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STANLIB Offshore Global Focus Fund - News
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Stanlib Global Focus comment - Jun 11
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Tuesday, 20 September 2011
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Fund Manager Comment
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Market Environment
The nearly flat performance of equities masked volatility caused by Greece's near sovereign debt default and the end of the second round of quantitative easing in the US. Mixed economic data left investors questioning whether the moderation in the US economy pointed to a mid-cycle slowdown or represented a more serious structural downturn. Monetary tightening in key emerging market economies battling inflation further dampened growth prospects, although falling oil prices provided some relief. Encouragingly, the Japanese economy showed signs of overcoming the near-term negative impact of the recent earthquake; inflationary forces remained subdued and gave the central bank enough leeway to stimulate the economy if required. Meanwhile, although immediate concerns about Greece's default abated, the increasingly politicised nature of the European sovereign debt crisis made it less predictable. Thus, caution prevailed and defensive stocks outperformed. Investors will look to the upcoming earnings season to provide more clarity into how company earnings are faring.
Fund Performance
The fund underperformed its benchmark in a quarter that saw defensives outperform. The overweight exposure to health care added value but failed to offset the impact of underweights in consumer stocks and utilities
Energy exposure detracted
Despite having reduced the stance, the fund's slight energy overweight hurt. Encouragingly, this was somewhat mitigated by aerospace group Safran, held in part as a hedge against oil price declines. I remain positive on the long-term outlook for the energy sector, given constrained supply and rising car penetration in emerging markets, and believe the oil price is well-supported at current levels.
Key technology names hurt
I sold the holding in Hewlett-Packard after it became obvious in a follow-up meeting with management that its issues would take longer to fix than first thought. Meanwhile, an expected slowdown in demand weighed on speciality glass business Corning, but its cheap valuation and innovative product pipeline offset these concerns. In contrast, online firms DeNA, Start Today and Rakuten, bought in the wake of the Japan sell-off, contributed to returns.
Health care holdings added value
Radiation therapy equipment firm Elekta issued solid annual results, whilst investors expected Sawai Pharmaceutical to benefit from increased sales of generic drugs in Japan.
Fund Positioning
The fund remains relatively cautiously positioned, with overweights in defensive areas such as health care and telecommunications, and underweights in cyclical industries including industrials and basic materials. The fund is also underweight financials.
Added to health care
I can find many health care businesses whose growth potential in emerging markets is not priced in. I bought Sanofi which, despite strong and durable diabetes, vaccines and animal health franchises and a growing presence in countries such as China, is cheap. I also remain on the lookoutforfirms that lead the field in terms of innovation. IIlumina, a leader in gene mapping technology, is one such company, whose products should playa key role in the prevailing trend towards more personalized medicine.
Moved overweight Japan
The indiscriminate sell-off that followed the earthquake allowed me to add attractively valued quality franchises well positioned to benefit from secular themes such as ageing, e-commerce and social gaming.
Emerging markets starting to look interesting
The correction seen this year in emerging markets on concerns over inflationary pressures and slower growth has created investment opportunities. I added a number of holdings such as ICICI Bank and mobile phone operator Bharti Airtel
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Stanlib Global Focus comment - Mar 11
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Tuesday, 14 June 2011
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Fund Manager Comment
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Market Environment
Global equities proved resilient, advancing for a third consecutive quarter despite escalating tensions in the Middle East and North Africa, the dramatic events in Japan and intensifying concerns over soaring food and oil prices. The political upheaval in a number of oil producing nations pushed fuel prices sharply higher, as investors feared that the unrest could result in significant supply disruptions. This situation did not materialise, but it exacerbated prevailing inflationary pressures. As a result, investors reduced their exposure to emerging markets, which are particularly susceptible to inflation given the higher share of food/energy in their consumption basket, in favour of developed markets. Japan was an exception, as the tragic earthquake, tsunami and nuclear crisis wrought appalling devastation, causing investors to shun companies with operations in the country until there was greater clarity on the longer term implications of the quake, particularly in respect of power supply disruptions and the resulting supply chain bottlenecks.
Fund Performance
The fund underperformed its benchmark. Fundamentally sound emerging market holdings were hurt by fund outflows from the region. The underweight stance in European banks that are vulnerable to sovereign debt defaults also proved counterproductive amid renewed investor interest. Mixed contribution from energy. Higher oil prices boosted energy equipment/services holdings in Aker Solutions, Baker Hughes and Noble. However, this was dampened by lower-than expected production volumes at exploration and production (E&P) firms Niko Resources and Pacific Rubiales, and a lack of exposure to US majors Exxon Mobil and Chevron. Stock-specifi c issues hurt US holdings Cisco Systems' quarterly results disappointed. However, the networking firm's valuation prices in a broken business model and ignores the potential from growth in data/video traffic. Meanwhile, concerns over supply disruption in the wake of the Japanese earthquake weighed upon General Motors' shares. I expect the stock to benefit from a recovery in US car sales and emerging market growth. In contrast, online auctioneer eBay released an encouraging earnings report following strength in its PayPal business and solid consumer spending. Financial stock picking hurt Higher-than-expected expenses and lower trading revenues caused Citigroup to underperform, as investors overlooked improving fundamentals at the core business.
Fund Positioning
I have positioned the fund in firms with pricing power, strong balance sheets and healthy cash flows. Profit taking in vulnerable areas In view of strong recent performance, I reduced the energy overweight. I sold stocks where my conviction levels were no longer as strong, such as the aforementioned Niko Resources and Pacific Rubiales Energy. I was concerned that substantially higher oil prices could result in demand destruction. I disposed of Vodafone, as its valuation discounted the anticipated earnings uplift from increased smartphone adoption. I also took profits in some consumer staples and industrials firms, whose profit margins were vulnerable to rising input costs. Opportunities in technology and health care I reinvested some of the proceeds in health care, where I can find cheap high quality franchises. I also continue to find attractively valued businesses in technology. I bought stocks, such as Microsoft and Hewlett-Packard, as well as information technology services firms, which stand to benefit from increased corporate spending. Increased exposure to US recovery I reduced the underweight stance in fi nancials, adding to high quality US banks, such as Wells Fargo, that are seeing improving credit conditions. I also bought businesses that stood to benefit from a stabilisation in US housing, such as home improvement chain Lowe's.
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Stanlib Global Focus comment - Dec 10
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Friday, 25 February 2011
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Fund Manager Comment
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Market Environment
Global equities rose sharply in a quarter marked by growing macroeconomic optimism. The second round of quantitative easing in the US boosted investor sentiment. A concurrent improvement in US economic indicators, which had stalled earlier in the year, suggested that the likelihood of another recession had receded in the near term. Meanwhile, emerging market economies continued to expand rapidly, although some began to grapple with inflationary pressures. Chinese authorities remained focused on preventing economic overheating and undertook further tightening measures, which raised some concerns about global growth prospects going forward. Investors also kept a close watch on developments related to the sovereign debt crisis in peripheral Europe. Encouragingly, corporate profitability remained robust and business on-the-ground trends seemed to suggest that earnings growth would remain fairly strong going forward. Many firms with cash-rich balance sheets were well-positioned to undertake merger and acquisitions to tap external growth opportunities.
Fund Performance
Robust stock selection and appropriate sector positioning ensured significant outperformance. An underweight stance in defensive health care and utilities sectors added value, as they lagged cyclicals, while energy holdings benefited from higher oil prices. Position in Monster Worldwide contributed A positive switch in investor perception about employment growth prospects in the US buoyed the shares of this jobs website operator. The company's favourable earnings forecast provided further support. Stock selection among industrials helped Investors were impressed by engineering group Fluor's order books and lighting equipment firm Acuity Brands' better-than-expected earnings. The latter, a quality business operating in a high barriers to entry market, is also benefiting from US stimulus support for energy-saving products. Materials performance was mixed Fertiliser business CF Industries benefited from an encouraging demand outlook against a backdrop of higher crop prices and low fertiliser inventories. Meanwhile, higher platinum prices supported autocatalysts and precious metal services business Umicore; investors also welcomed its solid quarterly results, which stemmed from robust volumes and favourable dynamics in most key segments. In contrast, exposure to gold producers that had done well previously hurt returns this quarter.
Fund Positioning
Given recent market gains, I believe one needs to be very selective when picking stocks. I find comparatively more ideas in the technology, energy and telecommunication sectors, and fewer opportunities among financials and consumer names. Natural resources positioning re-jigged I reduced the fund's exposure to gold and copper-related holdings in view of their very strong run. Conversely, I added to energy, where some of the large-sized names, such as onshore North American oil & gas producer Apache, looked attractive, and end-consumption is less dependent on capital expenditure compared with commodities such as steel. Increased telecommunications exposure I took advantage of cheap valuations and growth opportunities to add holdings. In Japan, both KDDI and Softbank stand to benefit from rising smartphone adoption, which should translate to higher revenue per user, while Axiata offers substantial growth potential through its exposure to Indonesia, Sri Lanka and Bangladesh. Underweight in financials somewhat reduced While I continued to stay clear of European banks that are vulnerable to sovereign debt issues, I added to high quality US names such as JPMorgan Chase, which is seeing strong revenue growth. Elsewhere, I took profits in tobacco manufacturers, such as Lorillard, which could face regulatory headwinds.
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Stanlib Global Focus comment - Sep 10
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Wednesday, 5 January 2011
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Fund Manager Comment
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Market Environment
Global equities delivered robust gains despite perceptible growth concerns. Investor confidence received an early boost when stress tests on European banks gave an easy pass to most despite their high gearing and exposure to Greek and Spanish government bonds. This temporarily alleviated many of the sovereign debt concerns that had weighed down stocks in the previous quarter and sparked a rally. Subsequently, disappointing economic data from the US raised the spectre of a "double dip" recession, which challenged sentiment and led to increased risk aversion. Investors readjusted their growth expectations and concluded that tougher comparisons and stimulus withdrawal in developed markets meant that growth rates might slow but this did not necessitate another recession. They also acknowledged uneven growth going forward, with emerging markets expected to outpace more leveraged developed nations. Consequently, shares rose once again, with emerging markets leading the way.
Fund Performance
Robust stock selection and appropriate sector positioning ensured the fund's relative outperformance. Consumer staples names that tapped buoyant demand stemming from changing emerging markets consumption patterns worked well. Materials holdings with strong fundamental drivers also added value. In contrast, an underweight in dividend-rich telecommunications shares hurt relative returns. Technology positions contributed Desktop virtualisation beneficiary Citrix Systems reported better-than-expected quarterly revenues that revealed a significant acceleration in the adoption of a key product. Meanwhile, smartphone producer HTC delivered healthy results, which highlighted its competitive advantage and successful branding strategy. Materials names lent support Bid interest in fertiliser firm Potash Corporation of Saskatchewan and miner Red Back Mining added value. Meanwhile, higher gold prices buoyed precious metal producer Newcrest Mining, where as an improved outlook for fertiliser demand supported agrochemicals company CF Industries. Health care holdings were mixed Radiation therapy equipment firm Elekta's encouraging results underscored its strong positioning in a structural growth market. In contrast, Russian pharmaceutical distributor Protek's profit warning hurt despite the positive outlook for this segment overall.
Fund Positioning
The fund was positioned more defensively to cater to a slower-growth environment. This entailed profit taking in industrials and technology holdings that had performed strongly. The proceeds funded defensive developed businesses as well as holdings with above-average growth prospects, particularly those in emerging markets. Overall US allocation cut significantly, although growth beneficiaries added I reduced the stance in US-listed industrials and technology stocks, including trucking firm Navistar International and data storage solution company SanDisk, because they were nearing my price targets. The profits helped finance increased exposure to names, such as Coca-Cola and Citigroup, which generate a significant proportion of profits in developing markets. Introduced new defensive names The consumer staples and telecommunications allocation was increased to include stable developed market names, such as Nestle and Vodafone, with catalysts for rerating. Additionally, Gudang Garam, an Indonesian tobacco business, and Mobile TeleSystems, a Russian mobile operator, tapped growth opportunities more directly. Materials sector remained attractive Underappreciated gold stocks expected to prosper amid market uncertainty and fertiliser names likely to benefi t from a favourable demand outlook were added. Amit Lodha takes over the management of the fund on 1 October.
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Stanlib Global Focus comment - Jun 10
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Thursday, 9 September 2010
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Fund Manager Comment
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Market Environment
Equity markets fell sharply, as investors grappled with a multitude of challenges to the global recovery. Initially, a cascading sovereign debt crisis highlighted the imbalances that many European economies face and drew attention to leverage and transparency issues in their banking system. Policymakers reacted by adopting austerity measures which, in turn, threatened the fragile economic revival. Growth challenges also emerged from China, where the government has taken steps to constrain loan growth, prevent the property sector overheating and keep inflation in check. Meanwhile, data releases in the US have started alluding to decelerating economic activity, as the effects of inventory replenishment and fiscal stimulus fade. Against this backdrop, investors have begun to reassess earnings expectations, which may be too high. However, the volatility has also created interesting opportunities - some firms with strong balance sheet and high free cash flow are very attractively valued.
Fund Performance
Despite tough market conditions, the investment thesis on key holdings played out and ensured the fund outperformed its benchmark over the quarter. A continued underweight exposure to besieged European equities also contributed to returns. Precious metal holdings gained Overweight positions in miners Red Back Mining, Randgold Resources and Goldcorp added value as gold prices rose amid the uncertainty. Overall, demand is outstripping supply, as more institutions with currency surpluses look to hold gold as a store value against inflation. I continue to favour firms likely to exceed production estimates, but look to minimise political risk by spreading the fund exposure across geographies. Industrials names lent support
The expected truck replacement cycle stemming from new emissions regulations and an outdated US fleet began to show through as truck manufacturer Navistar International reported better-than-expected quarterly results. Similarly, as anticipated, corporate restructuring story Ingersoll Rand benefitted from its new management's focus on margin improvements. Energy performance was mixed The oil spill in the Gulf of Mexico had a mixed impact on fund performance. Despite the prompt disposal of our holding in Anadarko Petroleum (which has a stake in the damaged oil rig), the position proved a drag on returns, somewhat tempered by our lack of exposure to BP.
