MEET THE TEAM FOORD ASSET MANAGEMENT

Transcription

1 MEET THE TEAM FOORD ASSET MANAGEMENT November 2015

2 MEET THE TEAM SPEAKERS Welcome Paul Cluer Managing Director Share focus Michael Townshend Portfolio Manager and Resources Analyst Returns and macro environment Mike Soekoe International Director of Business Development 2

3 FOORD FUND RANGE Local and International Funds

4 FOORD FUND RANGE LOCAL AND INTERNATIONAL FLAGSHIP FUNDS Foord Flexible Fund Foord International USD* World-wide best investment view (BIV), multi-asset Global conservative BIV, multi-asset REGULATION 28 FUNDS Foord Balanced Fund Foord Conservative Fund Regulation 28, multi-asset, high (< 75%) equity Regulation 28, multi-asset, medium (< 60%) equity SPECIALIST FUNDS Foord Equity Fund Foord Global Equity Fund USD* SA shares only Developed and emerging market shares * Available via a South African feeder fund 4

5 FOORD BALANCED FUNDS ROLLING 5-YEAR ANNUALISED RETURNS 35% 30% Excess return 5% Hurdle Inflation Foord return 25% 20% 15% 10% 5% 0% -5%

6 FOORD INTERNATIONAL ROLLING 5-YEAR ANNUALISED RETURNS (US$) US Inflation Real Return Foord International FIF Annualised Average Return (USD) 16% 12% 8% 4% 0%

7 FOORD FLEXIBLE FUND +3.2% PER ANNUM VS FOORD BALANCED FUND 3.2 Flexible Fund of Funds Regulation % 12.2%

8 FOORD EQUITY FUND OUTPERFORMS IN NEGATIVE MARKETS 10% Months when ALSI is negative Months when ALSI is positive 8% 6% 4% 2% 0% -2% -4% -6% -8%

9 RESOURCES SECTOR FOCUS Mike Townshend

10 RESOURCES DIGGING FOR OPPORTUNITIES 10

11 INVESTMENT CRITERIA REMEMBER THE BASICS Quality companies Sustainable competitive advantage Decent growth prospects Sound balance sheets Strong management (best in class, depth) Earnings growth, predictability and reliability Underpinned by strong cash flow Dividends are important Appealing valuations 11

12 RESOURCES VS MARKET RESOURCES HAVE UNDERPERFORMED % Source: Inet Bridge 12

13 RESOURCE SECTOR GREAT VARIATION BETWEEN COUNTERS BHP Billiton Anglo American Source: Inet Bridge 13

14 THE COMMODITY BOOM IS OVER IT S ALL ABOUT SUPPLY AND DEMAND $9,000 Copper price in $/ton Industry capex ($ billion) Forecast $180 $154 $7,000 $129 $103 $5,000 $77 $3,000 $51 $26 $1, $0 Source: Inet Bridge and Bloomberg 14

15 Australian iron ore exports, mt SUPPLY RESPONDING AS CAPITAL SPEND DELIVERS 220 Australian iron ore exports Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 Source: Macquarie Securities 15

16 CHINESE DEMAND SLOWING NATURE OF GROWTH CHANGING 48 Manufacturing & Construction (% of GDP) Services (% of GDP) Source: China National Bureau of Statistics 16

17 LOOKING AHEAD DO RESOURCE STOCKS PRESENT AN OPPORTUNITY? Earnings have collapsed Free cash flow evaporated Despite the bonanza, balance sheets deteriorated All this despite a significantly weaker rand Supply glut to continue SA mining largely ex-growth 17

18 RESOURCES SUMMARY LOW EXPOSURE TO SECTOR Some quality resource companies growth prospects, good management and sound balance sheets Current over-supplied environment holds Earnings growth and predictability is poor Free cash flow questionable Dividends under threat (Glencore, PGMs, Anglos) Valuations dependant on price assumptions Low resources exposure BHP Billiton and Sasol our main exposure 18

19 RETURNS AND MACRO ENVIRONMENT Mike Soekoe

20 SA SHARE MARKET HAS BEEN VOLATILE AS ANTICIPATED 57,500 FTSE/JSE AFRICA ALL SHARE INDEX 55,000 52,500 50,000 47,500 Jan 15 Mar 15 Apr 15 May 15 Jun 15 Jul 15 Sep 15 Oct 15 20

21 SHARE MARKET VOLATILITY HAS BEEN TRENDING UP 21

22 ASSET CLASS RETURNS YEAR TO 31 OCTOBER 2015 Oct 15 Oct 14 Oct 15 Oct 14 Shares % % Bonds % % JSE All Share (R) SA bonds (R) JSE All Share ($) SA cash (R) MSCI World ($) World bonds ($) Emerging markets ($) S&P500 ($) FTSE 100 (in ) China (in $) Commodities Currency Gold R/$ Copper $/ Oil R/ Property R/ SA real estate (R) US housing (Case Schiller) * * To 31 August 2015 Source: Deutsche Securities, Bloomberg 22

