Page 165 - Profiles's Unit Trusts & Collective Investments - September 2024

Fund Manager Interviews

Please comment on the year ahead and, if possible, estimate the performance of your fund
over 2 or 3 years. What are your targets and objectives for the year ahead?
The fund aims to replicate the performance of the FTSE/JSE Top 40 Index. We therefore expect
it to deliver a performance in line with its benchmark in the coming year. The share price
performance for Anglo American, Goldfields, FirstRand, Standard Bank and Naspers/Prosus will
be a key driver of the FTSE/JSE’s Top 40 performance, given their large weighting in the Index.

Are equity markets in general overpriced? Do you anticipate a significant correction or will
the bull run continue?
In a global market context, key developed markets look fairly priced to moderately expensive,
with future global equity returns likely to be lower. Economic activity in South Africa is severely
constrained by the acute underperformance of transport infrastructure, poor service delivery from
weak and revenue-hungry municipalities, inadequate (albeit stabilising) electricity supply and
chronically low business confidence. The performance of certain South African focussed
companies have therefore been under pressure, with valuations reducing substantially over the last
few years.
Following the election and the formation of the government of national unity, there have been
positive leadership changes in key ministries, indicating commitment to the constitution and to
addressing the country’s structural challenges. Consequently, there is optimism that, after the
dramatic economic decline of the last 15 years, the economy may stabilise and the country may
potentially be setting on a more constructive path. Nevertheless, given the deep structural issues
in the economy – most notably the sizable government debt burden and large, unskilled population
with high unemployment levels - we believe that any meaningful recovery will take an extended
period of time and is beset with risks.
Despite the rebound of the local market this year, certain sectors on the JSE remain deeply
undervalued. Through improving South Africa’s growth outlook and greater foreign interest
following the elections, the JSE has the potential to deliver another year of good performance.
As a passive fund, what advantages, in your view, does the underlying index you track offer
investors?
This fund is suitable for investors who are seeking to own the JSE/FTSE Top 40’s entire stock
selection at a very low cost, and who seek long-term capital growth with no short-term income
requirements.

H4 Worldwide Equity Fund

Sector: Worldwide–Equity–General
Portfolio manager: Yolanda Naudé
Benchmark: 35% South African - Equity - General & 65% Global - Equity - General
Returns to investors 1 year 3 years
H4 Worldwide Equity Fund 11.87% 13.14%
Sector Average 11.08% 10.59%
Inflation (CPI) 5.10% 5.96%
ProfileData performance stats to 30 June 2024: CAGR with dividends reinvested
Please describe your investment universe.
The H4 Worldwide Equity Fund has the objective of achieving maximum capital appreciation
over time. The benchmark of the fund is the combination of 35% (ASISA) SA Equity General peer
group average and 65% (ASISA) Global Equity General peer group average. To beat this
benchmark over time, the fund typically primarily invests in listed equity locally and globally, but it
may also invest in fixed interest securities, listed real estate, managed volatility equity solutions
and cash. Active currency management is also allowed, and used.

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