Northstar BCI Equity Fund is a general equity portfolio that aims to provide investors with high long-term capital growth

The portfolio’s net equity exposure will be a minimum of 80% of the portfolio's asset value.
Maximum foreign exposure as permitted by SARB.

The Northstar SCI Equity Fund will change it's name to Northstar BCI Equity Fund, effective from 25 August 2023

The fund switched Management Company from Sanlam Collective Investments to Boutique Collective Investments (RF) (Pty) Ltd. on 25 Aug 2023

Performance review:
Despite a weak end to the year, the JSE Capped Swix Index returned +4.4% in Rand terms in 2022. This performance was in stark contrast to very weak global equity markets, hampered by the war in Ukraine, supply chain disruptions and central banks' restrictive policies aimed at curbing rampant inflation. The local bourse outperformed the MSCI Emerging Market Index by 16.9% and the MSCI Developed Market Index by 14.2% last year.

On a relative basis, South African equities benefited from strong commodity and energy markets
and an improving environment for the Rand. The trend of outperformance of value stocks over
growth counters across global markets, had a positive effect on local stocks which have been
trading at depressed multiples since the onset of Covid in 2020. Local Resources finished the year
up +8.6%, SA Financials gained 6.9% and despite a rally in Naspers/Prosus in Q4, SA Industrials
declined -3.7% as the worsening effect of load shedding severely impacted manufacturing and
industrial production.

Fund's annual performance
The Northstar SCI Equity Fund was up +3.2% in 2022, marginally ahead of its benchmark, the
(ASISA) South African Equity General Peer Average which returned +3.1% during the year. Over the
past year the fund benefited from a healthy overweight exposure to key financials and quality
industrials, which performed exceedingly well. It was also boosted by an increase to its already
overweight exposure to Naspers/Prosus during year.

Against this, an underweight position to energy (particularly Coal) and overweight position to
underperforming drug and clothing retailers hurt performance. From a stock perspective, the
fund's top attributors against the JSE Capped Swix index included Angloplat, British American
Tobacco, Standard Bank, Aspen (underweight), MTN (underweight) and Pick 'n Pay. On the
negative side, our underweight positions to Glencore, Exxaro and Thungela were the main sources
of negative attribution. Being overweight Quilter, Life healthcare, Mr Price and Dis-chem also
produced negative alpha.

Positioning and expectations
With global growth expected to slow down significantly in 2023 and the full effect of central bank tightening to be felt by corporates and labour markets alike, equities may experience heightened volatility despite broadly trading at depressed multiples. The fund is positioned defensively against global and local recessionary pressures (relative to the local equity index) - this implies that it is underweight miners and cyclicals and overweight reasonably priced local and global defensives. Overall, we think that specific SA counters continue to offer significant value despite tough macro headwinds in 2023 and consequently, over the medium term, will generate healthy returns