23 LOOKING BACK WHAT WE SAID LAST YEAR US growth continues Stronger consumer spending Housing market recovery Gradual increase in interest rates European growth to recover slowly but geopolitical risk remains a threat Chinese growth will slow but still remains at a high level In SA, growth will slow and the rand remains vulnerable 23

24 LOOKING BACK ECONOMIC THESIS WAS MOSTLY CORRECT WHAT WE SAID LAST YEAR US growth continues Stronger consumer spending Housing market recovery Gradual increase in interest rates US growth continued Consumer spending accelerated New housing starts now over 1 million Interest rates stayed at zero European growth to recover slowly but geopolitical risk remains a threat Chinese growth will slow but still remains at a high level Ukraine and Greece settled with no impact on European growth Growth slowed to a rate of 7% In SA, growth will slow and the rand remains vulnerable Growth slowed sharply and the rand depreciated to over R13/$ 24

25 FOORD BALANCED FUND RETURNS TO 31 OCTOBER year 3 years 5 years 7 years 10 years % % % % % Foord Balanced Inflation* Average fund # Rank # 64/135 39/100 11/69 9/56 3/34 * CPI estimated for October 2015 # Provisional returns to 31 October 2015 Source: Foord, INET Bridge, Morningstar Average : South African Multi Asset High Equity Foord Balanced Fund (Class R). The above portfolio performance is calculated on a NAV to NAV basis. Income is reinvested on the ex-dividend date. Individual investor performance may differ as a result of the actual investment date, the date of reinvestment of income and withholding taxes. Periods greater than one year are annualised to show the average twelve month return. Actual annual figures are available on request. Past performance is not necessarily an indication of future performance. 25

26 FOORD EQUITY FUND RETURNS TO 31 OCTOBER year 3 years 5 years 7 years 10 years % % % % % Foord Equity FTSE/JSE ALSI Average Fund # Rank # 77/160 20/121 5/92 1/82 1/58 # Provisional returns to 31 October 2015 Source: Foord, INET Bridge, Morningstar Average: South African Equity General Foord Equity Fund (Class R). The above portfolio performance is calculated on a NAV to NAV basis. Income is reinvested on the ex-dividend date. Individual investor performance may differ as a result of the actual investment date, the date of reinvestment of income and withholding taxes. Periods greater than one year are annualised to show the average twelve month return. Actual annual figures are available on request. Past performance is not necessarily an indication of future performance. 26

27 FOORD FLEXIBLE FUND RETURNS TO 31 OCTOBER year 2 years 3 years 5 years 7 years % % % % % Foord Flexible Inflation* Average Fund # Rank # 17/43 17/40 10/29 5/26 1/22 * CPI estimated for October 2015 # Provisional returns to 31 October 2015 Source: Foord, INET Bridge, Morningstar Average : Worldwide Multi Asset Flexible Foord Flexible Fund (Class R). The above portfolio performance is calculated on a NAV to NAV basis. Income is reinvested on the ex-dividend date. Individual investor performance may differ as a result of the actual investment date, the date of reinvestment of income and withholding taxes. Periods greater than one year are annualised to show the average twelve month return. Actual annual figures are available on request. Past performance is not necessarily an indication of future performance. 27

28 FOORD INTERNATIONAL RETURNS TO 31 OCTOBER year 3 years 5 years 10 years 15 years % % % % % Fund ($) Average fund ($) # Rank # 19/116 15/73 6/46 2/13 3/8 Fund in rands # Provisional returns to 31 October 2015 Source: Foord, Morningstar Ranking: USD Moderate & Flexible Allocation Foord International Trust. The above portfolio performance is calculated on a NAV to NAV basis. Income is reinvested on the ex-dividend date. Individual investment performance may differ as a result of the the actual investment date, the date of reinvestment of income and withholding taxes. Periods greater than one year are annualised to show the average twelve month return. Actual annual figures are available on request. Past performance is not necessarily an indication of future performance. 28

