Bovest Portfolio Review

Many of us would agree that 2020 wasn’t the year we expected when we celebrated the departure of 2019. The year proved especially difficult for market participants that were caught between uncertainty and volatility in local and global markets. Even with all the uncertainty, 2020 was not a bad year with investors with well diversified portfolios. The Bovest performance for the year was as follows:

Bovest Unit Trusts

Bovest BCI Managed FOF 8.32% vs Industry Average: 5.19%

Bovest BCI Conservative FOF 6.73% vs Industry Average: 5.17%
Bovest BCI Worldwide Flexible FOF 14.28% vs Industry Average: 10.41%

The biggest reason for the outperformance was the underweight in risk asset classes (equities and listed property) during the March sell off and then moving overweight in risk asset classes during the correction.

We are optimistic that the equities growth can continue in 2021, with interest rates at historic lows and stimulus through governments. We are therefor overweight in local and global equities.

We brough in an allocation to value companies, that we believe may outperform growth companies.

Bovest Share Portfolios

Local

Bovest SA Sector Neutral Quality Portfolio: +15.8% (ZAR)

FTSE/JSE All Share Index Total Return: +7.0% (ZAR)

The Bovest SA houseview portfolio performed resolutely in 2020 as the focus on inherent quality businesses proved to minimise the drawdowns in March when the Covid-19 pandemic took hold. The largest contributors to 2020’s performance included Kumba Iron Ore (+64.3%), Prosus (+52.6%) and Afrimat (+33.8%). The resources sector has performed very well in an environment where commodity prices continued to rally despite concerns about global growth.

The SA financial sector was hit very hard due to the pandemic and concerns about the health of the average SA consumer. We do however feel that the SA Banking sector (especially FirstRand, Standard Bank, Capitec and Sanlam) do offer investors very attractive entry points for the next 3-5 years. The sector is very well capitalised and should be able to weather the storm until a vaccine rollout in SA is completed.

Offshore

Bovest Offshore Global Large Cap Quality Portfolio: +21.8% (USD)

MSCI World Index Total Return: +16.5% (USD)

The Bovest offshore houseview portfolio had a very good 2020 for the same reason as the SA portfolio. The quality factor that the portfolio’s have protected it from the severe and quick drawdown in March. The portfolio did however come under some pressure in the 4th quarter of 2020 as the rotation away from quality/growth companies into the more cyclical and cheaper companies ensued due to the positive news of the Covid-19 vaccine roll-out. The largest contributors to 2020’s performance included Apple (+82.3% – USD), Tencent (+51.3% – USD) and Hermes International (+44.9% – USD). The “stay-at-home” trend was especially strong in the global markets.

Overall we are happy with the holdings within our different portfolios and how they performed in 2020.

With 2021 we will continue to focus on diversification and quality holdings to whether any conditions that might come our way.

Let us know if you have any questions.

PJ Botha CA(SA), CFP ®

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