Laurium Capital, an independently owned asset manager based in Johannesburg, entered the South African Multi Asset High Equity sector with the launch of the Laurium Balanced Prescient Fund on 9 December 2015. The company was started in August 2008 by Murray Winckler and Gavin Vorwerg, who remain the majority shareholders and portfolio managers across all funds, including the exciting new Regulation 28 compliant balanced fund. Laurium Capital manages and advises several hedge and long-only funds in South Africa and the rest of Africa.
The business has a diversified asset base, with both hedge and long only funds. The client base is also well diversified across high net worth individuals, institutions and retail investors.
The ASISA Multi Asset High Equity sector, more commonly known in the retail market as balanced funds, has over R500bn assets under management, split across 150 different funds.
This category dominates annual sales flows, and if you’re not playing in this market, you’re losing out on substantial assets. To add to the case for offering a balanced proposition, typically it is the retirement money that contributes to a large portion of the total assets under management due to Regulation 28 requirements. This money tends to be much ‘stickier’,and is therefore an attractive space to play in.
After building an excellent track record in hedge funds since 2008, Laurium Capital entered the unit trust space in February 2013 with the launch of the Laurium Flexible Prescient Fund. As at the end of October 2016, the fund was ranked Number 1 since inception, out of 75 funds in the sector, with an annualized return of 17% net of fees. The All Share total return since the launch of the Laurium Flexible Fund until the end of October 2016, has been 40.2%; this compared to 80.3% total return by that of the Flexible Fund. This is double the return of the market, but with much lower volatility and fewer drawdowns. The decision to follow on the success of the Flexible Fund and introduce a Regulation 28 compliant balanced fund was an easy one.
All our funds are underpinned by a common investment philosophy. We believe that our skills in relative-value stock selection, combined with a disciplined portfolio construction and risk-management process should deliver superior risk-adjusted returns over time. Diversification is considered a free lunch, and can be appropriately achieved through a concentrated portfolio with high-conviction views. The Balanced Fund is managed very similarly to the Flexible Fund, with a lower equity allocation in order to comply with Regulation 28 restrictions.
The South African Multi Asset High Equity sector is currently dominated by five funds that make up over 60% of the industry assets. While these funds have solid track records, by allocating a portion to the Laurium Balanced Fund, you will be diversifying your clients’ retirement portfolios, and offering them superior risk-adjusted returns over time. Combining managers who have a differentiated approach, which many boutiques have, can significantly enhance your returns and reduce risk.
Managers like ourselves believe being nimble gives us an advantage in producing alpha. Being nimble means that you have the ability to capitalise on opportunities that larger managers simply can’t. Boutique managers have their own unique way of managing money, which is often very different from the larger houses. Advisers have seen the benefit of allocating to boutique managers to improve risk adjusted returns for their clients.
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