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Delivering Consistent Outperformance in Turbulent Times

Since March 2020, financial markets have recovered materially after the combination of global monetary stimulus and the arrival of vaccines to curb the impact of the COVID-19 virus – although some caution is now evident among investors. Globally, inflation expectations are also starting to rise, and many investors may well be feeling a little uncertain about where markets are headed from here.

At Sanlam Investments, we know that market cycles will always normalise over time. We’ve built our investment process around our pragmatic value philosophy, which allows us to look at businesses through the cycle, focusing on fundamentals and facts. This gives us the conviction not to be swayed by short-term noise and speculation but to have the patience to wait for market mispricings to correct themselves. We are constantly working to understand the business economics of the various companies so that we have a strong idea of where it is within its current cycle.

Our philosophy has allowed us to achieve top quartile performance consistently. This can be highlighted through the performance of our two flagship equity funds: the SIM Top Choice Fund has remained a consistent top quartile performer over the last five years on a rolling basis, and the SIM General Equity Fund, which has remained in the top two quartiles over the same period.

Both have also maintained a spot in the top 25% in the ASISA South African Equity General category over a rolling five-year period.

Rolling 5 year performance relative to competitors

To stay in the top quartiles against competitors so consistently requires great skill and a robust investment process. Our team is stable and believes deeply in our process, and we see the results year in and year out.

The SIM Top Choice Fund is a R1.4 billion pure equity fund suited to an aggressive risk profile and is a concentrated portfolio of Sanlam Investments’ best equity ideas. It has delivered alpha consistently and outperformed the benchmark (3% SteFI, FTSE/JSE Swix 97%) since inception. It has achieved annualised returns of 11.1% over the past five years, nearly double compared to the benchmark. Annualised return is the weighted average compound growth rate over the period measured. Cromwell Mashengete and Andrew Kingston manage the fund.

Performance to 31st March 2021

The SIM General Equity Fund suits an aggressive risk profile and targets long-term capital growth across all industry sectors of the JSE. The fund, run by Andrew Kingston, has beaten its benchmark (the ALSI from 1 Jan 1999 to 31 May 2019, Capped SWIX from 1 June 2019 to date) over all periods. The fund has also achieved alpha consistently since inception.

Performance to 31st March 2021

To quote Cromwell Mashengete in a recent Citywire article, “If the business is in a good space – we like their returns, we like the people managing the business, and the price is right – we will keep it in the fund. Today there are lots of resource stocks in the Top 10. We didn't just buy them now. We have been in that space for a number of years. Fundamentals, not news flow, is how to achieve consistency.”

Feel free to read the Collective Investment Schemes disclaimer, or visit our website for more.

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