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STANLIB Multi-Manager Diversified Equity Fund of Funds  |  South African-Equity-General
4.8680    +0.0101    (+0.209%)
NAV price (ZAR) Mon 30 Jun 2025 (change prev day)


STANLIB MM All Stars Equity FoF Comment- Jun 13 - Fund Manager Comment19 Sep 2013
In their quarterly equity review, Allan Gray notes that "five shares with a combined weight of just under one-third of the ALSI, have been massive winners over the last decade". It should be no surprise to you that these shares are the large Rand Hedge industrials of SABMiller, Richemont, MTN, Naspers and British American Tobacco. Given the quality of these companies Allan Gray have held large positions in many of these Rand Hedges through time. The success of many manager portfolios over time can be determined by their exposure to these shares, and importantly to the many other shares that are more dependent on the South African operating environment, which have not performed as well. Like Allan Gray, Coronation has also recently been favouring the large Rand Hedge industrials in their equity portfolios. Prudential's benchmark relative process would also have steered their portfolio toward these shares, with their long term relative performance highlighting the superior returns of such a strategy. The ABSA Rand Protector Fund has been a natural beneficiary of Rand weakness however their unavoidable exposure to the Resources companies would have been a headwind more recently.
The same can be said for the past 12 months , where the near 22% depreciation of the Rand relative to the dollar was the key driving force behind the equity market. For a while it was interest rate sensitive retailers, which benefited significantly from the "lower for longer" global interest rate theme. This however has faded year to date as the shares, bid up by foreign investors, became extremely expensive relative to history and their prospects, and we note with interest that many of our managers have been underweight this sector for some time. Rising inflation and interest rates and slowing GDP growth in South Africa are likely to be a headwind for these shares going forward. The Fund benefited significantly from its overweight positioning in industrial Rand Hedges and underweight position to retailers during the quarter, producing a return in line with the index, but 1.8% ahead of the peer group. It was ranked 34 / 121. Over the past 5 years, the Fund has outperformed the index by 0.4% net of fees and the peers by 2.31%.

The SA equity market has enjoyed a strong rally over the last short while and many companies, including the industrial rand hedges have become stretched from a valuation perspective. To counter this, we introduced a small exposure to the Kagiso Equity Alpha Fund, which currently has deeper value characteristics relative to the other managers in the Fund. The timing of this is interesting given the recent comments by the Fed to slowly start removing QE.
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