By: Momentum Securities
Momentum Securities’ International Equity portfolio would have ranked top quartile over one, two and three years for the period ending 31 July 2019 in comparison to the recently released ASISA statistics for its Global Equity General unit trust category.
The portfolio has generated cumulative performance in US dollars of 53% since inception on 1 June 2016, compared to its benchmark return of 32.4%, and would have placed a comparative 3rd , 2nd and 3rd over a one, two, and three year period respectively, in the comparative ASISA peer group. This translates into an annualised return of more than 14% since inception, beating its global equities benchmark by an excess of 4% per annum.
On a year-to-date basis, the model portfolio has returned 22.5% in US dollars compared to its benchmark returning 16.6%. These returns are in stark contrast to those generated on the Johannesburg Stock Exchange (JSE) over similar time frames, given the well-documented malaise, which has befallen South Africa’s economy.
According to Alexander Sprules, portfolio manager at Momentum Securities, this portfolio is a high conviction, actively managed, international portfolio investing directly in global listed equities.
“The returns of this portfolio are based on the ability of our International management team’s ability to outperform world equity benchmarks by identifying and investing in undervalued securities, with a key focus on selecting companies that have a proven track record for generating returns.
“The nature of these companies tend to be that their earnings are more stable. In terms of our bottom up investment philosophy, we also place strong emphasis on paying for sustainable earnings growth and selling companies that are overpriced relative to their earnings growth potential,” Sprules explains.
On average, this portfolio holds between 20 and 25 stocks, which means that the likelihood of its performance deviating from benchmark is substantially higher than say a portfolio holding, for example, 200 stocks. True to the high conviction nature of this strategy, the current top five holdings make up more than 30% of the portfolio, with the largest investments being Microsoft, Nestle, Comcast, Amazon and Anheuser-Busch.
“It is important to note that this is a long-term style agnostic strategy with a relatively high-risk profile, and investors must understand that investment cycles can cause share prices to fluctuate,” he continues. “However, the continuous outperformance highlights the value of geographical diversification through our offshore offering.”
The minimum lump sum required for a direct investment into the Momentum Securities International Equity portfolio is $80 000. “In order to make an investment in this portfolio more accessible to a wider range of investors, Momentum Securities also offers an exchange traded note (ETN), listed on the JSE, which invests in the Momentum Securities International Equity portfolio.
“This ETN (Ticker UMMIEA) is for investors looking to allocate a portion of their portfolio to an actively managed global equity portfolio in ZAR, via the JSE, for a minimum lump sum of as little as R5 000. This ETN is available on the Momentum Wealth platform, and we recommend that investors consult their investment advisors to assess whether the investment vehicle is suited to their profile and investment objectives,” Sprules concludes.