The Arysteq Global Opportunities Fund has a year to date ranking of 7 out of 97 offshore funds registered in South Africa. Year to date, the fund returned -9.0% vs that of the South African peer group median at -17.7%. The 1-year performance of the fund is 0.7% vs that of the Namibian peer group median at -6.4% (see graph 1).
Graph 1: Fund vs Peer Group Returns (June 2022)
Source: Arysteq
Technology stocks have been selling off since the start of the year due to a rise in interest rates and recessionary fears which may drive sentiment in markets leading into the end of the year. Our view is that market moves will mainly be driven by US monetary policy decisions going forward with banks benefiting from higher interest rates and inflation to start normalizing as soon as the end of the year.
Over the last quarter, we sold out of our position in Japan Tobacco. This was based on the fact that we see a lot more value in British American Tobacco. Our focus remains to add to companies with strong pricing power coupled with businesses that can easily pass on inflation. In line with our strategic asset allocation, we’ve added to Itochu Corporation, BP Plc and Micron Technology since April 2022.
The top 10 equity holdings in this fund comprise of British American Tobacco, Nintendo, Pfizer, BMW, BP Plc, Verizon Communications, Alibaba Group Holdings, Bank of China, Barclays and Nestle. The fund currently has exposure to the US, UK, Europe, Japan, Hong Kong and Australia with an underweight view on the US, France and Canada.
The Arysteq Balanced Fund has a year to date ranking of 3 out of 13 funds registered in Namibia in this mandate category. Year to date, the fund returned -3.3% vs that of the Namibian peer group median at -4.5%. The 1-year performance of the fund is 5.2% vs that of the Namibian peer group median at 5.1% (see graph 2).
Graph 2: Fund vs Peer Group Returns (June 2022)
Source: Arysteq
The big 4 banks are expected to benefit from a positive endowment effect leading to higher net margins. Retailers are also expected to outperform with inflation more easily being passed on to end consumers. With commodity prices remaining elevated for longer, resources stocks should continue to benefit.
We’ve increased our overall exposure to offshore equities through the Arysteq Global Opportunities Fund. We currently have 35.9% of the fund allocated offshore with the total equity exposure at 71.7%. We continue to hold our derivative exposure through the SAFEX as a strategic allocation across our balanced mandates.
Over the last quarter, we maintained our portfolios in line with our strategic asset allocation and to take advantage of fairly valued stocks in the market. Our buys for the period included SBN Holdings. Our portfolios ended the quarter being overweight Consumer Staples, Financials, Materials and Healthcare.
The top 10 equity holdings in this fund comprise of SBN Holdings, British American Tobacco, BHP Group, Nintendo, Anglo American, Pfizer, Standard Bank Group, BMW, BP Plc and FirstRand.
The Arysteq Real Return Fund has a year to date ranking of 3 out of 6 funds registered in Namibia in this mandate category. Year to date, the fund returned -2.4% vs that of the Namibian peer group median at -2.9% (see graph 3). The 1-year performance of the fund is 5.3% vs that of the Namibian peer group median at 4.3% (see graph 3).
Graph 3: Fund vs Peer Group Returns (June 2022)
Source: Arysteq
Lower economic growth and fears of a recession in the medium term are expected to curb demand for industrial metals. This has been further exacerbated by the economic slowdown in China, with Beijing taking a relatively uncompromising approach in managing the spread of COVID 19 amongst its population.
As with the Balanced Fund, we’ve increased our overall exposure to offshore equities through the Arysteq Global Opportunities Fund. We currently have 35.9% of the fund allocated offshore with the total equity exposure at 64.0%. We continue to hold our derivative exposure through the SAFEX as a strategic allocation in our absolute mandate as well.
Over the last quarter we made similar changes in line with trades executed in the Balanced Fund. All our multi-asset mandates continue to be less volatile and more defensive than the overall market.
The top 10 equity holdings in this fund comprise of SBN Holdings, British American Tobacco, Nintendo, Pfizer, BMW, BP Plc, BHP, Verizon Communications, Alibaba Group Holdings and Bank of China.
The Arysteq Money Market Fund has remained number 1 in the Namibian market over the last quarter. Changes to the portfolio mainly included rolling of maturities into higher yielding instruments for the quarter ended 30 June 2022.
Graph 4: Fund vs Peer Group Returns (June 2022)
Source: Arysteq
The US Federal Reserve, Bank of England, South African Reserve Bank and Bank of Namibia, amongst others, have been active for much of the year, raising interest rates as a means to suppress consumer buying power and bring rising costs under control. This will bode well for investors in the money market fund as we continue to take advantage of rising interest rates in our portfolio.
