Page 175 - Profile's Unit Trusts & Collective Investments - March 2025

Fund Manager Interviews

The Rozendal Global Fund delivered very disappointing returns for the year. Up until
mid-2024, the since inception performance relative to the fund’s benchmark was still neck and
neck. But the last six months of 2024 proved to be a torrid period for the fund. The fund’s overall
limited exposure to the US again hampered returns, but there were a variety of stock specific
reasons for the poor performance. The main detractors were Noble, one of the leading global oil
drillship owner and operators, M Dias Branco, a multi-national food manufacturer in Brazil and
communications satellite owner and operator SES S.A. The key contributors to returns were US
technology business Meta platforms, UK grocery retailer Tesco and leading Chinese e-commerce
business, JD.com. Our focus remains on our bottom-up investment approach: rather than taking a
broad top-down view of events on a country or sector level, we focus on the economics of
individual assets.

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 (ie, including interest) to be a better
store of value than many other currencies (notably the US dollar).

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