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PSG Angles and Perspectives: Q1 2015

24 April 2015

PSG Angles and Perspectives: Q1 2015

PSG Angles and Perspectives is the quarterly publication of PSG Asset Management which contains regular communications from our fund managers and about our funds.

In this publication we communicate to our investors those thoughts and ideas we believe are important and valuable.


Greg Hopkins

When we comb the world for mispriced securities, we more often than not circle back to the same conclusion: numerous securities across a range of asset classes appear overvalued. Many investors appear to be ignorant to the risk they are taking in their portfolios and the real possibility of capital loss. Most concerning is the fact that we consider risk to be high in some of the asset classes where the lowest risk investors are heavily exposed, including government bonds and property. This is probably not a surprising outcome, given that yields on many securities are at generational low levels. We agree with notable value investor... Read more

Global developed market banks: unloved and equally undervalued

Lisa Haakman

Warren Buffett describes his philosophy to risk in his 2015 letter to shareholders as follows: 'If you can't predict what tomorrow will bring, you must be prepared for whatever it does.' Banks would have been wise to follow this mantra and adopt a prudent approach to risk, but instead we have had numerous bank failures in recent decades, most recently during the global financial crisis. With fresh memories, investors are still shunning developed market banks. As seen in Graph 1, US banks are trading at 70-year lows on valuation relative to the S&P 500 Index. Looking at a shorter time frame, the US Banks Index and the UK Banks Index have... Read more

Considering the impact of rising interest rates on our portfolios

Shaun le Roux

We find ourselves in extraordinary times. As Chart 1 shows, 90% of the industrialised global economy is subject to near-zero interest rate policy. Central banks have adopted extremely accommodative monetary policy to counter the effects of the global financial crisis and the unwinding of a debt 'supercycle'. In recent times, G7 countries have gone as far as buying government bonds (quantitative easing) to inject liquidity into economies where demand for credit has been lacklustre or absent. As a result of these interventions, today we find most interest rates in developed markets, both short- and... Read more

Our multi asset class funds: their diversification benefits and how they compare

Paul Bosman

Our multi asset class funds give investors the benefit of professional and actively managed exposure to different asset classes. By combining these different asset classes, investors can achieve their desired returns at lower levels of risk because asset valuations do not all move in the same direction at the same time. The benefits of delegating the asset class decision to a professional manager means investors don't have to decide how much money to put in each asset class when to change this allocation in response to changing asset valuations Each fund has its own objective, benchmark, typical asset allocation and therefore minimum... Read more

Scenario-based investing and the management of risk

Anet Ahern

When it comes to the stewardship of our clients' money, we are well aware that in an ideal world, we would be dealing with total certainty on every decision we make and our conviction would be matched by the reality that ensues. We would never get an investment wrong – failure would not be an option. In fact, many investors are yearning for someone who can make sense of an often chaotic world, and ensure that their hardearned capital is safe, and that it grows. Investors want to be told what is going to happen, despite all evidence weighing against the predictive talents of the vast majority of market commentators and forecasters... Read more

Portfolio Holdings as at 31 March 2015

Performance to 31 March 2015

Unit Trust Summary

PSG Angles and Perspectives: Q1 2015

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