning industry and the official publication of the Financial Planning Institute of Southern Africa NPC (FPI). Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry.

INVESTMENT Our senior

INVESTMENT Our senior ESG analyst, Piet van der Merwe, has extensive stewardship experience, specialist knowledge in the credit and private markets, and serves on the Association for Savings and Investment Piet van der Merwe Luvuyo Mdingi South Africa (ASISA) Responsible Investment Committee. Luvuyo Mdingi was recently appointed as an ESG analyst and will work closely with Van der Merwe to focus on our company’s stewardship responsibilities. ASSET ALLOCATION AND ECONOMIC RESEARCH Herman van Papendorp heads up the Momentum Investments investment research and asset allocation team and takes ultimate responsibility for macro research, manager research and asset allocation. Sanisha Packirisamy, Momentum Investments economist, is responsible for providing a macro-economic framework to define investment fundamentals. Together, the macro team undertakes relevant macro-economic and asset class research to generate investment views, which are required to create and effectively manage outcome-based investment portfolios. An integral part of the economic and asset allocation research process is to assess the likely prospects for the global and local economies. The team continually determines the extent to which these economic prospects are priced into the different local and global asset classes. When divergences between asset prices and fundamentals are identified, these provide opportunities to generate asset allocation alpha for our portfolios. Scenario analysis is a cornerstone of both our longerterm strategic asset allocation and shorter-term tactical asset allocation methodologies to determine a realistic range of possible future outcomes. In this way, we try to future-proof investment decisions as much as is practically possible against uncertain and unexpected outcomes. This also helps us compile a risk-reward matrix for all asset classes, so that the team can make a probability-based allocation to each asset class, incorporating at least parts of each of the envisaged scenario outcomes. In essence, we invest for the central, most probable scenario and take cognisance of the positive and negative tail risks incorporated in two possible alternative scenarios, a best case and worst case on each side of a base-case scenario. SMART BETA AND PASSIVES Wayne Dennehy is the head of systematic strategies and the institutional distribution team. Loftie Botha is a portfolio manager and responsible for a range of funds that follow systematic strategies, including index tracking and smart beta funds. Stanley Bisho recently joined Momentum Investments as a portfolio manager (Systematic Strategies). Wayne Dennehy Loftie Botha Stanley Bisho Index tracker funds With clients becoming increasingly more aware of the negative impact of fees in the long run and of the risk of their investment manager severely underperforming the market, the spectacular growth of tracker funds is set to continue. Momentum Investments’ index funds are suitable for clients who want low-cost exposure to the local equity and listed property markets as well as certainty that returns would be in line with the benchmark. The Momentum Capped SWIX Index Fund gives clients exposure to the FTSE/JSE Capped Shareholder Weighted All Share Index, the de facto South African equity market benchmark. We also offer passive exposure to the listed property market through the Momentum Real Growth Property Index Fund, which tracks the broad-based FTSE/JSE All Property Index. Herman van Papendorp Sanisha Packirisamy 30 www.bluechipdigital.co.za

INVESTMENT Smart beta funds Our smart beta funds offer the benefits of both traditional and index investing. These funds aim to achieve benchmark-beating returns at lower fees than what is associated with traditional portfolios. Investment decisions are based on objective fundamental and market data that can be easily quantified, and hence subjectivity is kept to a minimum. The Momentum Trending Equity Fund follows a momentum strategy. The roots of momentum investing are found in the well-known truisms “the trend is your friend” and “cut your losses and let your profits run”. The Momentum Value Equity Fund aims to “buy low and sell high”. Opportunities often arise due to excessive negative (or positive) sentiment that creates opportunities for buying (or selling) shares when share prices are temporarily out of line with valuations. The Momentum Quality Equity Fund prefers to invest in highly profitable and stable companies. It also favours companies that follow a conservative approach when reporting earnings. The Momentum Trending Equity Fund and the Momentum Value Equity Fund were launched in April 2017 and delivered benchmark-beating returns since inception over a challenging period in the market. We are confident that the performance of the Momentum Quality Equity Fund, launched in August 2021, will follow suit. Value, momentum and quality styles are cyclical and often outperform at different points in time. With us, investing is personal. We therefore encourage clients to blend multiple investment styles to reduce volatility of their investments without sacrificing long-term performance. FIXED INCOME Ian Scott is the head of fixed income in the Momentum Investments team. He is the portfolio manager on bond, inflationlinked bond and flexible income mandates. He also takes overall responsibility for performance and management of the team of six investment professionals. Zisanda Gila is a senior money market portfolio manager at Momentum Investments. She manages over R50-billion in assets within the fixed income team across the various money market strategies. Her various roles in the industry over the years have equipped her with an in-depth understanding of financial markets coupled with the desire to be the best at her craft, client focus and maintaining strong relations with institutional clients. She and the fixed income team bagged multiple Raging Bull Awards for the Momentum Enhanced Yield Money Market Fund as the “Best South African interest-bearing short-term fund on a risk-adjusted basis” over a five-year period. The fixed income team manages core mandates for clients across five of the seven yield curves in South Africa. We manage client assets from short-dated money market funds all the way up the duration curve to inflation-linked bond funds. With us, investing is personal and core to our investment approach is understanding clients’ investment objectives. Our main goal is to keep clients fully invested and earn real yields through market cycles and deliver investment returns that meet their objectives on a Ian Scott Zisanda Gila risk-adjusted basis. We recognise that the investment journey for clients is a personal one and therefore require a multitude of different investment skills to create outcomes that are relevant and competitive for different client needs.

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