Keeping the Faith · Q1 1990 Q1 1992 Q1 1994 Q1 1996 Q1 1998 Q1 2000 Q1 2002 Q1 2004 Q1 2006 Q1...

6A Sandown Valley Crescent, Sandown, Sandton, 2196Proprietary and Confidential. Not for Distribution

Keeping the Faith

May 2019

Proprietary and Confidential. Not for Distribution

LONG ONLY

Domestic Offshore

HEDGE FUNDS

FundogramBUSINESS OVERVIEW

36ONE BCI Flexible Opportunity FundMulti-Asset, SA Equity Focus

36ONE BCI Equity FundGeneral Equity, SA Equity Focus

36ONE BCI SA Equity FundPure SA Equity Fund

PPS Managed Fund*Multi-Asset, Reg 28 Complaint

36ONE SNN QI Hedge Fund36ONE SNN Retail Hedge FundStandard Risk, SA Equity Focus, ZAR

Non FSCA approved USD denominated hedge funds

Domestic Offshore

36ONE Global Fund PCUSD Denominated, Multi-Asset

*36ONE has been appointed as the sole investment manager on the PPS Managed Fund

Segregated mandates of all the above portfolios are available to institutional investors.

What you need to know ....?


Resistance being removed? GLOBAL OUTLOOK

Late cycle – EPS momentum still up but slowing

Cheap money here to stay (for now)

Global liquidity is everything

Consumption very geared to the wealth effect

SA – hopefully hit the bottom

SA – long slow grind ahead – Governance is key


Late cycle indicators GLOBAL OUTLOOK


Wage pressures starting to hurt US operating EPS GLOBAL OUTLOOK

Source: RMB Morgan Stanley Bloomberg

-$5

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

Q1

1988

Q1

1990

Q1

1992

Q1

1994

Q1

1996

Q1

1998

Q1

2000

Q1

2002

Q1

2004

Q1

2006

Q1

2008

Q1

2010

Q1

2012

Q1

2014

Q1

2016

Q1

2018

S&P 500 Operating EPS


S&P 500 Index – Projected earnings slowing - market reratedGLOBAL OUTLOOK

100

110

120

130

140

150

160

170

180

1 500

1 700

1 900

2 100

2 300

2 500

2 700

2 900

3 100Ap

r 201

4

Jun

2014

Aug

2014

Oct

201

4

Dec

201

4

Feb

2015

Apr 2

015

Jun

2015

Aug

2015

Oct

201

5

Dec

201

5

Feb

2016

Apr 2

016

Jun

2016

Aug

2016

Oct

201

6

Dec

201

6

Feb

2017

Apr 2

017

Jun

2017

Aug

2017

Oct

201

7

Dec

201

7

Feb

2018

Apr 2

018

Jun

2018

Aug

2018

Oct

201

8

Dec

201

8

Feb

2019

S&P 500 (LHS) Consensus EPS (RHS)

Source: Bloomberg


Equity dividend yields still ahead of cash and bonds (barely)GLOBAL OUTLOOK

Source: RMB Morgan Stanley , Bloomberg

0%

1%

2%

3%

4%

5%

6%

7%

8%Ja

n-99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Jan-

14

Jan-

15

Jan-

16

Jan-

17

Jan-

18

Jan-

19

US Fed Fund JPM GBI Global- RY MSCI World- DY


Probably another leg up if the FED starts cutting rates GLOBAL OUTLOOK


0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

9,0%

10,0%

-60%

-40%

-20%

0%

20%

40%

60%Ja

n-90

Jan-

92

Jan-

94

Jan-

96

Jan-

98

Jan-

00

Jan-

02

Jan-

04

Jan-

06

Jan-

08

Jan-

10

Jan-

12

Jan-

14

Jan-

16

Jan-

18

S&P 500 (y/y) Fed Rate (RHS)


Household debt under control – a big positive for spending – especially in the US GLOBAL OUTLOOK


