Investec Equity Fund added to Bovest’s strategy

We recently added exposure to Investec Equity Fund to our Bovest BCI Managed FoF.

 

Upon deciding to add a fund to our mixture of Bovest solutions, a few factors are considered.

 

The first is that we only choose the best of the best in each asset class. Investec’s Equity fund recently won the special Raging Bull Award for top performance over 20 years by a South African equity general fund. It stands out as one of the best in the local equity space and we expect good continuous growth from the fund over the long term.

 

However, we don’t look at performance only but also consider how the fund manager blends with the other underlying fund managers in our Portfolio. For instance, our local equity exposure include the following funds:

  • Coronation top 20 and Kagiso Equity Alpha, both of which invest more on a value basis (i.e. if something looks cheap, they will buy it). They have therefore been invested in resources for some time now.
  • BCI Best Blend Equity, which is managed by boutique fund managers who focus more on opportunities in the small and Mid-cap space.
  • Investec equity is driven by Earnings Revisions, which is a different strategy than any of the above.

Each manager has a unique edge which is uncorrelated with each other. This gives our portfolios a nice blend and allows us to generate above market returns with lower volatility.

 

We also consider the underlying process of the fund managers. Investec Equity invests in companies whose earnings are being revised higher and which are trading at reasonable valuations. If a company continues to surprise earning predictions at a reasonable price, it will be considered for inclusion in the portfolio.

Although they were bearish on commodities and China for a while now, it is the first time in 3 years that they are investing in commodities. This is because it comes from such a low base and earnings look to surprise the negative outlook there is at the moment

 

A few of the local stocks included in their portfolio are:

  • Naspers: Investment in Tencent in China, has a lot more potential for revenue growth.
  • Is well positioned for internet data demand in South Africa.
  • Tigerbrands: New management, can turn around company and increase revenues significantly.

 

We believe the addition of Investec Equity will add value to our portfolios and increase the returns for you our clients over the long term.

 

PJ Botha

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