2. CONFIDENTIAL2 | Absa Stockbrokers and Portfolio Management
Craig Pheiffer,
CFA
BSc, MCom
27 years
experience in the
Financial
markets
Jan Kriel,
CFA
BCom Hons
5 years
experience
Chief Investment Strategist
Portfolio Managers:
Angela
Ngcemu
Bbsc Hons,
CFA Level II
candidate
Trainee
Portfolio
Manager
Chris
Thompson,
CFA
BCom Hons
7 Years
Experience
Vivek
Pursad
BSc
Actuarial
Science, BSc
Hons Stats
15 years
experience
Shaun
Jardine
BCom Hons
16 years
experience
Neo Kgantsi
BSc Hons
Actuarial
Sciences,
MSc Finance
19 years
experience
Lance
Gordon
BCom
21 years
experience
The Portfolio Management
team is responsible for
managing and implementing
the investment strategy and
actively monitoring the
portfolios.
We have portfolio managers
based in various regions to
provide personal face to
face service.
SPM Investment Committee
3. CONFIDENTIAL3 | Absa Stockbrokers and Portfolio Management
Investment Philosophy
Macro
Economic
Overview
Asset Allocation
Sector
Allocation
Implement &
Review
Stock Selection
Top Down /
Bottom Up
Alignment
Institutional & Internal Research
The Top-down element of the strategy incorporates a comprehensive analysis of the global and local economies in
order to identify key themes. The outcome is a clear view on expected returns from the various asset classes and the
relative performance of various sectors within each asset class. (For example within equities - resources, industrials,
financials).
Within the Bottom-up process, the prospects of individual instruments are analysed within each asset class and
sector.
Security selection is firmly guided within each asset class:
- Equities and Property - Value and long-term growth prospects are analysed and relayed into expectations of the
future earnings growth and/or dividends or distributions.
- Bonds, Cash and Preference Shares – Interest rate environment together with our expectations are considered to
manage duration. Credit exposure is added where deemed appropriate.
Our investment process is
based on a top down or
thematic view, supported
macro research,
combined with our own
bottom-up fundamental
research.
7. CONFIDENTIAL7 | Absa Stockbrokers and Portfolio Management
Local Portfolios
Brokerage Fees: 0,40% of the value of the transaction (no minimum) + standard regulatory and STRATE Fees.
Fee Schedule
AM Fee Advice Fee Platform Fee Performance Fee
Non-controlled Accounts 0.80% 0.00% -1.00% 0.00% 0.00%
*Fees are exclusive of VAT.
Non-Controlled Accounts: Funds invested via an investment platform (e.g. Retirement Annuities, provident funds, Living annuities, etc.)
9. CONFIDENTIAL9 | Absa Stockbrokers and Portfolio Management
Absa Local Equity Portfolio
Portfolio Overview
The objective is to exceed the performance of the FTSE/JSE All Share Index over the
longer-term. Shares selected are usually from the top blue-chip companies listed on
the JSE (represented in the Top40 Index) but may also be selected from the middle
range of companies represented in the FTSE/JSE Mid Cap Index. The Equity Portfolio
has a traditional share portfolio structure, being almost fully invested in FTSE/JSE-
listed equities. It generally contains between 18 and 22 holdings and is therefore
sufficiently diversified. Holdings are chosen via a rigorous investment process that
selects the shares with the most favorable forecast returns on a rolling one and two-
year basis.
Asset Allocation
Top Holdings
Risk profile and investment term
Low Low-Medium Medium Medium-High High
3 months + 6 months + 2 Years + 3 Years + 5 Years +
Performance
0
100
200
300
400
500
600
Feb-09
Jul-09
Dec-09
May-10
Oct-10
Mar-11
Aug-11
Jan-12
Jun-12
Nov-12
Apr-13
Sep-13
Feb-14
Jul-14
Dec-14
May-15
Oct-15
Mar-16
Aug-16
Jan-17
Jun-17
Nov-17
Apr-18
Sep-18
Feb-19
SPM Local Equity JSE ALSI
4%
14%
82%
Cash
Offshore Equity
Local Equity
10. CONFIDENTIAL10 | Absa Stockbrokers and Portfolio Management
Dis-Chem
Bidvest
First Rand
Standard Bank
PSG
Old Mutual
Discovery
Sanlam
British American Tobacco
AB Inbev
Naspers
BHP Group
Sasol
Anglo American
Mondi
Richemont
Bid Corp
Quilter
Sygnia Itrix MSCI world &
US ETF
Portfolio Strategy
Defensive
(8%)
Cyclicals
(89%)
SA Inc.