Fund Positioning
The fund's continued bias towards the technology, materials and industrials sectors belies significant changes at holding level. I took profits in early cycle names that had performed well in areas such as semiconductor, chemicals, construction materials and transport. The resulting portfolio is more conservatively positioned, with a beta in line with the market. Technology and materials firms favoured The fund is positioned away from the most economically-sensitive areas such as semiconductor, bulk materials and basic metals. Technology holdings are skewed towards cheaply valued quality franchises with recurring revenues that generate high returns on capital invested. Meanwhile, positions in materials are primarily in gold and platinum producers, with selective exposure to chemicals, agro-related and cement manufacturers. Energy continues to present opportunities
I expect the Gulf of Mexico disaster to translate into higher oil extraction costs. We do not own stocks reliant on US fields for their growth story in view of likely increased regulation. I expect energy services firms to incrementally benefit, as extra-safety measures are required. Financials exposure reduced I sold interest-sensitive financials after it became clear that interest rates in the developed world were likely to remain low for longer in view of the deteriorating backdrop in Europe.
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Stanlib Global Focus comment - Mar 10
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Tuesday, 29 June 2010
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Fund Manager Comment
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Market Environment
Global equities were propelled higher by a combination of encouraging economic data and earnings announcements. Investor sentiment was lifted by evidence of stronger than- expected demand and GDP acceleration in the US and Asia. Reports underscoring a stabilisation in US job markets were also welcomed because they had positive implications for consumer sentiment and demand, and meant that households could potentially restart payments on loans they would otherwise have defaulted. On the corporate front, some developed market businesses started to witness sales growth after many quarters. This translated into high cash fl ow levels and stronger-than expected earnings, arising from cost cutting programmes last year. However, these positive developments masked concerns about the sovereign debt crises in some European nations, and the beginnings of monetary tightening in emerging markets facing inflationary pressures. This kept markets in check and ensured valuations remained reasonable.
Fund Performance
Robust returns from individual holdings and appropriate sector positioning led to the outperformance of the fund over the quarter. My decision to tap into emerging markets both from a resources and demand standpoint proved positive. A nonconsensus overweight in US stocks and underweight in Europe paid off, as sovereign debt concerns hurt the latter. Bid interest buoyed key holdings As anticipated, cash rich corporates looking for growth embarked on merger & acquisition activity. Thus, an exposure to targets Psychiatric Solutions, a health care company, and Airgas, an industrial gas distributor, contributed. In contrast, investors penalised Consol Energy, which they felt paid too much for a recent purchase of natural gas assets, ignoring its robust coal reserves. Developed market players with emerging markets operations lent support Encouraging exploration announcements at resource rich energy firms Pacific Rubiales Energy and Anadarko Petroleum and gold producer Red Back Mining strengthened gains. An end of December Colombian stock exchange listing further boosted Pacific Rubiales Energy, which has assets in Colombia and Peru. Health care positions added value Novo Nordisk, a play on diabetes growth received approval for a new diabetes drug in the US. Meanwhile, South African generics manufacturer Aspen Pharmacare's solid results underscored rising drug demand in developing markets.
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Stanlib Global Focus comment - Dec 09
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Friday, 19 March 2010
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Fund Manager Comment
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Given that I remain cautiously optimistic about the outlook for 2010, the fund's positioning has not changed meaningfully at sector and regional level. It remains overweight cyclical sectors, such as technology, materials and industrials. Overall, my preference is for companies that should see revenue growth, have done a great job in terms of cost cutting, and hence will have the greatest opportunity to surprise on earnings.
Added to the fund's industrials exposure
This is an area where the fund was previously underweight, but where I am currently finding businesses that have been very aggressive in cutting costs. I am convinced that the firms we own in the fund will have much higher margins in this cycle than they did in the prior cycle.
The underweight in financials was reduced further
Here, the fund has exposure to commercial banks, with a focus on those expected to gain market share in the developed world and a few well positioned banks in emerging markets. I also hold stock exchanges in Hong Kong and Brazil, and a few Asian and US property firms.
Maintained the underweight in defensives
I still don't find the valuations in areas like utilities, telecommunications and consumer staples that compelling. The relative growth the majority of these businesses have to offer is not attractive in the current environment.
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Stanlib Global Focus comment - Sep 09
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Monday, 30 November 2009
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Fund Manager Comment
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The fund posted robust absolute returns over the quarter, despite being underweight financials, the strongest performing sector. However, it marginally underperformed its benchmark. within the health care space, the temporary shutdown of a manufacturing unit hurt Genzyme. However, this orphan drug firm has a robust pipeline and will not be affected by pricing restrictions. Meanwhile, I sold Fresenius, another detractor, as FDA-related processing delays have pushed back its growth. In contrast, energy stock picking contributed. Non-exposure to Exxon Mobil, which is expensive, lent support, as it underperformed growth-oriented names, such as Anadarko Petroleum, where I am overweight. Elsewhere, among consumer discretionary holdings, investors welcomed Las Vegas Sands' deleveraging efforts; the casino owner and operator, which has high-quality assets, announced IPO plans to help fund previously halted projects. Meanwhile, a rebound in travel demand supported online travel agency Priceline.com.
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Stanlib Global Focus comment - Jun 09
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Friday, 18 September 2009
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Fund Manager Comment
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The fund outperformed its benchmark during the quarter.
Renewed optimism among investors supported the overweight stance in economically-sensitive stocks. Oil service firm Weatherford International and exploration and production company Niko Resources contributed strongly. The former's technological edge, visible growth from recent project awards and significant international upside potential give it an edge. The latter is witnessing operational momentum on key blocks and offers near-term production and reserves growth exposure. Similarly, materials names, such as bottle producer Owen Illinois, boosted returns, as investors expected demand to recover ahead of the summer season. Meanwhile, gold producer Goldcorp, added for its growth profile and as an inflation hedge, reported better-than-anticipated quarterly results.
In contrast, Burger King detracted due to weak sales resulting from competitive pressures and innovative marketing strategies from McDonald's. However, I believe that it has the scope to continue to close the gap.
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Stanlib Global Focus comment - Dec 08
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Wednesday, 25 March 2009
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Fund Manager Comment
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Over the quarter the fund underperformed its benchmark.
Although a cautious stance in energy stocks proved justified given falling demand, our positioning in the sector detracted. A lack of exposure to Exxon Mobil hurt relative returns, as investors flocked to blue chips. Conversely, natural gas play Chesapeake Energy and energy services business Weatherford International faced temporary setbacks. The latter's technological edge should help it gain market share, while the former's valuation discounts unreasonably low long-term gas prices.
Similarly, health care positions Alcon and Charles River Laboratories underperformed amid profit warnings. Nonetheless, Alcon has a robust product portfolio catering to the fast-growing eye diseases market, while provider of outsourced research Charles River has a unique product offering.
On a positive note, the defensive positioning of the fund, which was overweight consumer staples and underweight materials and industrials, supported returns.
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Stanlib Global Focus comment - Sep 08
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Friday, 14 November 2008
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Fund Manager Comment
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Over the quarter, the fund underperformed its benchmark.
Unlike last quarter, when exposure to energy and metals &mining stocks had buoyed returns, the performance of these holdings proved discouraging. Fears of a global slowdown made investors ignore firm-specific fundamentals. Niko Resources detracted despite the fact that it was exposed to limited commodity price downside, as the Indian government buys its output at a fixed price.
Elsewhere, underweights in expensively valued banks JP Morgan Chase and Wells Fargo hurt relative returns, given their potential to acquire assets cheaply. Hedge fund firm Man Group also detracted amid difficult market conditions. However, its funds have a strong track record, a low correlation to equities and carry high redemption fees.
In contrast, overweights in key consumer staples and health care firms added value. Household goods firm Energizer and food manufacturer Nestle gained from investors' preference for defensive stocks. The latter implemented successful cost controls.
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Stanlib Global Focus comment - Jun 08
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Thursday, 18 September 2008
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Fund Manager Comment
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The fund significantly outperformed its benchmark over the quarter.
Key positions in the energy sector buoyed returns. News that Oil Search and its partners had taken an important step towards setting up a landmark liquefied natural gas project in Papua New Guinea pleased investors. Meanwhile, Woodside Petroleum benefited from the improved pricing environment. Petrobras also remained in favour given its substantial reserves in a resource-scarce environment.
Elsewhere, a run-up in coal prices caused by a squeeze in global supplies supported the share prices of Arch Coal and Fording Canadian Coal Trust. Meanwhile, reports that miner Kazakhmys had raised its stake in Eurasian Natural Resources boosted the latter's shares and raised expectations of a merger.
Not owning General Electric proved beneficial after it reported a fall in quarterly earnings and cut its annual profit forecast due to the write-downs of assets impacted by the credit market crisis.
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Stanlib Global Focus comment - Mar 08
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Friday, 11 July 2008
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Fund Manager Comment
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Over the quarter, the fund underperformed its benchmark, although it maintained first-quartile positioning over a three-year period. Despite an underweight in financials, individual holdings detracted, as investors wary of the credit crisis indiscriminately sold off these stocks. The position in Babcock & Brown was impacted despite the firm's quality infrastructure base and robust outlook. Similarly, an exposure to Marfin Poplar and Turkiye Halk Bankasi was also detrimental. However, these banks enjoy significant loan growth opportunities.
Meanwhile, Siemens hindered fund performance after it announced substantial write-downs related to legacy contracts. The possibility of further such developments led me to reduce my position in the stock.
Conversely, metals & mining shares contributed. Holdings in ArcelorMittal and Impala Platinum were supported by favourable demand-supply dynamics, with the former focusing on developing markets at the expense of slowing developed economies.
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Stanlib Global Focus comment - Dec 07
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Thursday, 6 March 2008
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Fund Manager Comment
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Stock selection drove returns across all regions, particularly in the US.
A lack of exposure to selected US and European banks boosted relative returns amid significant capital base depletion due to risky asset exposure. Meanwhile, holdings in banks catering to the Emerging Markets, such as Unibanco, contributed to relative returns as they enjoyed robust growth opportunities.
Elsewhere, buoyant agricultural markets spurred demand for related chemicals. Mosaic benefited from tight fertiliser supplies, which pushed up prices even as the demand outlook remained positive. Monsanto also had a positive impact.
A major oil discovery, strong production growth and access to reserves supported the fund's off-benchmark position in Petrobras. Also, an upbeat outlook for Gazprom amid expectations of gas price increases and export growth to Europe supported gains.
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Stanlib Global Focus comment - Sep 07
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Tuesday, 27 November 2007
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Fund Manager Comment
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Over the quarter, the fund significantly outperformed its benchmark and was placed in the first quartile relative to its peers.
The fund's exposure towards the energy sector was tilted towards oilfield service stocks, such as Schlumberger and Weatherford International, which benefited from the strength in the price of crude oil and double-digit earnings growth.
A common theme across the top contributors was the ability to grow market share and generate strong cash flows. For example, Nestle and Procter & Gamble added value due to rising margins and strong organic top-line growth. Elsewhere, Cisco Systems share price rose due to good revenue-growth expectations for the next two years, underpinned by demand for network equipment.
Key holdings across a range of sectors outperformed. Numico, a baby food & clinical nutrition company, added value due to demand for its infant food products in Asia and a buy-out offer.
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Stanlib Global Focus comment - Jun 07
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Tuesday, 25 September 2007
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Fund Manager Comment
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During the quarter, the fund outperformed its benchmark.
Within the capital goods sector, MAN, Europe's third-largest truck manufacturer and engineering group, contributed to returns in light of the growing demand for trucks in Eastern and Central Europe. Atlas Copco, a global leader in compressors, also bolstered performance amid strong sales.
An off-benchmark holding in America Movil, a provider of wireless communications services in Latin America, enhanced returns in light of robust earnings driven by strong subscriber growth in Brazil and Mexico.
In the utilities sector, shares of German company E.ON rose after it did not proceed with a controversial acquisition. Subsequently, E.ON announced a buyback of its shares by the end of 2008 and raised its earnings guidance for 2007.
Conversely, holdings in selected real-estate companies detracted, largely due to concerns about higher interest rates and sub-prime mortgage problems in the US, prompting a sell-off in property investment trusts.
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Stanlib Global Focus comment - Mar 07
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Thursday, 24 May 2007
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Fund Manager Comment
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During the quarter, the fund outperformed its benchmark, the MSCI World Index. Within the information technology sector, a key contributor was Corning, the US-based company which provides specialised glass for LCD TV screens and components for telecommunications equipment. The shares rose after the company's fourth-quarter results exceeded investors' expectations. The outlook for LCD TV glass pricing also suggested that supply and demand could remain well balanced across the industry. A number of financial stocks enhanced performance. Specifically, a holding in real estate company Mitsubishi Estate proved profitable, as the firm was able to increase rentals in light of rising land prices and growing demand for office space in Japan. In the healthcare segment, the fund's holding in CSL performed well after the company announced better-thanexpected results.
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Stanlib Global Focus comment - Sep 06
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Monday, 26 March 2007
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Fund Manager Comment
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During the quarter, the fund returned 3.4% in US dollar terms, underperforming the benchmark index, which returned 4.5% over the same period. Stock selection in the energy and financial sectors weighed on fund performance. This was partly offset by positive security selection and an overweight exposure to the telecommunication services and information technology sectors. Although the fund was underweight the energy sector, poor returns from overweight holdings in Valero Energy and Occidental Petroleum more than offset that benefit. An overweight position in a financial services company also detracted from performance, after earnings growth fell short of market expectations. Conversely, exposure to US telecommunication services major AT&T, which is in the process of realising cost savings from mergers, worked well. In the information technology sector, exposure to a Canadian graphic chipmaker proved particularly beneficial. The stock rose amid news of the company being acquired by a US semiconductor company
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Stanlib Global Focus comment - Dec 06
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Monday, 26 March 2007
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Fund Manager Comment
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During the quarter, the fund returned 7.5% in US dollar terms, underperforming the benchmark index, which returned 8.4% over the same period. Holdings in a component-manufacturer for LCD screens and telecommunications equipment dampened returns. Investors were concerned that its sales expectations for the fourth quarter might be too high, and could result in excess inventories in early 2007. Exposure to an online gaming company also hurt performance after a change in US laws forced it to suspend operations in the US. Meanwhile, the fund's holding in the biggest insurer in a leading Asian economy made a positive contribution. Investors were attracted to its sizeable footprint in an underpenetrated industry that is expected to grow at a robust pace. Investments in select European telecommunication service providers also proved beneficial. These well-managed companies outperformed after they reported strong quarterly earnings and appear set to profit from trans-national growth opportunities.
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Stanlib Global Focus comment - Jun 06
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Tuesday, 28 November 2006
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Fund Manager Comment
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During the quarter, the fund returned -2.7% in US dollar terms, underperforming its benchmark index, which returned - 0.5% over the same period. The relative weakness of securities held in the diversified financial services and hotels, restaurants & leisure sectors hurt fund returns. For instance, Japan's largest leasing company performed poorly following news of its investments in an asset management company indicted for insider trading. Meanwhile, the publication of disappointing macroeconomic data precipitated the underperformance of an African financial institution held in the fund. Fund returns were reduced by the poor performance of United Health Group, the second-largest US health insurance firm. Despite continuing to report strong customer growth, the company is currently under investigation over alleged back-dating of stock options given to some of its top executives. Conversely, individual security selection and an underweight exposure to the retailing sector contributed to performance. Rising oil prices and strong demand led to the continued outperformance of oil & gas companies.
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Stanlib Global Focus comment - Mar 06
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Friday, 25 August 2006
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Fund Manager Comment
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Stock selection amongst diversified financial companies boosted to the fund's outperformance, and individual contributors included Deutsche Boerse. Lack of exposure to US banks continued to help portfolio performance, while a holding in a certain German bank contributed to returns. Stock selection in the energy sector enhanced performance. Although the portfolio is underweight the sector relative to the benchmark index, exposure to selected energy services and refining companies boosted returns after holding back performance during the previous quarter. Elsewhere, selected holdings in emerging-market telecommunications companies boosted returns, while performance was hampered by exposure to US healthcare companies, including UnitedHealth group, which performed poorly during the period.
The fund remained overweight technology, telecommunications, and healthcare during the quarter. After taking profits in selected technology holdings during the quarter, the manager found attractive opportunities amongst larger US technology companies. Exposure to telecommunication companies was increased, partly through market appreciation and partly through the addition of individual stock ideas, particularly those that are set to benefit from Mergers and Acquisitions activity. Within the natural resources sector, the manager prefers to have exposure areas with demand/supply imbalances. Accordingly, she found more stock ideas within the energy services and refinery sectors than in the materials sector, where bottlenecks are more scarce. At regional level, valuations across markets seem to have converged, which means that investors are not being rewarded for taking on additional risk. With this in mind, the manager increased exposure to developed markets, most notably to the US, where the portfolio was previously very underweight.
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Standard Bank Global Focus comment - Sep 05
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Tuesday, 20 December 2005
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Fund Manager Comment
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During the quarter, stock picking drove performance on a regional and sector basis. Stock picking in the energy sector contributed substantially to returns, given the high price of oil and natural gas, and disruptions to US supply. Selected holdings in the banks and diversified financials services sectors also helped performance.
Holdings in consumer services stocks hampered returns as consumer confidence deteriorated over the quarter. Carnival performed poorly as concerns over high fuel prices diluted positive news. The fund's underweight exposure to the automobiles sector also detracted from overall performance.
Returns were boosted by the fund's underweight exposure to North America, its overweight exposure to Europe, and stock picking in emerging markets. The fund's relatively low exposure to Japan proved negative, but was offset by strong returns from individual holdings.
The long-term positioning of the fund remained broadly unchanged over the third quarter, although the fund manager made some tactical changes.
The manager maintained the fund's weighting in selected oil refineries, due to increasing supply of oil that will be refined by a relatively small number of refineries.
She also boosted the fund's exposure to diversified financials, including Japanese credit card companies. The manager also bought real estate companies in Japan that are benefiting from rising land and property prices. Stocks that could suffer from lower US consumer spending - such as housebuilders and retailers - have been sold.
From a currency standpoint, the fund's overweight exposure to South East Asian companies, which are tied to the dollar, mitigates a long-term underweight stance towards the US.
