Background

The Select BCI Equity Fund combines the capabilities of Fairtree’s independent domestic and global equity teams. The Fund will target a long-term strategic exposure of 75% domestic SA equity and 25% global equity exposure over time as represented by its composite benchmark. (75% of FTSE/JSE Capped Shareholder Weighted All Share Total Return Index and 25% of the S&P Global 1200 Total Return Index.)

The global equity component of the Fund may invest in developed market as well as emerging market equities. The managers follow an active fundamental management approach to equity security selection and portfolio construction and have a focus on maximising long term total returns for investors.

The Fund is style agnostic and its approach to equity investment is flexibility, which allows the team to move between sectors and stocks and actively trade the portfolio as deemed appropriate given any macro environment. In doing so, the portfolio managers can successfully navigate through periods when a particular investment style underperforms the market. The Fund will tend to have a positive bias to reasonably priced leading companies in industries that are benefitting from prevailing economic conditions.

The global equity component of the Fund is managed by Andre Malan and Cornelius Zeeman, supported by eight dedicated globally focused analysts. The team’s approach to global equity investing seeks to strike a balance between generating alpha (excess returns) whilst lowering the risk of underperformance against global equity benchmarks by applying a number of portfolio risk constraints. These include limiting the active risk taken at the security (stock), sector and country level. It also employs stock liquidity screening and targets a tracking error of between 2%-5% against the appropriate global equity benchmark. The investable universe of stocks is screened across a set of 25 of Fairtree’s proprietary financial metrics that comprise valuation indicators, growth indicators, momentum indicators and quality indicators. This is followed by rigorous fundamental analysis of the screened stocks.

Investment Philosophy and Process

The Select BCI Equity Fund combines the capabilities of Fairtree’s independent domestic and global equity teams. The Fund will target a long-term strategic exposure of 65% domestic SA equity and 35% global equity exposure over time, as represented by its composite benchmark, 65% FTSE JSE Capped shareholders Weighted Index (J433T) and 35% S&P 1200 Index. It is a general equity portfolio that aims to provide investors with high long-term capital growth.

The Fund is style agnostic, and its approach to equity investment is flexible. Given any macro environment, this allows the team to move between sectors and stocks and actively trade the portfolio as deemed appropriate. In doing so, the portfolio managers can successfully navigate periods when a particular investment style underperforms the market. The Fund will tend to have a positive bias toward reasonably priced leading companies in industries benefitting from prevailing economic conditions.

The Fund is co-managed by Chantelle Baptiste and Donald Curtayne, who are supported by Fairtree’s Global Equity Team and SA Equity Team.