(27%)
Rand Hedged
(70%) Cash holdings: 3.5%
11. CONFIDENTIAL11 | Absa Stockbrokers and Portfolio Management
* JSE ALSI
Performance as of 31/05/2019. Portfolio performance figures are net of fees and calculated
using Time-Weighted Returns.
Absa Local Equity Portfolio Annualized Performance
Period Local Equity Portfolio Portfolio Benchmark*
1 Year 4.39% 2.43%
3 Years 6.52% 5.18%
5 Years 6.66% 4.17%
10 Years 13.78% 12.59%
Calendar Performance
Period Local Equity Portfolio Portfolio Benchmark*
2018 -9.61% -8.50%
2017 22.20% 21.00%
2016 -7.22% -4.62%
2015 6.72% 5.10%
2014 11.68% 10.90%
2013 24.32% 21.40%
2012 29.89% 26.70%
Portfolios were compared to their relevant ASISA peer groups. All numbers are net of fees.
The peer group range, indicated by the coloured bars, show the range between the 5th and 95th percentile of the peer
group. This provides an indication of how the peer group is performing, while excluding outliers.
All metrics are calculated over a 36-month measurement period.
All data is till 31/03/2019
7.32 7.35
11.90
0.95
5.09
(0.00) 0.04 0.09
6.03
0.00
0.92 0.97
-5
0
5
10
15
20
25
Risk-Return Metrics
12. CONFIDENTIAL12 | Absa Stockbrokers and Portfolio Management
Personal Portfolio Range
13. CONFIDENTIAL13 | Absa Stockbrokers and Portfolio Management
Low Medium High
PotentialReturn
Low
High
Potential Risk
Our personal portfolios are
managed according to the
guidelines as set out in Regulation
28 of the Pension Fund Act and is
suitable for pension fund
investment selection.
The strategic asset allocation
(SAA) for each risk profile is
determined via a rand risk-
optimised process executed by the
Asset Allocation Committee of the
Absa Global Solutions and
Investments team.
SPM populates the SAA with
individual shares/bonds or
financial instruments or exchanged
traded funds and collective
investment schemes where
appropriate.
Accumulation
Preserver
Growth
Personal Portfolios Risk profile (Reg 28 compliant)
Strategic asset allocation of the high-, medium- and low-risk portfolios
14. CONFIDENTIAL14 | Absa Stockbrokers and Portfolio Management
Absa Personal Portfolio - Preserver
Portfolio Objective & Strategy
The Absa Preserver Personal Portfolio objective is to preserve capital over the long-
term and to minimise the probability of capital loss over the medium-term. Our
philosophy is rooted in strategic asset allocation (SAA). Diversification benefits are
achieved as each asset class does not respond in the same manner to market
movements, and as such, asset allocation is the primary driver of both investment
performance and portfolio risk. The portfolio is managed according to the guidelines
as set out in Regulation 28 of the Pension Fund Act and is suitable for pension fund
investment selection.
Asset Allocation
Investment performance
Annualized Returns – 31 May 2019
Portfolio 1 Year Return 2 Year Return
Preserver Personal Portfolio 7.80% 6.40%
CPI + 2% 6.39% 6.44%
Figures present actual portfolio performance after all fees for the one-year period with back-tested passive
performance for three years.
Performance as of 31/05/2019. Portfolio performance figures are net of fees and calculated using Time-
Weighted Returns.