The manager believes that attractive stock picking opportunities still exist in the technology sector, although there are better opportunities in the UStechnology sector than in Japan.
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Standard Bank Global Focus comment - Jun 05
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Thursday, 17 November 2005
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Fund Manager Comment
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Exposure to companies in the energy sector was the largest contributor to returns, given the persistently high oil price.
Selected pharmaceuticals holdings also positively contributed to performance. The share price of Roche Holdings rose significantly during the period as the company's relationship with Genentech has afforded it some good treatments for cancer.
Exposure to technology and telecommunications companies also helped during the quarter.
The fund's lack of exposure to US companies hurt performance, mainly due to the currency effect of a strengthening dollar, but this was tempered by the selection of companies in the Asia Pacific region.
The fund's exposure to Europe ex UK produced the greatest returns, although selected holdings in the US within a range of sectors contributed positively to the overall performance of the fund.
During the second quarter of 2005, the fund's long-term positioning remained broadly unchanged, although the fund manager made certain tactical changes.
From a currency standpoint, the fund's overweight exposure to stocks in the South East Asia region, which are tied to the dollar, mitigates a long-term underweight exposure to the US.
The manager believes that there are still attractive stock-picking opportunities in the technology sector, where inventories, which were high last year, have declined.
The manager has maintained the fund's weighting in selected oil refineries due to the increased demand for oil from a relatively small number of refineries, and in oil-services companies that help producers source oil that is difficult to extract.
In addition, the fund manager is looking for economically-sensitive companies, such as technology firms, and stocks within certain industrial sub-sectors that could benefit from any up tick in economic activity over the medium term.
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Standard Bank Global Focus comment - Mar 05
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Friday, 1 July 2005
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Fund Manager Comment
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Stock selection in emerging markets, most notably Korea and Estonia, was a key contributor to performance this quarter. Selected stocks in North America also added value, specifically oil and natural gas producers EnCana and Occidental Petroleum. Stock picking in the UK and Japan, however, detracted from performance over the same period. At a sector level, company selection in the energy sector, particularly companies in North America, positively contributed to performance.
Key detractors from performance included companies in the technology sector. Qualcomm, a long-term holding in the portfolio, suffered in line with the decline of the Nasdaq over the same period. Companies in the materials and consumer discretionary sectors also hurt relative returns.
Although the fund manager has taken profits in a number of emerging market stocks, there are further attractive opportunities in the region. This is in contrast to the UK, Continental Europe and the US, where compelling ideas are more difficult to find.
Exposure to the technology and telecommunication services sectors increased over the period as investment opportunities presented themselves, while the fund's exposure to the energy and materials sector rose partly because of market appreciation. Meanwhile, exposure to the financials, healthcare and consumer staples sectors fell as the fund manager took profits in selected companies.
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Standard Bank Global Focus comment - Dec 04
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Thursday, 17 March 2005
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Fund Manager Comment
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Stock selection in the Pacific Basin ex Japan, emerging markets and Japan proved particularly rewarding. However, these gains were offset by somewhat disappointing stock picking in the US and Europe. Stock selection in UKwas also unrewarding.
At sector level, exposure to commercial banking, pharmaceuticals, oil & gas and real estate industries boosted performance. Specifically, a large Baltic bank and a Spanish tobacco company contributed to returns. In addition, cruise- line operator Carnival and industrial conglomerate Tyco continued to add value over the period. Meanwhile selected holdings within the IT services, internet software & services, and diversified telecommunication services sectors reduced returns.
Over the period under review, the manager increased the fund's exposure to Asia Pacific and emerging markets stocks relative to the benchmark index. This occurred at the expense of European and UK equities. While the fund retained an overweight exposure to these regions, the positions were moved further in line with the benchmark weighting. Geographic weightings can deviate significantly from the benchmark index and are entirely a consequence of stock selection.
The manager aims to pick the winners from each global sector for the fund.
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Standard Bank Global Focus comment - Sep 04
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Monday, 29 November 2004
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Fund Manager Comment
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During the quarter, the fund returned -2.1% in US dollar terms, underperforming the benchmark MSCI World Index, which returned -1.0 over the same period. Stock selection in the US and UK was somewhat disappointing over the period. Individual investment decisions in Japan were also unrewarding, but the fund's low exposure to this market helped to limit losses. Similarly, stock picking in the Pacific Basin excluding Japan region and in emerging markets proved rewarding. On a global sector basis, exposure to the financials, industrials, energy, telecommunication services, materials, and utilities sectors increased at the expense of the consumer discretionary, information technology, and consumer staples sectors. Exposure to the health care sector remained unchanged from 30 June; however, the manager added to the fund's position in pharmaceuticals company Roche.
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