The ClucasGray Equity Fund declined by 1.5% in the month, lagging the JSE Swix, and ahead of the General Equity peer group. November was characterised by some diverse returns. Globally, cyclical shares were under pressure, the the Resources Index falling 12% in the month. In addition, Large global industrials, British American Tobacco ( BTI) and Richemont endured a difficult month, falling 25% and 17% respectively. On the positive side banks, retailers and Naspers performed well, whilst the Rand enjoyed a strong month gaining 6% against the Dollar.

Richemont is not a company that the company is exposed to, although we do have a position in BTI. The fund had previously preferred to be exposed to BTI through Reinet, which we believe offered a discounted entry into BTI - a strategy that largely worked, with Reinet outperforming BTI by around 30% since January. Following the weakness in BTI, we believe that the current valuation more than compensates investors for the regulatory risks, and we have increased our exposure too it, at the expense of Reinet.

We encourage you to read ClucasGray Asset Management September 2018 quarterly (www.cgam.co.za) for a detailed assessment of our views and portfolio positioning.

The ClucasGray Equity Prescient Fund is a SA only, general equity fund. The fund aims to provide long term capital growth ahead of its benchmark (SWIX) and the competing unit trust category by investing in any shares that are listed on the JSE. The fund is a high conviction fund aiming to hold no more than 25 stocks at any one time. Fundamental analysis, a valuation discipline and a belief that inefficient markets create opportunities in mispriced assets underpin our process.

Following the emerging market crisis that impacted many South African companies, July saw welcome relief to select sectors. Financials rallied over 6%, although this gain was offset by declines in Resources and Industrials. Year to date, only the Resources sector has shown positive returns (+16%), with Financials, Industrials and Property all declining in the case of Property the decline has been brutal, with the sector falling more than 20%. In an environment of subdued returns, the ClucasGray Equity Fund has gained over 12% over the last year, with the JSE Swix and the Peer group gaining just over 5% and 3% respectively.

We have made numerous changes to the portfolio over the last few months. New additions include Tiger Brands and Grindrod, and we increased weightings in Old Mutual, Clover, select banks and the combination of British American Tobacco and Reinet. To fund these purchases we have sold out of Quilter and Remgro, and reduced exposure to Naspers, Sasol, amongst others. The operating environment is always dynamic whilst uncomfortable at times, we remain resolute in our belief that patient investors will in due course reflect favorably on the opportunities that are currently being presented. For a more detailed explanation of our views and positioning, please refer to the June 2018 quarterly commentary on our website, www.cgam.co.za.