Where to look for Real Growth? - 26th August 2020 - Boutique Collective Investments
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Where to look for Real Growth?
26th August 2020
Who are we?
Incorporated on 1st October 2000 as FSCA Authorised Category II Fund Manager.
Centaur is a Retail Only Asset Manager with R4.5bn of Asset under Management.
Founding Principles: Excellent performance Awards in Recent Years1:
1. Deliver exceptional performance. due to:
2x 4x
2. With outstanding service.
3. And the utmost integrity.
Awards Awards
Disclosures: AuM as at 31 Jul’20. 1Awards:
2018 Morningstar Award: Centaur BCI Flexible Fund – Best Flexible Allocation Fund ending Dec’17.
2017 Raging Bull Award: Centaur BCI Flexible Fund – Best South African Multi-Asset Flexible Fund (Risk Adjusted) 5 years ending Dec’17.
2017 Morningstar Award: Centaur BCI Flexible Fund – Best Flexible Allocation Fund ending Dec’16.
2016 Raging Bull Award: Centaur BCI Balanced Fund – Top Performing South African Multi-Asset High Equity Fund 3 years ending Dec’16.
2016 Raging Bull Award: Centaur BCI Flexible Fund – Top Performing South African Multi-Asset Flexible Fund (Risk Adjusted) 5 years ending Dec’16.
2016 Raging Bull Award: Centaur BCI Flexible Fund – Top Performing South African Multi-Asset Flexible Fund 3 years ending Dec’16.
The full details and basis of the awards are available from the manager.Centaur Net Long-Term Equity Performance Since Inception1
3 500
As at: 31 Jul’20 Centaur Benchmark¹
3 000 Compound Annual Return 18.8% 11.3%
Growth of R100 investment (cumulative)
Annual Std. Deviation 12.8% 13.8%
2 500
2 000
1 500
1 000
500
-
Jul '99 Jul '02 Jul '05 Jul '08 Jul '11 Jul '14 Jul '17 Jul '20
Centaur Equity Strategy Benchmark² ALSI
Benchmark¹: Source: Bloomberg, Maitland as at 31 July 2020.
1 Oct 2000 - 31 Dec 2004: 50% ALSI (J203), 50% FINDI (J213) – including dividends Centaur Equity Strategy utilised in Centaur's products since inception: 1 October 2000. Past performance is not
1 Jan 2004 – 30 June 2007: 50% ALSI (J203), 50% FINDI (J213) a reliable indicator of future returns. Investment performance is for illustrative purposes only and is calculated
1 July 2007 – 31 January 2015: 15% RESI (J258), 65% FINDI (J250), 20% SA Repo by taking actual initial fees and ongoing fees into account for amount shown with income reinvested on
1 February 2015 – 30 June 2018: 15% RESI (J258T), 65% FINDI (J250T), 20% SA Repo reinvestment dates. Annualised return is weighted average compound growth rate over the period measured.South African Real GDP
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
Mar '00 Mar '02 Mar '04 Mar '06 Mar '08 Mar '10 Mar '12 Mar '14 Mar '16 Mar '18 Mar '20
3 Year Average Growth 1 Year Growth
Source: Bloomberg, at 31 Mar’20
Treasury Forecasts 7% fall in GDP in 2020, and 2% rise–inZero
2021structural reformSA’s Fiscal Reality
16% 90%
14% 80%
12% 70%
Government Debt
10% 60%
Fiscal Deficit
8% 50%
6% 40%
4% 30%
2% 20%
0% 10%
-2% 0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2021 is Treasury Budget. Source: Bloomberg, at 24 Aug.
Fiscal Deficit Govt debt
Nominal GDP has to grow faster than Debt via: Less expenditure, growth orPurchasing Power Parity of Rand-Dollar
20 100%
18
80%
16
60%
South African Rand
14
13,30
12
40%
10
20%
8
6 0%
4
-20%
2
0 -40%
Jul '90 Jul '93 Jul '96 Jul '99 Jul '02 Jul '05 Jul '08 Jul '11 Jul '14 Jul '17 Jul '20
Premium / (Discount) Purchase Power Parity Fair Value USDZAR Rand Spot
Source: Bloomberg, 31 Jul’20
28% above PPP value
- A resilient Rand? current account surplus; strong net assetInterest Rates and Outlook
US RSA
6% 14%
5% 12%
4% 10%
3% 8%
2% 6%
1% 4%
2%
0%
0%
-1%
-2%
-2%
-4%
-3%
10 Year Bond Federal Funds Inflation ALBI Yield SA CPI Real Yield
Source: Bloomberg, 31 Jul’20
Low interest rates globally.
SA high real yields but SA inflation a riskAsset Classes: The Real Returns
Inflation – 5 year average 5% asymmetric upside which is poor for real returns -
ZAR above PPP fair value 29% Undervalued but international is a diversifier and inflation hedge. ?