29 FOORD GLOBAL EQUITY RETURNS TO 31 OCTOBER year 3 years Since Inception (01/06/2012) % % % FGEF in Dollars* MSCI AC World Index ($)** Average Fund # Rank # 1191/ / /1172 FGEF in Euros* FGEF in Sterling* FGEF in Rands* # Provisional returns to 31 October 2015 * Net of fees and expenses (Class B) ** MSCI AC World Total Return Net USD Ranking: Global Large-Cap Blend Equity Class B performance, net of fees, is calculated on a single pricing basis (i.e. NAV to NAV rolling monthly basis). Since the date of inception for Class B Units, there were no subscription fees or realization fees charged and no dividends or distributions were declared or made by the Fund. Individual investor performance may differ as a result of the actual investment date, the date of investment of income and withholding taxes, where applicable. For investment in Class B Units held less than 12 months, the total returns may also differ due to the realization fees of 1% that may be imposed at the discretion of the Investment Manager. Past performance of the Fund is not necessarily indicative of the future performance of the Fund. 29

30 MACRO OUTLOOK US ECONOMIC GROWTH REMAINS ON TRACK Job creation remains intact, wage growth improving Consumer spending recovering from poor Q1 Consumer tailwinds low-end especially (lower oil & food prices) Interest rate rise by Q1 probable, but cycle will be shallow 30

31 US GDP GROWTH RECOVERING AFTER WEAK Q GDP, QoQ (% 1yr) GDP, YoY Recession Periods US 31

32 US UNEMPLOYMENT RATE HEADING TOWARDS FULL EMPLOYMENT Total Monthly Nonfarm Payrolls (left) Unemployment Rate - %, SA US (right) Recession Periods US 32

33 MACRO OUTLOOK EURO LOW GROWTH CONTINUES Weaker euro and energy continue to boost exporters Greek and Iranian agreements a boost for sentiment Recovery gaining traction 33

34 MACRO OUTLOOK CHINA GROWTH TO MODERATE Economic transition will take time Policy easing on many fronts likely to continue near term Property market improving/consumer confidence strong 34

35 MACRO OUTLOOK SA ECONOMY FACING HEADWINDS Slow growth in 2016 Lower real wage growth affecting consumer Electricity constraints, policy uncertainty and lack of job creation remain negatives Current account deficit has improved Rand remains vulnerable longer term 35

36 RAND OUTLOOK DEPRECIATION TO CONTINUE R 14 R 12 R 10 R 8 R 6 R 4 R

37 STRATEGY Equities (domestic and offshore) our preferred asset class International equities attractive vulnerable rand, greater diversity and better valuations High volatility cautious in the short term equity market weakness will be used to increase equity exposure Outlook for local bonds has improved local bond valuations reasonable will look to increase exposure at higher yields listed property not attractive at present 37

38 FOORD FLEXIBLE FUND OF FUNDS EFFECTIVE ASSET ALLOCATION AT 31 OCTOBER 2015 Foreign Assets, 67.6% SA Equities, 15.4% Cash, 14.5% Commodities, 2.5% 38

39 THANK YOU

40 DISCLAIMER Foord Asset Management (Pty) Ltd and Foord Unit Trusts (RF) (Pty) Ltd are authorised Financial Services Providers (FSP: 578 & 21476) Any information provided is not intended to be nor does it constitute financial, tax, legal, investment, or other type of advice, and the suitability or potential value of any information or particular investment source is not guaranteed. Forecasts contained herein are not guaranteed to occur. Collective Investment Schemes in Securities (unit trusts) are generally medium- to long-term investments. The value of participatory interests (units) may go down as well as up and past performance is not necessarily a guide to the future. Unit trust prices are calculated on a net asset value basis, which is the total value of all assets in the portfolio including any income accruals and less any permissible deductions from the portfolio. Foord Unit Trusts does not provide any guarantee either with respect to the capital or the performance return of the investment. Unit trusts are traded at ruling prices and can engage in borrowing. Foord Unit Trusts does not engage in scrip lending. Forward pricing is used. Commission and incentives may be paid and if so, this cost is not borne by the investor. A schedule and description of fees and charges, including performance fees, and maximum commissions is available on Distributions may be subject to mandatory withholding taxes. A fund of funds invests only in other Collective Investment Schemes, which may levy their own charges, which could result in a higher fee structure. A feeder fund portfolio is a portfolio that, apart from assets in liquid form, consists solely of units in a single portfolio of a single investment scheme which could result in a higher fee structure. Foord Unit Trusts is authorised to close the portfolios to new investors in order to manage the portfolios more efficiently in accordance with the mandates. This document is not an advertisement, but is provided exclusively for information purposes and should not be regarded as an offer or solicitation to purchase, sell or otherwise deal with any particular investment. While we have taken and will continue to take care that the information contained herein is true and correct, we request that you report any errors to Foord at unittrusts@foord.co.za. The document is protected by copyright and may not be copied, reproduced, sold or distributed without prior written consent. FOORD IS A MEMBER OF THE ASSOCIATION FOR SAVINGS AND INVESTMENT SA For further information see the Minimum Disclosure Documents available at 40