Metropolitan Absolute Provider comment - Sep 04 - Fund Manager Comment21 Oct 2004
The fund performance for the month to 30 September 2004 was 2.35%. Our quants stocks returned 6.6% adding some alpha to the overall equity performance. We are still bullish on equities going forward given our view that we are going into a structurally lower inflationary environment, hence our gross exposure of +75%. In October we are also going to roll the hedge up, to protect us at the higher market level and to shift our cap higher, to continue participating on the upside.
Bonds did 1.33% for the month. In June we reduced our exposure from 20% to 5% whilesubsequently increasing our equity exposure from 60 to 75%. This worked out positively as equities have outperformed bonds by 12.36% in the last quarter.
For the next three months we expect equities to continue outperforming bonds due to our negative sentiment on the US economy, which will continue to support commodity prices. We are also weary of oil prices affecting inflation negatively in the short term, hence we are comfortable with our underweight position in bonds currently.
Metropolitan Absolute Provider comment - Jun 04 - Fund Manager Comment20 Jul 2004
The fund performance for the month to 30 June 2004 was up 0.57%. The Topi40 fell from 9526 to 9201, a total return loss of 3.25%. Our quants stocks cushioned the bad performance resulting in a total equity loss of - .27%. The index portion was also able to out- perform the Topi40 by 0.85%. This was due to significant arbitrage opportunities between underlying Topi40 Index stocks and their futures in the month of June. Such arbitrage opportunities are common in the month of futures close-out and we plan to capitalise on these in the future. This together with the hedge resulted in a positive equity contribution of 0.36% for the month of June.
Bonds contributed 0.02% to performance. Last month we mentioned that bonds were oversold and we waited for them to come back to fair value before we could reduce our exposure. We have since reduced exposure from 20% to 5%. While we do not expect rates to rise this year, the bonds are very sensitive to the volatile Rand, hence increasing our benchmark risk. The US is also expected to increase rates systematically through-out 2004, which confirms Tito Mboweni's suggestion that the party is over.
Our three months equity view is influenced by the stronger Rand which is in turn negatively correlated with commodity prices. Due to their offsetting nature, we expect a stagnant market, range/bound between 9000 and 9500. With our effective equity exposure at 33%, we will utilise the seemingly directionless interim to receive interest on cash.
Metropolitan Absolute Provider comment - May 04 - Fund Manager Comment15 Jun 2004
The portfolio strives to produce absolute returns regardless of stock market trends by: .
- investing in attractive listed shares, bonds and money market instruments; .
- minimising downside risk through equity protection;
· thereby reducing the fund volatility and risk considerably.
·
Because equity protection is on the Topi40 Index, 80% of the equity exposure is indexed to minimise the protection error. The remaining 20% is managed quantitatively to generate alpha on the market returns. Bonds exposure is benchmarked to the All Bond index while cash is benchmarked to the STeFI Money Market Index.
Metropolitan Prudential Managed - name change - Official Announcement02 Jun 2004
With effect from 1 June 2004, the Metropolitan Prudential Managed Portfolio has changed its name to the Metropolitan Absolute Provider Portfolio. The mandate of the fund was also changed to be an absolute return equity based mandate and classified as a 'Targeted Absolute and Real Return Fund'. The benchmark of the fund will be CPI (X) + 5%.
Mandate Universe31 May 2004
Metropolitan Prudential Managed comment - Mar 04 - Fund Manager Comment05 May 2004
The fund is in the process of being restructured and will be reclassified.
Metropolitan Prudential Managed comment - Dec 03 - Fund Manager Comment27 Jan 2004
On a macro asset allocation level the fund ended the year overweight in cash, underweight bonds, and neutrally weighted in equity and property. The equity sector allocation continued to edge up in the favour of equity, tough net equity purchases and relative equity out- performance over bonds and cash, since restructuring. The equity allocation remains underweight in Resources and overweight in Financials and Industrials. Stock selection made a positive contribution with the best individual contributions for the year coming from our overweight positions in MTN/Johnnic, Naspers, and Santam as well as our underweight positions in Nedbank and Richemont.
The strong Rand, lower CPI and PPI and short- term interest rate cuts continued to buoyed the bond market during the year. The bond portfolio recorded a return of 17.8%for the year. Our bond exposure was maintained at an underweight position, to reflect our expectation of limited future returns relative to the other asset classes.
With the lower risk profile of the fund the emphasis of the fund would be on property and local bond investments. The equity portfolio is overweight in the financial and industrials while underweight Resources, in line with our risk return expectations.