Risk profile and investment term
Low Medium High
2 Years + 3 Years + 5 Years +
4%
5%
10%
14%
14%
54%
Alternatives
Local Property
Local Bonds
Offshore Equity
Local Equity
Cash
15. CONFIDENTIAL15 | Absa Stockbrokers and Portfolio Management
Absa Personal Portfolio - Accumulation
Portfolio Objective & Strategy
The Absa Accumulation Personal Portfolio objective is to provide investors access to
capital growth over the long term and may exhibit high levels of return volatility and
possible capital loss over the short term. Our philosophy is rooted in strategic asset
allocation (SAA). Diversification benefits are achieved as each asset class does not
respond in the same manner to market movements, and as such, asset allocation is
the primary driver of both investment performance and portfolio risk. The portfolio is
managed according to the guidelines as set out in Regulation 28 of the Pension Fund
Act and is suitable for pension fund investment selection.
Asset Allocation
Investment performance
Annualized Returns – 31 May 2019
Portfolio 1 Year Return 2 Year Return
Accumulation Personal Portfolio 7.50% 6.20%
CPI + 3% 7.39% 7.44%
Risk profile and investment term
Low Medium High
2 Years + 3 Years + 5 Years +
Figures present actual portfolio performance after all fees for the one-year period with back-tested passive
performance for three years.
Performance as of 31/05/2019. Portfolio performance figures are net of fees and calculated using Time-
Weighted Returns.
6%
7%
16%
22%
22%
27%
Alternatives
Local Property
Local Bonds
Offshore Equity
Local Equity
Cash
16. CONFIDENTIAL16 | Absa Stockbrokers and Portfolio Management
Absa Personal Portfolio - Growth
Portfolio Objective & Strategy
The Absa Growth Personal Portfolio provides investors access to capital growth over
the long term and may exhibit high levels of return volatility and possibly capital loss
over the short term. Our philosophy is rooted in strategic asset allocation (SAA).
Diversification benefits are achieved as each asset class does not respond in the
same manner to market movements, and as such, asset allocation is the primary
driver of both investment performance and portfolio risk. The portfolio is managed
according to the guidelines as set out in Regulation 28 of the Pension Fund Act and is
suitable for pension fund investment selection.
Asset Allocation
Investment performance
Annualized Returns – 31 May 2019
Portfolio 1 Year Return 2 Year Return
Growth Personal Portfolio 7.50% 5.45%
CPI + 5% 9.06% 9.05%
Risk profile and investment term
Low-Medium Medium High
2 Years + 3 Years + 5 Years + Figures present actual portfolio performance after all fees for the one-year period with back-tested passive
performance for three years.
Performance as of 31/05/2019. Portfolio performance figures are net of fees and calculated using Time-
Weighted Returns.
4%
8%
10%
20%
29%
29%
Cash
Alternatives
Local Property
Local Bonds
Offshore Equity
Local Equity
17. CONFIDENTIAL17 | Absa Stockbrokers and Portfolio Management
Absa Global Equity Portfolio
Available as a ETN on ALI Platform
18. CONFIDENTIAL18 | Absa Stockbrokers and Portfolio Management
Our views on the macro and
investment cycle will instruct
our thoughts on which
sectors and geographies we
might favour at any given
time
A quantitative approach to
valuation and an
understanding of the growth
drivers are central to our
bottom up selection process
Quant Screens Macro Screens Valuations
Portfolio
Construction
MSCI AC World
Developed Markets
and Emerging
Markets but
excluding South
African listed
companies
> $25bn market cap
> $50m daily liquidity
• Identify Macro themes
that represent tailwinds
for the a sector or
region and those that
represent headwinds
Analyse a wide range of
valuation metrics relative
to history and peer group
Metrics include P/E, P/B,
PEG ratios, EV/Sales,
FCF, DY
Maximise reward/risk,
and minimise specific
risk
Consider cyclicality of
business and market
cycle
Control unwanted
systematic risks
Sector diversification
based on pre-defined
macro trends
Global Equity Markets
Companies:
~2500
Companies:
350-500
Companies:
125-175
Companies:
50-70
Companies:
20-30
The Global Equity portfolio takes a number of sizeable active bets to try and generate
outperformance through concentration.