0%

20%

40%

60%

80%

100%

120%

Q1

1970

Q1

1973

Q1

1976

Q1

1979

Q1

1982

Q1

1985

Q1

1988

Q1

1991

Q1

1994

Q1

1997

Q1

2000

Q1

2003

Q1

2006

Q1

2009

Q1

2012

Q1

2015

Q1

2018

HH Debt to GDP

EU US Japan


China – credit stimulus GLOBAL OUTLOOK

Source: BCA Research


Chinese Property Cycle GLOBAL OUTLOOK

Source: CEIC, UBS estimates


China – pumping credit GLOBAL OUTLOOK


Shanghai Composite IndexGLOBAL OUTLOOK

230

240

250

260

270

280

290

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

5 500Ap

r 201

4

Jun

2014

Aug

2014

Oct

201

4

Dec

201

4

Feb

2015

Apr 2

015

Jun

2015

Aug

2015

Oct

201

5

Dec

201

5

Feb

2016

Apr 2

016

Jun

2016

Aug

2016

Oct

201

6

Dec

201

6

Feb

2017

Apr 2

017

Jun

2017

Aug

2017

Oct

201

7

Dec

201

7

Feb

2018

Apr 2

018

Jun

2018

Aug

2018

Oct

201

8

Dec

201

8

Feb

2019

Shanghai Composite (LHS) Consensus EPS (RHS)

Source: Bloomberg


China starting to need cash – could be a big drain on global liquidity GLOBAL OUTLOOK


-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Q1

1990

Q1

1992

Q1

1994

Q1

1996

Q1

1998

Q1

2000

Q1

2002

Q1

2004

Q1

2006

Q1

2008

Q1

2010

Q1

2012

Q1

2014

Q1

2016

Q1

2018

China Current Account Balance as % of GDP


STOXX Europe 600 IndexGLOBAL OUTLOOK

19

21

23

25

27

29

275

295

315

335

355

375

395

415

435M

ay 2

014

Jul 2

014

Sep

2014

Nov

201

4

Jan

2015

Mar

201

5

May

201

5

Jul 2

015

Sep

2015

Nov

201

5

Jan

2016

Mar

201

6

May

201

6

Jul 2

016

Sep

2016

Nov

201

6

Jan

2017

Mar

201

7

May

201

7

Jul 2

017

Sep

2017

Nov

201

7

Jan

2018

Mar

201

8

May

201

8

Jul 2

018

Sep

2018

Nov

201

8

Jan

2019

Mar

201

9

Euro Stoxx 600 (LHS) Consensus EPS (RHS)

Source: Bloomberg

Is it a new dawn....?


SA – not in great company – unemployment the biggest challenge LOCAL OUTLOOK


Eskom – electricity tariff hikesLOCAL OUTLOOK

Electricity prices (USc per kWh) in US$ terms: the ZAR at 15.5 would compensate for the 13.8% hike in tariffs

Source: RMB Morgan Stanley research

High electricity consumers that have to face higher input costs and tend to suffer from ZAR weakness:• Cement producers• Food retailers• Local Manufacturers• Retailers


Fruitless and wasteful expenditure exorbitantLOCAL OUTLOOK


SA earnings revisions for domestic earners have been very negativeLOCAL OUTLOOK



Retail sector – employment costs rising ahead of revenue LOCAL OUTLOOK



SA inflation – well managed LOCAL OUTLOOK

Source: StatsSA, Standard Bank estimates


SA – lots of cash on the side – mainly corporates LOCAL OUTLOOK

Source: SARB, SBG Securities


PGM Basket and Palladium (ZAR prices)LOCAL OUTLOOK

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

22 000M

ar 2

014

May

201

4

Jul 2

014

Sep

2014

Nov

201

4

Jan

2015

Mar

201

5

May

201

5

Jul 2

015

Sep

2015

Nov

201

5

Jan

2016

Mar

201

6

May

201

6

Jul 2

016

Sep

2016

Nov

201

6

Jan

2017

Mar

201

7

May

201

7

Jul 2

017

Sep

2017

Nov

201

7

Jan

2018

Mar

201

8

May

201

8

Jul 2

018

Sep

2018

Nov

201

8

Jan

2019

PGM Basket Palladium

Source: Bloomberg


Staying with earnings visibility both globally and in SA PERFORMANCE AND POSITIONING

Global

Globally – preference still the US

Preferred sectors – big global tech/consumer discretionary

Local

Resources and platinum

SA Banks

Select Industrials – Bidvest, KAP Industrial Holdings, AECI, Hudaco

Telecommunications – MTN

4% in gold shares, physical gold and physical platinum


36ONE BCI Equity Fund: Performance to April 2019PERFORMANCE AND POSITIONING

36ONE BCI Equity Fund CAPSWIX TR* Outperformance

YTD 12.3% 9.1% 3.2%

12 months 5.8% (1.7%) 7.5%

3 years 4.7% 4.7% 0.0%

5 years 7.3% 6.7% 0.6%

Since inception (Jul ‘12)

12.9% 11.5% 1.4%

Annualised volatility 10.2% 10.5%

Total Return p.a.

