03
May 2021
Welcome to the latest edition of the Angles & Perspectives
Anet Ahern
Asset Management
In this edition, we consider the importance of how we remain ‘true to label’ and ensure we continue to bring our clients differentiated portfolios. Our philosophy consistently drives the investment decisions in our funds. We revisit why our funds have a valuable contribution to make as part of carefully constructed client portfolios and for patient, long-term investors. We explore why our cash holdings are currently low compared to past experience (even as markets are expensive) and weigh the advantages income-seeking investors may find in considering multi-asset funds. We remain resolute in our efforts to help investors to look beyond short-term noise and uncertainty, and to recognise the opportunities that abound for patient investors at present.
“ There is no single sector or stock that is always in favour. There is always an opportunity to find mispriced value. ”
Angles & Perspectives Q1 2021
In this edition, we consider the importance of how we remain ‘true to label’ and ensure we continue to bring our clients differentiated portfolios. Our philosophy consistently drives the investment decisions in our funds. We revisit why our funds have a valuable contribution to make as part of carefully constructed client portfolios and for patient, long-term investors. We explore why our cash holdings are currently low compared to past experience (even as markets are expensive) and weigh the advantages income-seeking investors may find in considering multi-asset funds. We remain resolute in our efforts to help investors to look beyond short-term noise and uncertainty, and to recognise the opportunities that abound for patient investors at present.
Introduction
Anet Ahern
CEO, PSG Asset Management
Assessing our investment approach
Justin Floor
Fund Manager, PSG Asset Management
Why our funds remain offensively positioned when equity markets are high
Shaun le Roux
Fund Manager, PSG Asset Management
Blending our best ideas: Lifting the lid on the asset allocation of our multi-asset portfolios
Dirk Jooste
Fund Manager, PSG Asset Management
Portfolio holdings as at 31 March 2021
Click here to view the portfolio holdings of the funds to 31 March 2021
Performance to 31 March 2021
Click here to view the performance of the funds to 31 March 2021
Unit trust summary
Click here to view a summary of the unit trusts
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Introduction
Markets are cyclical by nature. This ensures no single sector, stock or geography remains in the lead indefinitely. There are also many different approaches to investment and endless debates about the ‘best’ approach. Market cycles often overlap and intersect, and this can present pitfalls to unwary investors if they lock in losses by switching between strategies at the wrong time. Part of our commitment to investors is that we remain ‘true to the label’ of differentiated investing, with a focus on balancing value and quality.
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Assessing our investment approach
As we are differentiated managers, our performance can be out of step with that of the market from time to time. The most recent drawdown, which culminated in early 2020, lasted longer and was deeper than we would have liked. Looking ahead, however, we remain convinced of the value our approach can add to client portfolios. We are encouraged by the differentiated and attractive positioning our portfolios offer clients and believe this unique outlook will become increasingly valuable to investors looking to navigate the deep (and sometimes lovely) forests of investment markets going forward.
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Why our funds remain offensively positioned when equity markets are high
We recently marked the one-year anniversary of the lows reached during the pandemic-induced panic of March 2020. If you had predicted at the time that the S&P 500 would be 78% higher a year later, psychiatric observation would have been suggested. With markets hitting all-time highs in recent weeks and many prominent examples of the frothiness, manias and bubbles that we associate with late-cycle bull markets on display, caution is justified. Clients will be familiar with our tendency to hold high levels of cash when markets are expensive and risk appetite is high – a case of being fearful when others are greedy. Yet cash levels in our funds are currently low and our funds remain offensively positioned.
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Blending our best ideas: Lifting the lid on the asset allocation of our multi-asset portfolios
Multi-asset funds can invest across multiple asset classes to meet their portfolio objectives. We aim to allocate capital to our best ideas, balancing risk and potential reward, in line with the client and mandate needs. Our default position is always cash, and we will only allocate to opportunities that offer sufficient risk-adjusted returns above what can be earned on cash. Every security has a return hurdle based on the risks associated with investing in it. We allocate capital on a bottom-up basis, as the expected returns exceed these required return hurdles.
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