Fund in Focus: A consistent outperformer with major potential | Fin24

Fund in Focus: A consistent outperformer with major potential

Sep 05 2018 11:01
Timothy Rangongo

Fund manager insights:

The Aluwani Top 25 Fund is administered by Aluwani Capital Partners (ACP), an independent black-owned investment management business. 

The fund is a specialist large-cap equity portfolio and cites providing investors with high long-term capital growth as one of its core objectives.

“The fund only invests in up to 25 JSE-listed equity securities that do not include companies outside of the top 50 companies in terms of market capitalisation on the FTSE/JSE Securities Exchange,” according to the fund’s manager and Aluwani’s head of equities, Patrick Mathidi.

Although the size of its portfolio surged by over 5% to R432.29m assets under management from May to June, Mathidi says they “could do better than that”. 

The fund has shown consistent growth since inception and outperforms its benchmark the majority of the time.

Asked on how the fund overcomes market challenges like the recent tanking of the Turkish lira, and whether the fund also experienced its fair share of exposure to the risks, Mathidi tells finweek that the management team adheres to an investment philosophy of ensuring sustainable risk-adjusted returns over the long term by, among others, extracting value from as many diversified alpha sources as possible.

One of the ways in which this is done is to carefully pick rand-hedge stocks to offset risks from phenomena like the Turkish lira meltdown. 

“On the domestic side, we still believe that there is value in terms of the companies we look at, like the industrial stocks that do better in a weak rand environment, and Naspers and British American Tobacco, which do better under current circumstances,” according to Mathidi.

The fund is presently 29.79% heavy in Naspers (Mathidi points out that the benchmark weight in Naspers is almost 30%) and holds 5.13% in British American Tobacco, among other rand-hedge shares. 

More than half its equity is held in the industrials sector on which ACP says it has a positive outlook. 

ACP’s Top 25 Fund counts the trade war that’s currently being ignited by the US as one if its biggest global concerns, particularly “the extent to which there’s an impact on trading partners and emerging markets like SA – it will present a key risk going forward”, says Mathidi. 

According to Mathidi, the ACP “has seen this translate into a weaker rand, that we see persisting”.

Foreign securities may not, as a stringent constraint, be included in the portfolio.

Why finweek would consider adding it:

The Aluwani Top 25 Fund has had 18 positive months as at 30 June, and presents investors with a 2.68% return on investment in terms of the dividend yield. 

The fund was a runner-up for this year’s Morningstar award in the best South African equity fund category. ACP’s largest shareholder is Momentum. 


This article originally appeared in the 30 August edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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