Flexible funds not always more risky

March 14, 2015
Victoria Gorman

Money Marketing (March 2015)

Asset allocation and stock picking key to good performance of flexible funds

Multi asset fund investors may focus on the returns appropriate asset allocation adds, but stock picking also contributes to performance. This is according to Kim Hubner, head of business development and marketing at Laurium Capital, a leading independent owner-managed alternative asset manager. In February the asset manager achieved two significant milestones in its small but growing unit trust funds – the Laurium Flexible Prescient Fund and the Laurium Equity Prescient Fund. Funds under management in the two funds surpassed the R1bn mark, and the Laurium Flexible Prescient Fund celebrated its second anniversary.

The Laurium Flexible Fund is a flexible multi asset fund that has achieved annual returns of 27.5%* pa for its investors. The unconstrained mandate allows the managers flexibility in asset allocation, and Hubner says good asset allocation calls in the past two years have contributed to performance.

Equity exposure has been high (80% on average) as have foreign holdings. This allowed the fund and its investors to benefit fully from the bull market – locally and offshore. Individual stock picks have also added to the strong Comair and Aspen helped performance. Positions in Billiton and Sasol were slight performance detractors, but with a focus on not losing capital and managing downside risk, these holdings did not significantly detract from the overall meaningful positions can be taken in large, mid- and small cap stocks – depending on where the best opportunities lie.The fund considers the top 160 stocks in the local market. The flexible multi asset category allows for unconstrained investing – a key strength of Laurium Capital. Flexible multi asset funds can be viewed as more aggressive and risky, but with Laurium’s experience in managing money, there is a strong focus on managing risk. Net exposure to the market is constantly monitored, as is the effect of the size of positions taken in various stocks and asset classes. “We don’t like to lose money,” says Hubner. Liquidity is also monitored.

Laurium Capital was launched in 2008, and has a six year track record in managing hedge funds, for which it was recently awarded two prestigious HedgeNews Africa Awards**.-- Returns quoted after fees-- The Laurium Aggressive Long Short Fund won the prestigious Long/Short Equity category, and the Laurium Chobe Sub–Saharan Long Short Fund on the Pan Africa and MENA (hedge) category at the HedgeNews AfricaAwards held on 19 February 2015.

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