Step 1 Step 2 Step 3 Step 4 Step 5
Equity screen selection process
19. CONFIDENTIAL19 | Absa Stockbrokers and Portfolio Management
We identify strong macro
themes that will drive
performance and reduce risk
Big brands – Investing in well know brands has historically outperformed the overall market and these companies tend to
posses the characteristics that make a good investment namely; financial strength, good management, and a competitive
edge.
An Ageing demographic– The greying of America, Japan and Europe is a secular trend facing the these countries and this
demographic trend will support long term growth within sectors such as heath-care, senior housing and travel for the
elderly.
Technology, Media and Telecoms – these sectors will continue to grow in the medium to long-term. We look for
companies within these sectors that offer growth at a reasonable price and are very well established in there market. Size
matters.
BIG BRANDS
AGEING
DEMOGRAPHIC
TECH &
TELECOMS and
Media
Boeing, Visa
Unilever, Prudential and Diageo
J&J, Roche
Ventas
Comcast, Alibaba, United Technologies,
and China Mobile
Our global macro themes
GROWING
MIDDLE CLASS
MILLENIALS
Expedia, Estee lauder, Disney
Expedia, Estee lauder, Visa
21. CONFIDENTIAL21 | Absa Stockbrokers and Portfolio Management
Absa Global Equity Portfolio
Sector Allocation
Annualized Returns in USD
To Date 31 March 2019 1 Year 2 Years 5 Years
Absa Global Equity Portfolio 6.01% 6.46% n/a
MSCI World Index TR 6.48% 9.80% 11.39%
Source: Absa Stockbrokers and Portfolio Managers
Performance as of 30/04/2019. Portfolio performance figures are net of fees and calculated using Time-weighted
rate of return.
The primary objective of the portfolio is to provide above-average total
returns over the medium to long-term, by investing in shares listed offshore.
Our approach combines a top-down and bottom-up analysis not constrained
by one particular investment style. We believe the best returns come from a
flexible approach during different economic and market cycles. Holdings are
chosen using a clearly defined investment process that selects companies
with favourable fundamentals that are supported by a macro tailwind or
secular trend. The portfolio is dominated by companies with high quality
durable business models that exhibit good long term prospects driven by an
identified trend or theme.
Portfolio Overview
Top Holdings
17%
14%
13%
12%
11%
10%
9%
8%
3%
3%
Information Tech.
Health care
Communication
Cons. Discretionary
Consumer Staples
Financials
Cash
Industrials
Real Estate
Energy
23. CONFIDENTIAL23 | Absa Stockbrokers and Portfolio Management
ASISA Low Equity Sector
1 Year 2 Years 3 Years 5 Years 10 Years
Absa Personal Portfolio - Preserver 7.80% 6.40%
Asisa Low Equity mean returns 5.97% 5.27%
Absa personal portfolio - Preserver rank 25 33
ASISA low equity # of funds 167 158
Absa Personal Portfolio quartile rank 1st 1st
ASISA Medium Equity Sector
1 Year 2 Years 3 Years 5 Years 10 Years
Absa Personal Portfolio - Accumulation 7.50% 6.20%
Asisa Medium Equity mean returns 4.89% 4.22%
Absa personal portfolio - Accumulation rank 10 11
ASISA Medium equity # of funds 97 91
Absa Personal Portfolio quartile rank 1st 1st
ASISA High Equity Sector
1 Year 2 Years 3 Years 5 Years 10 Years
Absa Personal Portfolio – Growth 7.50% 5.45%
Asisa High Equity mean returns 3.71% 3.61%
Absa personal portfolio - Growth rank 14 30
ASISA High equity # of funds 210 200
Absa Personal Portfolio quartile rank 1st 1st
ASISA High Equity Sector
1 Year 2 Years 3 Years 5 Years 10 Years
Absa Balanced Portfolio 8.28% 2.71% 5.75% 6.70% 12.26%
Asisa High Equity mean returns 3.71% 3.61% 2.77% 5.23% 9.98%
Absa Balanced Portfolio rank 8 138 13 15 1
ASISA High equity # of funds 210 200 176 120 56
Absa Balanced Portfolio quartile rank 1st 3rd 1st 1st 1st
ASISA SA General Equity Sector
1 Year 2 Years 3 Years 5 Years 10 Years
Absa Local Equity Portfolio 4.39% 5.17% 6.52% 6.66% 13.78%
ASISA SA General Equity mean returns 0.03% 1.40% 1.30% 3.41% 10.78%
Absa Local Equity Portfolio rank 24 25 8 10 3
ASISA SA General Equity # of funds 203 188 167 132 80