Nominal Real
Asset Classes
Return Yields
Cash 4.7% Zero real yields. -
SAGB 10 yrs 10.0% Real yields but inflation risk. +
Income funds 7.0% Beware of the credit risk. +
Inflation linked bonds 8 yrs 8.3% Looks attractive, inflation hedge. +
Property ? Oversupply into weak market. -
SA listed Rand hedge 15.0% Return on SA listed select opportunities. +
Domestically focused equities 11.0% Require growth, but a good inflation hedge. +
International stocks – USD return 6.0% US indices look pricey - metrics on upper end. +
US 10 year bonds 0.5% Negative real yields. -
Favourable Caution NegativeAn Analogy of the Market by Charlie Munger:
“Any damn fool can see that a horse carrying a light weight with a wonderful win rate and a good post position etc.,
etc. is way more likely to win than a horse with a terrible record and extra weight and so on and so on. But if you look
at the odds, the bad horse pays 100 to 1, whereas the good horse pays 3 to 2. Then it's not clear which is statistically
the best bet using the mathematics of Fermat and Pascal. The prices have changed in such a way that it's very hard to
beat the system.”
Centaur’s job is to find the mis-priced odds and invest accordingly.
High growth areas: Underpriced growth areas we are invested in:
Cloud computing Growth largely in the price for a Chinese health insurance Discovery via Ping An Health
business which may be a utility.
Online gaming and sports betting GVC
Electric vehicles Tesla is ludicrously priced & adoption slow. Music streaming Spotify (global leader)
Online commerce Amazon >100X PE for a complex business. Internet commerce Naspers
Healthcare Looking for suitable candidates.
Not certain yesterdays winners will be tomorrows winSome stock picks offering 10%+ real return potential?
Return Expectation
15 - 20% 20 - 30% 30%+
SA Listed Rand Hedge: ARM Trading at 25% discount, attractive suite assets. y
Insulated from SA economy Aspen 85% ex SA, on 8X PE with entrepreneurial management. y
and can deliver volume Ninety-One 70% assets ex SA, excellent distribution on modest PE. y
growth.
Discovery Ping An Health growing at 60% p.a. y
Offshore: BTI Trading at 8.5% dividend yield for an addictive product. y
Excellent value for growth Spotify Global leader in growing music streaming industry. y
and capital light. GVC Vertically integrated leader in online gaming. y
Brightsphere US asset manager on 7X PE, owned on John Paulson. y
SA Equities: MR Price Capital light, gaining market share at low PE. y
Defensive, high ROE, Vodacom Defensive at 7%+ yield. y
gaining market share. RMI Holdings OUTsurance a capital light disruptor, 40% ex value ex SA. y
Asymmetric Upside PPC High risk optionality to GDFI recovery. y
Merafe Undervalued with restructuring value unlock. y
Centaur invest largely in quality stocks
– which have excess return potentiCentaur BCI Balanced Fund Performance since Inception1
As at: 31 Jul’20 1 yr 3 yrs 5 yrs Inception1
190
Centaur BCI Balanced Fund 3.2% 3.5% 5.2% 8.8%
Growth of R100 investment (cumulative)
Benchmark2 return 4.5% 4.4% 5.4% 8.4%
170
150
130
110
90
Jul'13 Jul'14 Jul'15 Jul'16 Jul'17 Jul'18 Jul'19 Jul'20
Centaur BCI Balanced Fund (Distribution Adjusted) Benchmark²
2
Benchmark:
1 Jul 2013 – 31 Oct 2018: 28% ALSI (J203T), 28% FINDI (J250T), 8% MSCI World Index, 30% JSE ALBI, 6% SA Repo rate. Source: Maitland, Moneymate and Centaur, as at 31 July 2020. 1Inception Date: 01 July 2013. Past performance is not a reliable indicator of future returns.
Boutique Collective Investments (RF) (Pty) Ltd (“BCI”) is a registered Manager of the Boutique Collective Investments Scheme, approved in terms of the
1 Nov 2018 – Current: 25% JSE All Bond Index (ALBTR), 48% JSE Capped SWIX (J433T), 16% MSCI World (M1WO)
and 11% SteFI, calculated over a rolling 2-year period. Collective Investments Schemes Control Act, No 45 of 2002. Collective Investment Schemes in securities are generally medium to long term investments. The
value of participatory interests may go up or down and past performance is not necessarily an indication of future performance. A schedule of fees, charges,
maximum commissions, and rankings is available on request. Investment performance is for illustrative purposes only and is calculated by taking actual initial
fees and ongoing fees into account for amount shown with income reinvested on reinvestment dates. Annualised return is weighted average compound
growth rate over the period measured. Highest and lowest calendar year performance since inception (as at 31 July 2020): High 19.6% Low -5.4%.An Allocation to Centaur Improved Returns – 7 years
170
As at: 31 Jul’20 EW EW excl. CBF ∆
EW – An Equally Weighted portfolio
160 Return p.a. 6.9% 6.5% 0.4%
of SA’s 4 largest SA Multi-Asset
Growth of R100 investment (cumulative)
Std. deviation 9.4% 9.3% 0.1%
150 High Equity Funds and the Centaur
BCI Balanced Fund.
