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6A Sandown Valley Crescent, Sandown, Sandton, 2196Proprietary and Confidential. Not for Distribution
Keeping the Faith
May 2019
Proprietary and Confidential. Not for Distribution
LONG ONLY
Domestic Offshore
HEDGE FUNDS
FundogramBUSINESS OVERVIEW
36ONE BCI Flexible Opportunity FundMulti-Asset, SA Equity Focus
36ONE BCI Equity FundGeneral Equity, SA Equity Focus
36ONE BCI SA Equity FundPure SA Equity Fund
PPS Managed Fund*Multi-Asset, Reg 28 Complaint
36ONE SNN QI Hedge Fund36ONE SNN Retail Hedge FundStandard Risk, SA Equity Focus, ZAR
Non FSCA approved USD denominated hedge funds
Domestic Offshore
36ONE Global Fund PCUSD Denominated, Multi-Asset
*36ONE has been appointed as the sole investment manager on the PPS Managed Fund
Segregated mandates of all the above portfolios are available to institutional investors.
What you need to know ....?
Proprietary and Confidential. Not for Distribution
Resistance being removed? GLOBAL OUTLOOK
Late cycle – EPS momentum still up but slowing
Cheap money here to stay (for now)
Global liquidity is everything
Consumption very geared to the wealth effect
SA – hopefully hit the bottom
SA – long slow grind ahead – Governance is key
Proprietary and Confidential. Not for Distribution
Late cycle indicators GLOBAL OUTLOOK
Proprietary and Confidential. Not for Distribution
Wage pressures starting to hurt US operating EPS GLOBAL OUTLOOK
Source: RMB Morgan Stanley Bloomberg
-$5
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Q1
1988
Q1
1990
Q1
1992
Q1
1994
Q1
1996
Q1
1998
Q1
2000
Q1
2002
Q1
2004
Q1
2006
Q1
2008
Q1
2010
Q1
2012
Q1
2014
Q1
2016
Q1
2018
S&P 500 Operating EPS
Proprietary and Confidential. Not for Distribution
S&P 500 Index – Projected earnings slowing - market reratedGLOBAL OUTLOOK
100
110
120
130
140
150
160
170
180
1 500
1 700
1 900
2 100
2 300
2 500
2 700
2 900
3 100Ap
r 201
4
Jun
2014
Aug
2014
Oct
201
4
Dec
201
4
Feb
2015
Apr 2
015
Jun
2015
Aug
2015
Oct
201
5
Dec
201
5
Feb
2016
Apr 2
016
Jun
2016
Aug
2016
Oct
201
6
Dec
201
6
Feb
2017
Apr 2
017
Jun
2017
Aug
2017
Oct
201
7
Dec
201
7
Feb
2018
Apr 2
018
Jun
2018
Aug
2018
Oct
201
8
Dec
201
8
Feb
2019
S&P 500 (LHS) Consensus EPS (RHS)
Source: Bloomberg
Proprietary and Confidential. Not for Distribution
Equity dividend yields still ahead of cash and bonds (barely)GLOBAL OUTLOOK
Source: RMB Morgan Stanley , Bloomberg
0%
1%
2%
3%
4%
5%
6%
7%
8%Ja
n-99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Jan-
14
Jan-
15
Jan-
16
Jan-
17
Jan-
18
Jan-
19
US Fed Fund JPM GBI Global- RY MSCI World- DY
Proprietary and Confidential. Not for Distribution
Probably another leg up if the FED starts cutting rates GLOBAL OUTLOOK
Source: RMB Morgan Stanley , Bloomberg
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
-60%
-40%
-20%
0%
20%
40%
60%Ja
n-90
Jan-
92
Jan-
94
Jan-
96
Jan-
98
Jan-
00
Jan-
02
Jan-
04
Jan-
06
Jan-
08
Jan-
10
Jan-
12
Jan-
14
Jan-
16
Jan-
18
S&P 500 (y/y) Fed Rate (RHS)
Proprietary and Confidential. Not for Distribution
Household debt under control – a big positive for spending – especially in the US GLOBAL OUTLOOK
Source: RMB Morgan Stanley , Bloomberg
0%
20%
40%
60%
80%
100%
120%
Q1
1970
Q1
1973
Q1
1976
Q1
1979
Q1
1982
Q1
1985
Q1
1988
Q1
1991
Q1
1994
Q1
1997
Q1
2000
Q1
2003
Q1
2006
Q1
2009
Q1
2012
Q1
2015
Q1
2018
HH Debt to GDP
EU US Japan
Proprietary and Confidential. Not for Distribution
China – credit stimulus GLOBAL OUTLOOK
Source: BCA Research
Proprietary and Confidential. Not for Distribution
Chinese Property Cycle GLOBAL OUTLOOK
Source: CEIC, UBS estimates
Proprietary and Confidential. Not for Distribution
China – pumping credit GLOBAL OUTLOOK
Proprietary and Confidential. Not for Distribution
Shanghai Composite IndexGLOBAL OUTLOOK
230
240
250
260
270
280
290
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500Ap
