Old Mutual Investors comment - Sep 09 - Fund Manager Comment26 Oct 2009
The positioning of the fund in favour of the more cyclical shares since the beginning of the year has rewarded investors as the prices of these shares outperformed strongly. However, this means that much of the value which was in abundance earlier in the year has now diminished.
Companies whose earnings are more defensive in nature are now beginning to look more appealing relative to the cyclical shares, which have run hard. As we have previously mentioned, this market is more about stockpicking than following a particular theme. We remain of the view that the global and local economies will continue to improve, supported by favourable monetary and fiscal policy. This will continue to provide support to company earnings.
Old Mutual Investors comment - Jun 09 - Fund Manager Comment04 Sep 2009
There has been an enormous amount of debate around the question of whether the various fiscal stimulus packages and easy monetary policy will drive recovery in the global economy. While that is an important question to answer, we focus on investing in companies which are cheap, and over time, we expect the value to be unlocked. Most of the shares we have invested in over the last few months have typically been the more economically sensitive shares that were hammered in last year's market collapse. Many of these shares were priced at extremely low levels by an overly pessimistic market. We bought these shares when the market was selling them at bargain prices.
We are not so enamoured with the more defensive shares (typical examples are the food companies). Many of these are great companies, but they are not cheap. While the extreme relative valuation between the defensive and the economically sensitive shares has narrowed, on balance we still find more value in the latter.
Old Mutual Investors comment - Mar 09 - Fund Manager Comment21 May 2009
Despite the strong recovery during March the FTSE/JSE All Share Index was down 4.2% over the first quarter of 2009. This negative performance was driven by poor returns from financials (-8.1%) and industrials (-9.3%). Resources (+1.7%) had a positive quarter on the back of a strong recovery in some of the commodity prices. Large caps (down 4.1%) outperformed both small caps (down 6.4%) and mid-caps (down 4.4%). The fund underperformed the peer group average performance for the quarter.
Investor sentiment remains cautious, driven by concerns around the severity of the global economic slowdown. Volatility in global equity markets continues to be high and is expected to continue in the wake of investor uncertainty.
On broad sector exposure, the fund has an underweight position in small companies and listed property, a neutral position in financials and overweight positions in resources, industrial rand hedges and local industrials. In general, the fund is marginally overweight in cyclical shares, which we believe are attractively priced, and underweight in defensive shares, which we believe are fully valued.
On a weighted basis, the price:earnings ratio of the fund (using rolling earnings) is currently 9.1 times, and the dividend yield is 4.0% on a rolling basis.
Old Mutual Investors comment - Dec 08 - Fund Manager Comment26 Feb 2009
The FTSE/JSE All Share Index delivered a negative 9.2% return for the last quarter of 2008, bringing the total return for the index for the year to a negative 23.2%. The negative return over the quarter was driven by poor returns from all sectors: resources (-12.9%), financials (-11.6%) and industrials (-4.4%). The Old Mutual Investors' Fund had a good relative performance, outperforming the general equity category average and the All Share Index over the quarter and the year to December. Investor sentiment remains cautious, driven by the crisis in the global financial system, but also on concerns around the severity of a global economic slowdown. Volatility in global equity markets continues to be very high and is expected to continue in the wake of investor uncertainty. The fund's broad positioning relative to the general equity sector average remains overweight to large capitalisation and underweight to small capitalisation shares. During the quarter we added to Exxaro, Anglo American and Billiton, driven by attractive valuations. We also started building a position in cyclical retail by buying JD Group and Lewis on the back of our expectation that local interest rates will be reduced further in 2009. On the selling side, we started reducing the defensive food retailers and food producers by selling Tiger Brands, Shoprite and Spar. We also reduced our bank exposure from overweight to neutral. On a weighted basis, the price: earnings ratio of the fund (using rolling earnings) is currently 8.0 times, and the dividend yield is 4.6%.