Page 160 - Profiles's Unit Trusts & Collective Investments - September 2024

CHAPTER 9

Chapter 9
Fund Manager Interviews
Fund Manager Interviews

NQF
Relevant to
The fund manager interviews presented in this chapter provide a fascinating insight into 119997: 3
the different approaches to investment management required by different types of 242594: 2, 3
collective investment schemes, and a range of views for the future. The interviews are 243130: 2, 3
243148: 2
comments from fund managers about the way in which they manage their funds, how 243153: 4
they make investment decisions, what they anticipate for the year ahead and, in some
cases, specific shares which they favour for their portfolios.
For this issue, a selection of top performing funds was made in order to present both the major
collective investment scheme managers and a cross-section of categories (general equity, specialist
equity, bond funds, hedge funds, etc). The managers of all the funds selected were invited to
contribute. Not all those invited were able or willing to make a contribution, so the interviews
included here do not necessarily cover all the sectors which we would like to cover.
In addition to the comments provided by each fund manager, we also show the one and three
year lump sum returns (NAV to NAV, dividends reinvested) for each featured fund, the average
performance of the sector, and inflation for the period. The performance figures are annual
compound returns (CAGR).
Bear in mind that the performance figures for each fund are not simply a function of each
manager’s approach or skill. With the exception of hedge funds and some multi asset funds, the
mandates of unit trusts require the fund manager to remain invested in particular sectors or asset
classes regardless of the state of the markets. This means that a fund manager’s choices in a bear
market might be limited to switching part of the portfolio from growth shares to defensive stocks.
In short, the performance figures often reflect sector performance as well as manager performance.
The interviews reveal both the different approaches of different managers, and the significant
effect of sector choice. The manager of a specialist theme fund, for example, works on the
assumption that investors in the fund want to be fully invested in that sector. The manager will
see his or her job as outperforming the fund’s benchmark (and its peers); not making asset
allocation choices.
In other words, the manager of a theme fund is not striving for an absolute return. This makes
the choice of sector (and fund) very important from the investor’s point of view.

Argon BCI Flexible Income Fund

Sector: South African–Multi Asset–Income
Portfolio manager: Krishna Sathee
Benchmark: STeFI Composite Index x 110%
Returns to investors 1 year 3 years
Argon BCI Flexible Income Fund 13.58% 9.94%
Sector Average 10.25% 7.60%
Inflation (CPI) 5.10% 5.96%
ProfileData performance stats to 30 June 2024: CAGR with dividends reinvested
Please describe your investment universe.
The Argon BCI Flexible Income Fund invests in SA government bonds, corporate and
parastatal bonds, floating rate notes (FRNs), inflation-linked bonds, money market instruments
and derivatives. The money market instruments and FRNs are included in the fund for interest
income, while the bonds are included in the fund for capital appreciation. Derivatives are used to
either reduce credit duration when negative on bonds, or to extend duration when positive on
bonds. This fund is not geared, and the risk profile is moderate.

158 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts