Page 175 - Profiles's Unit Trusts & Collective Investments - September 2024

Fund Manager Interviews

In terms of risk management, what methods or strategies are you able to use to protect your
clients’ investments?
Our primary risk management tool is to allocate capital only to assets trading below fair value,
and to hold cash when we are unable to find sensible opportunities in risky assets. Sizing positions
with reference to the risk embedded in the underlying asset is a further way in which we manage
risk.

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?
We do not attempt to forecast market or fund returns over one-year periods. We continue to
find a wide disparity in valuations across different geographies and sectors, and whilst we are not
overly excited about the risk and return prospects of equity markets in aggregate, we do find it
possible to buy assets at attractive valuations that gives us confidence in the longer term returns
the fund should deliver to investors.
Are equity markets in general overpriced? Do you anticipate a significant correction or will
the bull-run continue?
In aggregate, we consider the world equity market to be on the expensive side of fair value. But
this is mainly due to the US market which dominates global indices. Emerging markets however
appear to offer better value compared to most developed markets at the moment.
Which asset classes do you expect will give the best total rates of return over the next few
years?
Global equities – but given valuations currently, we expect divergent outcomes between
different geographies within global equities.
Offshore investments are heavily influenced by the rand. Please give your view on the rand
over the next 1, 3 and 5 years.
As with markets in general, we do not attempt to make short term forecasts of exchange rates.
On a longer-term view, with reference to purchasing power parity, we continue to view the Rand as
priced too cheaply, and hence expect Rand cash investments (i.e. including interest) to be a better
store of value than many other currencies (notably the US dollar).

Steyn Capital Equity Prescient Fund

Sector: South African–Equity–General
Portfolio manager: Andre Steyn
Benchmark: FTSE/JSE Shareholder Weighted Total Return Index net of fees
Returns to investors 1 year 3 years
Steyn Capital Equity Prescient Fund 20.65% 14.61%
Sector Average 9.81% 9.72%
Inflation (CPI) 5.10% 5.96%
ProfileData performance stats to 30 June 2024: CAGR with dividends reinvested
Please describe your investment universe.
Steyn Capital Management has a 16 year track record of successfully investing in equities in
inefficient markets like South Africa, Pan-Africa, and global Frontier and Emerging Markets, both
on the long and short sides. Over that time-frame, we have whittled down the universe of 40 000
listed equites within all of those markets to a proprietary high quality universe of 4 500 businesses
in Emerging and Frontier markets. We screen that proprietary universe for undervalued stocks
across our Emerging and Frontier markets, with our South African equity unit trust generally
being able to invest in the 150 largest South African listed equities.

Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts 173