Mandate Overview03 Nov 2017
The BlueApha BCI Equity Fund is a general equity portfolio with the objective to deliver a high long-term total return.
Fund Name Changed - Official Announcement03 Nov 2017
The BlueAlpha BCI Select Equity Fund will change it's name to BlueAlpha BCI Equity Fund, effective from 03 November 2017
BlueAlpha BCI Select Equity comment - Dec 16 - Fund Manager Comment16 Mar 2017
Domestic Equity
The US Presidential election has brought a very strong Dollar, a large rally in global cyclicals, and a much higher US Treasury 10 year yield. The Rand was stable against the dollar over the quarter.
The best performing sector was local banks, on the back of the stable Rand and the strength of Global Banks. The fund is overweight this sector. Gold and platinum shares have had a poor quarter and as the fund has no exposure, this was a large contributor to outperformance. Gold and Platinum stocks have struggled to earn acceptable returns over the last 8 years and in most cases barely generate enough cash to fund current capital spend. We see the current low ratings of Price to Book as being a reflection of the poor returns and not a signal that they are cheap.
We have sold our entire position in Steinhoff post their most recent results. Over the last 6 months, the company has continued to buy questionable assets funded with large share issuances, as well as change their year-end reporting date. Continual purchasing of companies makes analysing Steinhoff particularly difficult. However, since 2011, diluted EPS in Euro is unchanged and ROE has halved. We think that the new Steinhoff / Shoprite merger will bring a disappointing outcome for Shoprite minorities.
Domestic retailers continue to struggle with Pick n Pay and Woolworths being the two worst performers in the portfolio. Other domestic stocks such as Bidvest, Imperial and Telkom all did well. We have continued to add to the domestic cyclical portion of the fund. With short rates peaking alongside food inflation, the worst of the economic woe is probably behind us.
Global Equity
Globally, our stock selection - which is overweight US stocks - has been beneficial in the current climate. Our exposure to the US is about 17% of the total portfolio and has added 40 basis points to outperformance. The two best sectors have been US banks and energy. The fund has very little exposure to Europe.