0%

20%

40%

60%

80%

100%

120%

140%

Jun

12

Nov

12

Apr 1

3

Sep

13

Feb

14

Jul 1

4

Dec

14

May

15

Oct

15

Mar

16

Aug

16

Jan

17

Jun

17

Nov

17

Apr 1

8

Sep

18

Feb

19

36ONE BCI Equity Fund FTSE/JSE Capped SWIX Total Return

Source: Bloomberg as at 30 April 2019. Inception Date: July 2012. *Benchmark: 1 July 2012 – 31 October 2017: FTSE JSE SWIX (J403T)1 November 2017 – Current: FTSE JSE CAPI SWIX (J433T), calculated over a rolling 1 year period, capped at 2% p.a.Highest and lowest calendar year performance since inception (as at 31 March 2019): High 33.66 Low -6.38 (Class A)

Boutique Collective Investments (RF) (Pty) Ltd (“BCI”) is a registered Manager of the Boutique Collective Investments Scheme and Sanne Management Company (RF) (Pty) Ltd (“Sanne”) are registered and approved in terms of the Collective Investment Schemes Control Act 45 of 2002 and are full members of the Association for Savings and Investment SA. Collective Investment Schemes in securities and hedge funds are generally medium to long term investments. The value of participatory interests may go up or down and past performance is not necessarily an indication of future performance. The Manager does not guarantee the capital or the return of a portfolio. Collective Investments are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees, charges and maximum commissions is available on request. 36ONE Asset Management (Pty) Ltd (“36ONE”) reserves the right to close and reopen certain portfolios from time to time in order to manage them more efficiently. Additional information, including application forms, annual or quarterly reports can be obtained from 36ONE, free of charge. Should a performance fee be applicable, the performance fees will be calculated and accrued on a daily/monthly basis based upon the daily/monthly outperformance, in excess of the benchmark, multiplied by the share rate and paid over to the manager monthly. Performance figures quoted are from either Morningstar, Bloomberg, Maitland, Maitland Guernsey, or Sanne as at the date of this report for a lump sum investment, using either NAV-NAV with income reinvested or mandate specific parameters and do not take any upfront manager’s charge into account. Income distributions are declared on the ex-dividend date. Actual investment performance will differ based on the initial fees charge applicable, the actual investment date, the date of reinvestment and dividend withholding tax. Annualised return is the weighted average compound growth rate over the period measured. Investments in foreign securities may include additional risks such as potential constraints on liquidity and repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information. Boutique Collective Investments (RF) Pty Ltd and Sanne Management Company (RF) (Pty) Ltd retain full legal responsibility for third party named portfolios. Although reasonable steps have been taken to ensure the validity and accuracy of the information in this document, 36ONE does not accept any responsibility for any claim, damages, loss or expense, however it arises, out of or in connection with the information in this document, whether by a client, investor or intermediary. This document does not constitute a solicitation, invitation or investment recommendation, and prior to selecting a financial product or fund it is recommended that investors seek specialised financial, legal and tax advice. 36ONE Asset Management (Pty) Ltd, 2004/035570/07 and FSP number 19107, is an authorised discretionary financial services provider under the Financial Advisory and Intermediary Services Act (No. 37 of 2002).

Disclaimer

6A Sandown Valley Crescent, Sandown, Sandton, 2196www.36one.co.za | [email protected]

Keeping the Faith · Q1 1990 Q1 1992 Q1 1994 Q1 1996 Q1 1998 Q1 2000 Q1 2002 Q1 2004 Q1 2006 Q1...

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Transcript of Keeping the Faith · Q1 1990 Q1 1992 Q1 1994 Q1 1996 Q1 1998 Q1 2000 Q1 2002 Q1 2004 Q1 2006 Q1...