r 201
4
Jun
2014
Aug
2014
Oct
201
4
Dec
201
4
Feb
2015
Apr 2
015
Jun
2015
Aug
2015
Oct
201
5
Dec
201
5
Feb
2016
Apr 2
016
Jun
2016
Aug
2016
Oct
201
6
Dec
201
6
Feb
2017
Apr 2
017
Jun
2017
Aug
2017
Oct
201
7
Dec
201
7
Feb
2018
Apr 2
018
Jun
2018
Aug
2018
Oct
201
8
Dec
201
8
Feb
2019
Shanghai Composite (LHS) Consensus EPS (RHS)
Source: Bloomberg
Proprietary and Confidential. Not for Distribution
China starting to need cash – could be a big drain on global liquidity GLOBAL OUTLOOK
Source: RMB Morgan Stanley , Bloomberg
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Q1
1990
Q1
1992
Q1
1994
Q1
1996
Q1
1998
Q1
2000
Q1
2002
Q1
2004
Q1
2006
Q1
2008
Q1
2010
Q1
2012
Q1
2014
Q1
2016
Q1
2018
China Current Account Balance as % of GDP
Proprietary and Confidential. Not for Distribution
STOXX Europe 600 IndexGLOBAL OUTLOOK
19
21
23
25
27
29
275
295
315
335
355
375
395
415
435M
ay 2
014
Jul 2
014
Sep
2014
Nov
201
4
Jan
2015
Mar
201
5
May
201
5
Jul 2
015
Sep
2015
Nov
201
5
Jan
2016
Mar
201
6
May
201
6
Jul 2
016
Sep
2016
Nov
201
6
Jan
2017
Mar
201
7
May
201
7
Jul 2
017
Sep
2017
Nov
201
7
Jan
2018
Mar
201
8
May
201
8
Jul 2
018
Sep
2018
Nov
201
8
Jan
2019
Mar
201
9
Euro Stoxx 600 (LHS) Consensus EPS (RHS)
Source: Bloomberg
Is it a new dawn....?
Proprietary and Confidential. Not for Distribution
SA – not in great company – unemployment the biggest challenge LOCAL OUTLOOK
Proprietary and Confidential. Not for Distribution
Eskom – electricity tariff hikesLOCAL OUTLOOK
Electricity prices (USc per kWh) in US$ terms: the ZAR at 15.5 would compensate for the 13.8% hike in tariffs
Source: RMB Morgan Stanley research
High electricity consumers that have to face higher input costs and tend to suffer from ZAR weakness:• Cement producers• Food retailers• Local Manufacturers• Retailers
Proprietary and Confidential. Not for Distribution
Fruitless and wasteful expenditure exorbitantLOCAL OUTLOOK
Proprietary and Confidential. Not for Distribution
SA earnings revisions for domestic earners have been very negativeLOCAL OUTLOOK
Source: RMB Morgan Stanley , Bloomberg
Proprietary and Confidential. Not for Distribution
Retail sector – employment costs rising ahead of revenue LOCAL OUTLOOK
Source: RMB Morgan Stanley , Bloomberg
Proprietary and Confidential. Not for Distribution
SA inflation – well managed LOCAL OUTLOOK
Source: StatsSA, Standard Bank estimates
Proprietary and Confidential. Not for Distribution
SA – lots of cash on the side – mainly corporates LOCAL OUTLOOK
Source: SARB, SBG Securities
Proprietary and Confidential. Not for Distribution
PGM Basket and Palladium (ZAR prices)LOCAL OUTLOOK
6 000
8 000
10 000
12 000
14 000
16 000
18 000
20 000
22 000M
ar 2
014
May
201
4
Jul 2
014
Sep
2014
Nov
201
4
Jan
2015
Mar
201
5
May
201
5
Jul 2
015
Sep
2015
Nov
201
5
Jan
2016
Mar
201
6
May
201
6
Jul 2
016
Sep
2016
Nov
201
6
Jan
2017
Mar
201
7
May
201
7
Jul 2
017
Sep
2017
Nov
201
7
Jan
2018
Mar
201
8
May
201
8
Jul 2
018
Sep
2018
Nov
201
8
Jan
2019
PGM Basket Palladium
Source: Bloomberg
Proprietary and Confidential. Not for Distribution
Staying with earnings visibility both globally and in SA PERFORMANCE AND POSITIONING
Global
Globally – preference still the US
Preferred sectors – big global tech/consumer discretionary
Local
Resources and platinum
SA Banks
Select Industrials – Bidvest, KAP Industrial Holdings, AECI, Hudaco
Telecommunications – MTN
4% in gold shares, physical gold and physical platinum
Proprietary and Confidential. Not for Distribution
36ONE BCI Equity Fund: Performance to April 2019PERFORMANCE AND POSITIONING
36ONE BCI Equity Fund CAPSWIX TR* Outperformance
YTD 12.3% 9.1% 3.2%
12 months 5.8% (1.7%) 7.5%
3 years 4.7% 4.7% 0.0%
5 years 7.3% 6.7% 0.6%
Since inception (Jul ‘12)
12.9% 11.5% 1.4%
Annualised volatility 10.2% 10.5%
Total Return p.a.
