As a flexible fund, the fund can invest between 0 and 100% of its portfolio in equities. As such, it is not Regulation 28 compliant. Fund manager Murray Winckler says the fund will probably have an 80% equity exposure over the long run. The investment team’s expertise meant the fund would focus on researching local companies, and would elect to use ETFs to get exposure to offshore equities.
Benchmark Portfolio Managers Total Expense Ratio (TER)Fund size (R'm)Minimum investment amount CPI plus 5%Gavin Vorwerg and Murray Winckler2.31%517R50,000 lump-sum or R2,000 pm
Top Ten Holdings%1. USA Index EFT12.3%2. Naspers5.2%3. Old Mutual4.4%4. Steinhoff4.3%5. MTN3.7%6. RMB3.6%Investec3.4%Sun International2.7%Sasol2.7%Sirius2.6%
Fund Performance (to end Dec)6 months20132014InceptionLaurium Flexible8.46%29.80%22.60%59.20%Inflation (CPI)1.37%5.40%5.50%10.87%
As can be seen from the Top Ten holdings, the USA ETF – which tracks the companies in the S&P 500 index – remains the largest single holding in the portfolio. “We are still happy with the position size,” says Winckler. “The ETF did 13% in U.S. Dollars last year, and we think this year we will see a total return of 5-10%. We also think the dollar will remain strong and this will add to the return in Rands.”In terms of the local market, Winckler estimates the total return for the year to be in the upper single digits, possibly reaching 10%. “We think there are going to be big earnings downgrades from the resource companies – the likes of Billiton, Kumba, and Sasol because of the lower commodity prices, especially due to oil.”Winckler believes the oil price will create a massive buying opportunity for Sasol, but the timing is difficult. “I think they can comfortable keep operating at $50/barrel in Secunda. If you remove the replacement cost of capital expenditure (the money required to keep operating plant at the same level) you could take another $20/barrel off the price. This implies Sasol could operate at $30/barrel, before the benefits of its chemical by-products which reduce cost of production further.”
The fund also has a fairly large position in Sun International. “There are a lot of changes going on there. They are making the assets more efficient by reducing costs, and they are also expanding into South America, and they will benefit from the weaker rand,” says Winckler.