140
EW ex CBF – the above equally
130
weighted portfolio excluding the
Centaur BCI Balanced Fund.
120
Source: Maitland, Moneymate and Centaur, as at 31 July 2020.
110 1Inception Date: 01 July 2013. Past performance is not a reliable
indicator of future returns. Boutique Collective Investments (RF) (Pty)
Ltd (“BCI”) is a registered Manager of the Boutique Collective
Investments Scheme, approved in terms of the Collective
Investments Schemes Control Act, No 45 of 2002. Collective
100 Investment Schemes in securities are generally medium to long term
investments. The value of participatory interests may go up or down
and past performance is not necessarily an indication of future
performance. A schedule of fees, charges, maximum commissions,
and rankings is available on request. Investment performance is for
90 illustrative purposes only and is calculated by taking actual initial fees
and ongoing fees into account for amount shown with income
Jul '13 Jul '14 Jul '15 Jul '16 Jul '17 Jul '18 Jul '19 Jul '20 reinvested on reinvestment dates. Annualised return is weighted
average compound growth rate over the period measured. Highest
and lowest calendar year performance since inception (as at 31 July
2020): High 19.6% Low -5.4%.
EW ex CBF EW
Investing in Centaur offers Return and Diversification BenConclusion
Centaur embraces change and evolves our investments to new realities.
Inflation protection is of increasing importance in the medium term.
Seeing some good equity opportunities and investing accordingly.
Experienced team with proven ability of outperformance.
Centaur is on top of its game and focused on delivering superior performance.
Alpha generation in the Medium TermContact Details
Centaur Contact Details Management Company Information
Tel: 021 685 2408 Boutique Collective Investments (RF) (Pty) Limited
E-Mail: admin@centaur.co.za Catnia Building, Bella Rosa Office Park,
Website: www.centaur.co.za Durban Road, Bellville, 7530.
Tel: 021 007 1500/1/2
Physical address: Great Westerford Building, 240 Main Road,
Fax: 086 502 5319
Rondebosch, Cape Town, 7700.
Email: clientservices@bcis.co.za
Postal address: P.O. Box 35, Newlands, 7725. Website: www.bcis.co.za
Centaur Asset Management (Pty) Ltd is an authorised Financial Service
Provider FSP 647. Valuation takes place daily and prices can be viewed on Centaur’s Custodian Information
website (www.centaur.co.za) or in the daily newspaper. Actual annual performance figures The Standard Bank of South Africa Limited
are available to existing investors on request. Upon request the Manager Tel: 021 441 4100
will provide the investor with portfolio quarterly investment holdings reports.
Disclaimer
Boutique Collective Investments (RF) (Pty) Ltd (“BCI”) is a registered Manager of the Boutique Collective Investments Scheme, approved in terms of the Collective Investments Schemes Control Act, No 45 of 2002 and is a full member of the Association for Savings and Investment SA. Collective
Investment Schemes in securities are generally medium to long term investments. The value of participatory interests may go up or down and past performance is not necessarily an indication of future performance. The Manager does not guarantee the capital or the return of a portfolio. Collective
Investments are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees, charges and maximum commissions is available on request. BCI reserves the right to close and reopen certain portfolios from time to time in order to manage them more efficiently. Additional
information, including application forms, annual or quarterly reports can be obtained from BCI, free of charge. Performance fees are calculated and accrued on a daily basis based upon the daily outperformance, in excess of the benchmark, multiplied by the share rate and paid over to the manager
monthly. Performance figures quoted are from Moneymate, as at the date of this report for a lump sum investment, using NAV-NAV with income reinvested and do not take any upfront manager’s charge into account. Income distributions are declared on the ex-dividend date. Actual investment
performance will differ based on the initial fees charge applicable, the actual investment date, the date of reinvestment and dividend withholding tax. Investments in foreign securities may include additional risks such as potential constraints on liquidity and repatriation of funds, macroeconomic risk,
political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information. Boutique Collective Investments (RF) Pty Ltd retains full legal responsibility for the third party named portfolio. Although reasonable steps have been taken to ensure
the validity and accuracy of the information in this document, BCI does not accept any responsibility for any claim, damages, loss or expense, however it arises, out of or in connection with the information in this document, whether by a client, investor or intermediary. This document should not be
seen as an offer to purchase any specific product and is not to be construed as advice or guidance in any form whatsoever. Investors are encouraged to obtain independent professional investment and taxation advice before investing with or in any of BCI/the Manager’s products.You can also read