0%
20%
40%
60%
80%
100%
120%
140%
Jun
12
Nov
12
Apr 1
3
Sep
13
Feb
14
Jul 1
4
Dec
14
May
15
Oct
15
Mar
16
Aug
16
Jan
17
Jun
17
Nov
17
Apr 1
8
Sep
18
Feb
19
36ONE BCI Equity Fund FTSE/JSE Capped SWIX Total Return
Source: Bloomberg as at 30 April 2019. Inception Date: July 2012. *Benchmark: 1 July 2012 – 31 October 2017: FTSE JSE SWIX (J403T)1 November 2017 – Current: FTSE JSE CAPI SWIX (J433T), calculated over a rolling 1 year period, capped at 2% p.a.Highest and lowest calendar year performance since inception (as at 31 March 2019): High 33.66 Low -6.38 (Class A)
Boutique Collective Investments (RF) (Pty) Ltd (“BCI”) is a registered Manager of the Boutique Collective Investments Scheme and Sanne Management Company (RF) (Pty) Ltd (“Sanne”) are registered and approved in terms of the Collective Investment Schemes Control Act 45 of 2002 and are full members of the Association for Savings and Investment SA. Collective Investment Schemes in securities and hedge funds are generally medium to long term investments. The value of participatory interests may go up or down and past performance is not necessarily an indication of future performance. The Manager does not guarantee the capital or the return of a portfolio. Collective Investments are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees, charges and maximum commissions is available on request. 36ONE Asset Management (Pty) Ltd (“36ONE”) reserves the right to close and reopen certain portfolios from time to time in order to manage them more efficiently. Additional information, including application forms, annual or quarterly reports can be obtained from 36ONE, free of charge. Should a performance fee be applicable, the performance fees will be calculated and accrued on a daily/monthly basis based upon the daily/monthly outperformance, in excess of the benchmark, multiplied by the share rate and paid over to the manager monthly. Performance figures quoted are from either Morningstar, Bloomberg, Maitland, Maitland Guernsey, or Sanne as at the date of this report for a lump sum investment, using either NAV-NAV with income reinvested or mandate specific parameters and do not take any upfront manager’s charge into account. Income distributions are declared on the ex-dividend date. Actual investment performance will differ based on the initial fees charge applicable, the actual investment date, the date of reinvestment and dividend withholding tax. Annualised return is the weighted average compound growth rate over the period measured. Investments in foreign securities may include additional risks such as potential constraints on liquidity and repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information. Boutique Collective Investments (RF) Pty Ltd and Sanne Management Company (RF) (Pty) Ltd retain full legal responsibility for third party named portfolios. Although reasonable steps have been taken to ensure the validity and accuracy of the information in this document, 36ONE does not accept any responsibility for any claim, damages, loss or expense, however it arises, out of or in connection with the information in this document, whether by a client, investor or intermediary. This document does not constitute a solicitation, invitation or investment recommendation, and prior to selecting a financial product or fund it is recommended that investors seek specialised financial, legal and tax advice. 36ONE Asset Management (Pty) Ltd, 2004/035570/07 and FSP number 19107, is an authorised discretionary financial services provider under the Financial Advisory and Intermediary Services Act (No. 37 of 2002).
Disclaimer
6A Sandown Valley Crescent, Sandown, Sandton, 2196www.36one.co.za | support@36one.co.za
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