Page 164 - Profiles's Unit Trusts & Collective Investments - September 2024

CHAPTER 9

generation and increased maintenance by Eskom. The inflation outlook has also improved,
benefiting from lower oil prices, and easing food inflation. The SARB now anticipates that inflation
will reach the midpoint of 4.5% earlier than previously expected.
We believe the year ahead will be characterised by central bank actions both locally and
globally. Central banks are expected to ease monetary policies by cutting rates. The European
Central Bank and the Bank of Canada are among the central banks that have already begun their
rate-cutting cycles. In the absence of shocks, we anticipate that the SARB will begin cutting rates
before the end of 2024, and it is more likely to be a gradual process.

Camissa Top 40 Tracker Fund
Sector: South African–Equity–Large Cap
Portfolio manager: Aslam Dalvi
Benchmark: FTSE/JSE Top 40 index
Returns to investors 1 year 3 years
Camissa Top 40 Tracker Fund 6.51% 10.03%
Sector Average 6.55% 9.68%
Inflation (CPI) 5.10% 5.96%
ProfileData performance stats to 30 June 2024: CAGR with dividends reinvested

Please describe your investment universe.
The Camissa Top 40 Index Tracker Fund tracks movements and replicates the performance of
the FTSE/JSE Top 40 Index over time, by investing largely in the constituents of this index (i.e.,
generally the largest 40 companies listed on the JSE Securities Exchange).
Please comment on your investment year (July 2023 – June 2024) from a fund manager’s
point of view.
The fund delivered a return of 6.5% (net of fees) over the year to end June 2024 – below its
benchmark – the FTSE/JSE Top 40 Index. The lower return relative to the index reflects primarily
higher trading costs and fees, which were only partially offset by the execution of low-risk return
enhancement strategies during the year. The fund remains the best performing Top 40 Tracker
product since inception and is among the top three best performing funds over the last 5, 10 and 15
years.
In terms of risk management, what methods or strategies are you able to use to protect your
clients’ investments?
The fund is on the upper end of the risk spectrum owing to the concentrated nature of the
portfolio. Absolute risk (of an outright capital loss) is generally higher than traditional equity
funds as we aim to replicate the market, regardless of whether we consider the positions taken to
be cheap or expensive based on our estimate of the fair values of the relevant stocks.
Relative risk or tracking error, which measures the risk of deviating too far from the fund’s
benchmark, is typically low given that the portfolio aims to largely replicate its benchmark – the
FTSE/JSE Top 40 Index.
The fund employs several techniques to manage portfolio risk. Tracking error risk is closely
managed through rigorous cash flow management and we employ quantitative rebalancing
techniques to minimise transaction costs and keep the fund’s performance in line with the
benchmark over long periods. Low risk enhancement strategies are also frequently used to add
incremental returns with a view to somewhat offsetting the management fee. Strict cash
management allows the fund to track the FTSE/JSE Top 40 Index, with minimal tracking error,
and to always ensure maximum practical exposure to the Index.

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