Absa Local Equity Portfolio quartile rank 1st 1st 1st 1st 1st
Morningstar Ranking – 31 May 2019
The above study assumes that SPM portfolios are unit trusts. SPM Portfolio returns are net of all fees including average financial advisor fee as well as DWT
Source: Morningstar and internal
Indices
1 Year 2 Years 3 Years 5 Years 10 Years
Beassa ALBI TR ZAR
FTSE/JSE All Share TR ZAR
FTSE/JSE SA Listed Property TR ZAR
SA CPI Synthetic(Headline)
STeFI Composite ZAR
24. CONFIDENTIAL24 | Absa Stockbrokers and Portfolio Management
FAIS Notice and Disclaimer
Disclaimer and FAIS Notice
This document (together with any associated verbal presentation) (this “document”) is provided on the express understanding that the information contained therein would be regarded and treated as proprietary to
Absa Stockbrokers and Portfolio Management (“SPM”) and shall not be regarded as research material of any kind and is for illustrative purposes only. This document shall not be reproduced without the prior written
consent of SPM. This document shall not be used, in whole or in part, for any purpose other than for the consideration of the information set out therein. This document has been prepared solely for information
purposes and accordingly does not constitute an offer, a solicitation of an offer, invitation to acquire any security or to enter into any agreement, or any advice or recommendation to conclude any transaction
(whether on the indicative terms or otherwise) nor does it create any liability or obligation on the part of SPM and must not be deemed as such. Neither SPM, nor any affiliate, nor any of its respective officers,
directors, partners, or employees accepts any liability whatsoever for any direct or consequential damages or loss arising from any use of this document and its contents.
Any information, illustrative prices, technical views, disclosure materials or analyses provided to you have been prepared on assumptions and parameters that reflect good faith determinations by SPM and do not
constitute advice by SPM and it should not be relied upon as such. The information, assumptions and parameters used are not the only ones that might reasonably have been selected and therefore no guarantee is
given as to the accuracy, completeness, or reasonableness of any such information, quotations, disclosure or analyses.
The past performance of any securities or other products is not an indication of future performance. No representation or warranty is made that any indicative performance or return indicated will be achieved in the
future.
Any transaction or agreement to perform certain services that may be concluded pursuant to this document and/or any associated verbal presentation shall be in terms of and confirmed by the signing of
appropriate documentation, on terms to be agreed between the relevant parties.
Prospective investors should obtain independent advice in respect of any product detailed in this document as SPM provides no opinion or advice including investment, tax or legal advice and makes no
representation or warranty about the suitability of a product for a particular client or circumstance.
Transactions described in this document may give rise to substantial risk and are not suitable for all investors. This information is to be used at your own risk and SPM makes no representation with regards to the
correctness of the information herein. By accepting this document, you agree to be bound by the foregoing terms and limitations.
The views in this document are those of SPM and are subject to change, and SPM has no obligation to update its views or the information in this document.
Absa Stockbrokers and Portfolio Management Pty Limited is a Member of the JSE Equity Market, Registered Credit Provider Reg. No. NCRCP68, and an Authorised Financial Services Provider with FSP No 45849.
Absa Stockbrokers and Portfolio Management is a wholly owned subsidiary of Barclays Africa Group Ltd and complies with Absa's privacy and security policies. However, business is conducted directly with Absa
Stockbrokers and Portfolio Management (Pty) Ltd.