Download Fact sheets - Nedgroup Investments

Nedgroup Investments Rainmaker Fund
Class A2
December 2016
EQUITY RANGE
Portfolio profile
RISK RATING
The portfolio is suitable for investors seeking exposure to the domestic equity market with maximum capital
appreciation as their primary goal over the long term. Investors should have a tolerance for short-term market volatility
in order to achieve long-term objectives.
Low
Medium
High
1
Performance
Risk reward profile
Equity investments are volatile by nature and
subject to potential capital loss.
Period
1 year pa
3 Years pa
5 Years pa
Since Inception
Lowest 1 year return
Highest 1 year return
Portfolio
-1.8%
6.3%
11.2%
11.6%
-6.7%
33.3%
Benchmark
3.1%
4.7%
10.5%
10.5%
Portfolio
10.4%
ALSI
10.5%
GENERAL INFORMATION
ASISA category
Risk
South African Equity General
Period
Volatility [5 years]
Benchmark
ASISA Category Average
Investment manager
Abax Investments (Pty) Ltd is authorised as a
Financial Services Provider under the
Financial Advisory and Intermediary Services
Act (FSP No. 856).
Portfolio structure
Basic materials
15.7%
Industrials
Inception date
Consumer goods
04 January 2010
Health care
3.6%
22.4%
7.6%
Consumer services
Appropriate term
Telecommunications
Minimum 5 - 7 years
Financials
18.8%
2.6%
25.0%
Convertible bonds
0.8%
Market value
Cash and money market
3.5%
R 13,590 Million
CIS
0.1%
Income distributions
Frequency: Annually
December 2016: 170.91 cpu
Previous 12 months: 170.91 cpu
Fees and charges (excluding VAT)
Top 10 holdings
Initial fees
Annual management fee
0.00%
1.25%
Total expense ratio
Transaction costs
Total investment charges 2
1.45%
0.19%
1.64%
Please Note:
Differences may exist due to rounding
CONTACT
Client Services Centre
Tel: 0860 123 263
Fax 0861 119 733
Website: www.nedgroupinvestments.co.za
Email [email protected]
Minimum Disclosure Document
Share
Naspers Ltd
British American Tobacco Plc
FirstRand Ltd
Steinhoff International H NV (JSE)
Sasol Ltd
Old Mutual Plc
Mondi Plc
Barclays Africa Group Ltd
BHP Billiton Plc
Mediclinic International Plc
Total
Percentage
14.8
8.7
7.8
5.5
5.0
3.7
3.6
3.6
3.5
3.3
59.5
1) The annualized total return is the average return earned by an investment each year over a given time period. Performance is calculated for the portfolio and
individual investment performance may differ as a result of initial fees, the actual investment, the actual investment date, the date of reinvestment and dividend
withholding tax. Due to the delayed release of inflation data, relevant benchmarks will lag by one month.
Data source: © Morningstar Inc. All rights reserved.
2) Total Expense Ratio (TER), expressed as a percentage of the Fund, relates to expenses incurred in the administration of the Fund. A higher TER does not
necessarily imply a poor return, nor does a low TER imply a good return. The current TER may not necessarily be an accurate indication of future TERs. Transaction
Costs (TC), expressed as a percentage of the Fund, relate to the costs incurred in buying and selling the underlying assets of the Fund. TC are a necessary cost in
administering the fund and impact fund returns. It should not be considered in isolation as returns may be impacted by other factors over time including market
returns, the type of fund, the investment decisions of the investment manager and the TER. The Total Investment Charges expressed as a percentage of the Fund,
relates to all investment costs of the Fund. Both the TER and TC of the Fund are calculated on an annualised basis, beginning 01/10/2013 and ending 30/09/2016
Nedgroup Investments Rainmaker Fund
December 2016
E QUI TY R ANGE
Investment Manager Commentary
Abax Investments
The JSE All Share Index recorded a gain of 1.0% in December and 2.6% for the 2016 calendar year. For the month of December, Financials gained 3.5%
and Industrials +1.8%. Resources lagged in December (-3.6%) but still ended the year well ahead of the other major sectors in performance terms. Our
holdings in Steinhoff (+12.3%), Barclays Africa (+7.2%) and FirstRand (+5.3%) enhanced the Fund’s performance in December while our holdings in BHP
Billiton (-6.5%), Mondi (-2.2%) and British American Tobacco (-0.4%) detracted from performance.
Market volatility, low economic growth as well as local and global political uncertainty (Brexit / US elections) made 2016 a challenging year. In 2017, we
can expect more of the same but amid the volatility, there are signs of some stability and better growth for the year ahead. For example, GDP growth in
South Africa is forecast to pick up from an estimated +0.5% in 2016 to 1.3% in 2017, the political landscape appears to be gradually turning for the better,
and commodity prices have lifted materially (most notably coal and iron ore). However, while the local economy is in the process of bottoming, it is likely to
remain in a low-growth trap in the absence of necessary reforms.
Looking abroad, investors seem focused on the positive ramifications of a Donald Trump US presidency, but the year ahead is full of uncertainty—with
changes in store for fiscal, monetary, regulatory and trade policies. In Europe there is a growing rise in anti-establishment parties and populism which may
result in surprising election outcomes (Netherlands, France and Germany) and in turn policy direction.
The Nedgroup Investments Rainmaker Fund’s under-performance during 2016 was principally driven by two factors:

Underweight resources - Despite eroding fundamentals, commodity prices rebounded sharply during 2016. This in turn lifted the resources
sector (+34.2% in 2016), to which the Fund had limited exposure. While we guard against complacency and prejudice, we under-estimated the
extent and sustainability of the recovery in commodity prices. In some cases, share prices are discounting far higher commodity prices than
current spot prices (valuation is unattractive), and we have concerns around the sustainability of demand from China which in turn could drive
commodity and share prices lower (China consumes well in excess of 50% of global iron ore, nickel, copper, aluminium and other commodities).
Currently, the Fund’s preferred commodity exposure is via BHP Billiton and Mondi.

Overweight industrial rand hedges - While we had considered the rand to be under-valued in January 2016 shortly after the dismissal of
Nhlanhla Nene as the finance minister and consequently reduced the extent of the rand hedge position, we did not anticipate the extent of
recovery that occurred during the balance of 2016. The rand ended the year 30% stronger versus the British pound and 18% versus the US
dollar than it was in January 2016. This has proved to be a major headwind to many of our large industrial rand hedge positions – notably
British American Tobacco, Mediclinic and Steinhoff. The Fund retains this exposure as the long-term growth prospects for all of these
businesses remain as compelling and their valuations are now back in even more attractive territory.
We are preparing for another challenging year, thus we remind investors of our long-term approach of investing in defensive, economically-robust
businesses, at reasonable prices, run by competent management teams and which we believe will produce consistent compounding growth in profits and
dividends. Our portfolio positioning contains a balance between holdings in stable, long-term growth businesses that are globally diversified and not reliant
on the performance of the domestic economy (Naspers, BAT, Mediclinic, Mondi and Steinhoff), and attractively priced businesses exposed to the local
economy that are well managed and will survive in a worst case scenario but flourish should any improvement materialise (FirstRand, Absa, AVI and Tiger
Brands).
The Nedgroup Investments Rainmaker Fund currently trades on a forward rolling Price/Earnings (P/E) ratio of 14.3x and a dividend yield of 4.0%.
Who we are
Fees
Nedgroup Collective Investments (RF) Proprietary Limited, is the company that is
authorised in terms of the Collective Investment Schemes Control Act to administer the
Nedgroup Investments unit trust funds. It is a member of the Association of Savings &
Investment South Africa (ASISA).
A schedule of fees and charges and maximum commissions is available on request
from Nedgroup Investments.
Disclaimer
The Standard Bank of South Africa Limited is the registered trustee.
Contact details: Standard Bank, Po Box 54, Cape Town 8000,
[email protected], Tel 021 401 2002.
Unit trusts are traded at ruling prices and can engage in borrowing and scrip lending.
Nedgroup Investments has the right to close unit trust funds to new investors in order
to manage it more efficiently. For further additional information on the fund, including
but not limited to, brochures, application forms and the annual report please contact
Nedgroup Investments.
Performance
Nedgroup Investments contact details
Unit trusts are generally medium to long-term investments. The value of your
investment may go down as well as up. Certain unit trust funds may be subject to
currency fluctuations due to its international exposure. Past performance is not
necessarily a guide to future performance. Nedgroup Investments does not guarantee
the performance of your investment and even if forecasts about the expected future
performance are included you will carry the investment and market risk, which includes
the possibility of losing capital.
Tel: 0860 123 263 (RSA only)
Tel: +27 21 416 6011 (Outside RSA)
Fax: 0861 119 733 (RSA only)
Email: [email protected]
For further information on the fund please visit: www.nedgroupinvestments.co.za
Our trustee
Our offices are located at
Nedbank Clocktower, Clocktower Precinct, V&A Waterfront, Cape Town, 8001
Pricing
Funds are valued daily at 15:00. Instructions must reach us before 14:00 (12:00 for
Nedgroup Money Market Fund) to ensure same day value. Prices are published daily
on our website and in selected major newspapers.
Write to us
PO Box 1510, Cape Town, 8000
Date of issue
17 January 2017