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Manager's Fact Sheet
Fund Profile
Manager's Commentary
Old Mutual Investors Fund | South African–Equity–General
385.1588    +4.8312    (+1.270%)
NAV price (ZAR) Thu 22 Jul 2021 (change prev day)
Old Mutual Investors comment - Sep 12 - Fund Manager Comment26 Oct 2012
Equities remained buoyant during the quarter as cheap money globally supported equity prices. Despite the market's willingness to bid share prices higher, our valuations see limited opportunities for much higher prices. We do, though, recognise that in the current environment of low interest rates and concerted efforts by central banks around the world to support economic growth, share prices are likely to continue to grind higher. For this reason we hold low levels of cash in our portfolios.

We remain cautious on the outlook for China and, therefore, on the outlook for commodity prices, as China will continue to struggle to sort out a number of significant imbalances in their economy. Mining shares have underperformed significantly over the last few years and, because of that, have appeared "cheap" to some investors. But this ignores the rapidly falling commodity prices, which have resulted in significant earnings downgrades for the miners. We do recognise that these shares are beginning to offer some value, based on long-term historical trend earnings, but conditions for the miners are likely to remain tough.

The current level of unrest on South African mines is disturbing and the potential loss of jobs is of significant concern to us. While the sizeable current account deficit is being financed to a large extent by foreign portfolio flows, the rand is vulnerable to a change of heart by foreigners, and current events are not helpful in this regard. Our caution on the rand is why we choose to hold a number of shares with varying degrees of rand-hedge qualities, while at the same time fulfilling our other valuation requirements.

Appropriately valued, high quality shares fulfil an important core status in our funds, including British American Tobacco (BAT), SABMiller, Sanlam, Bidvest and Remgro. Our large holding in Old Mutual has served us well, as we identified early on that the market was ignoring the significant changes in the dynamics of the group since 2008. Well-considered diversification is as important as ever in the current market and to our approach, which places significant emphasis on the risk return dynamic and provides a steady framework, not only in these markets but in all market conditions.
Old Mutual Investors comment - Jun 12 - Fund Manager Comment31 Jul 2012
While the market improved during the quarter, there were some very different sectorial performances. The fund's large investment in the healthcare sector, as well as an overweight position in financial shares, added to performance. Long-term performance is also about avoiding losses. We managed to avoid the dreadful performance of the Telkom shares during the quarter, which were down 35%, and also held only a small exposure to beleaguered platinum shares.

Quality defensive shares maintained their strong performance as the world continued to fret over Europe, but a number of these shares still offer little value. We continued to selectively lighten exposure to these shares and switched into some of the cheaper resources shares, whose prices had retreated on the back of weaker commodity prices. We recognise relatively more value in the cyclical shares, but this value is unlikely to be unlocked until investors feel more confident about the prospects of the global economy.
Old Mutual Investors comment - Mar 12 - Fund Manager Comment09 May 2012
Our more cautious approach towards resources shares served the fund well during the quarter as resources shares declined against the FTSE/JSE Shareholder Weighted All Share Index (SWIX), which increased by 7.5%. The weakness in mining shares was driven by further downgrades in earnings expectations by the market on most global mining companies. These downgrades were driven by poor 2011 operating performance and a muted near-term production outlook. While the fund's exposure to gold was further reduced, some platinum exposure was added for the first time in a while as we took the opportunity to buy into the weakness, as platinum shares were sold off again by the market.

Despite a macro environment and market supported by continued low levels of interest rates globally, we do not see significant undervalued opportunities on the JSE. Consumer shares have been supported by strong tailwinds, but, in our view, those are fully discounted in prices in most cases. The fund has benefited from the strong run in the share prices of banks, life assurance and construction shares. However, while longer term fundamentals remain favourable for these sectors, we expect more muted returns in the short term. Healthcare remains a strong defensive and core part of the portfolio.
Old Mutual Investors comment - Dec 11 - Fund Manager Comment15 Feb 2012
The last quarter was again characterised by heightened volatility. We have expressed our view in previous commentary that the world economy was unlikely to experience a "double-dip" recession. While recent economic data appears to support this, markets lacked conviction pending a coordinated policy announcement out of the European Union. Europe remains a key focus due to its importance to world trade, additionally for those South African companies with operations there, e.g. Steinhoff, Medi-Clinic, Bidvest, Imperial.

Meanwhile, the USA's key short-term economic indicators beat consensus expectations. Although early days, this, combined with signs of recovery in manufacturing from China and key European countries, gave investors reason to go bargain hunting for some oversold companies. The local market struggled to maintain a particular direction over the quarter, but in the end, the FTSE/JSE All Share Index (ALSI) closed 8.4% higher. Our patience was rewarded on one of the fund's largest holdings, Old Mutual, which outperformed the SWIX by 21% during the quarter.

As we move into 2012, we will likely continue to experience volatile markets as key macro events will compete with company fundamentals. We continue to invest in companies with strong operational metrics, competitive advantages and defensive earnings. We will also opportunistically buy companies trading below their intrinsic values with a sufficient margin of safety or sell those trading above our target prices.
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