Page 177 - Profile's Unit Trusts and Collective Investments 2021 issue 2

Fund Manager Interviews

Please comment on the year ahead, and if possible estimate the performance of your fund
over 2 or 3 years. What are your targets and objectives for the year ahead?
While the benchmark for the Fund is CPI +5% p.a., we prefer to measure the performance
against a more appropriate benchmark, being the tech heavy Nasdaq Composite Index. The target
is to outperform the index over the longer term. The fund has managed to beat the index over the
last 2 and 3 year periods.
Technology stocks are providing the most opportunities at the moment, with excellent growth
prospects from some less familiar names that are emerging in this space.
2020 was an extraordinary year for the fund, with a return of 78% in rand terms for the year.
One cannot expect to replicate that performance annually; however, we do expect growth to
continue. We aim to continue to generate meaningful returns for investors by identifying
companies that have potential for high growth, have a sound business model, good financial
fundamentals and offer a service or product that satisfies a clear need either now or in the future.
Are equity markets in general overpriced? Do you anticipate a significant correction or will
the bull run continue?
One cannot express an opinion that covers all markets worldwide. We believe that advances in
digital technology will be the biggest driver of world economic activity over the next few decades.
The USA will remain in the forefront of the development and exploitation of that technology. We
will consequently focus on USA markets.
There is no doubt that USA markets are experiencing a very long growth phase. In the past
every growth phase has ended in a correction. We expect that history will repeat itself and that a
significant correction will occur sometime. The events that have sparked past market collapses
were varied and unforeseen. USA markets have always regained upward momentum and surpassed
previous valuations after a period of time.
We do not believe that anyone can reliably benefit from timing market fluctuations and we see
no merit in trying to predict a correction.
Which asset classes do you expect will give the best total rates of return over the next few years?
The fund is a long equity fund, with a small cash holding. We don't see this changing much over
the next few years. We intend to stay invested in equities as we expect this asset class will
outperform any other asset class over the long-term.
Innovation and technology are delivering so much change and opportunity in new markets and
products. We expect this to continue for the long term. Our job is to identify and invest in the
companies that lead these sectors and deliver excess growth and returns.
Offshore investments are heavily influenced by the rand. Please give your view on the rand
over the next 1, 3 and 5 years.
Currencies over the long term are a product of interest rate and inflation differentials. No one
can control nor predict exchange rate movements. Therefore we do not have a view or hedge
against currency fluctuations.
In the long run, being invested in quality high momentum growth stocks should trump any
exchange rate noise. In fact, the rand’s appreciation against the dollar over the past 5 years is
insignificant.

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Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts