Investor sentiment is often affected by the most recent events and since sentiment is a powerful driver of both expectation and decision making, it is of utmost importance for any investor to continually, and soberly balance their views with longer term perspectives.

1. Investor sentiment is often affected by the most recent events and since sentiment is a powerful
driver of both expectation and decision making, it is of utmost importance for any investor to
continually, and soberly balance their views with longer term perspectives.
To create context, Graph 1 below shows the cumulative return of the RCIS THINK Growth QI
Hedge Fund (“Our Fund”) and the JSE All Share Index TR (“JSE”) since inception and Graph 2
the calendar year breakdown of the same return, displayed in blue and black respectively.
In looking at these graphs one might be inclined to focus on the potential of correctly timing
investments in order to have fully benefited from hedge fund exposure in 2015 and the equity
index returns of 2017. Realistically however, the start of 2015 brought no clear promise of strong
returns from both long and short positions held by hedge funds, nor did 2017 pledge a 20.95%
equity return, which was largely due to Naspers’ calendar year return of 71.80%. In fact, rather
than correctly timing the market it would have been more likely that a sentimental investor
increased equity exposure towards the end of 2017 only to be exposed to the tail end of the equity
rally followed by an incredibly volatile 2018, that brought a year to date loss of -3.84% (-8.00% for
SWIX) as at 30 September 2018.
How then should we invest?
As market shocks and surprises are abundant, an
investment strategy based on timing investments will be
lacking compared to one based on strategically
constructing portfolios for the long term. If one cannot
effectively time the market, diversification should rather
make a portfolio adaptable to any type of market. This
can be done by constructing a portfolio that is able to
sufficiently protect invested capital even when
investment views prove to be wrong or amidst severe
market shocks, and yet participate well when
opportunities arise.
Investing for all Seasons
By Elmien Wagenaar & Kobus Jansen van Vuuren
Comment:
September 2018
90
100
110
120
130
140
Oct2014
Jan2015
Apr2015
Jul2015
Oct2015
Jan2016
Apr2016
Jul2016
Oct2016
Jan2017
Apr2017
Jul2017
Oct2017
Jan2018
Apr2018
Jul2018
CumulativeReturn
Graph 1: Cumulative Returns
1 Nov 2014 to 30 Sep 2018
JSE All Share Index TR
RCIS THINK Growth QI Hedge Fund
5.13%
2.63%
20.95%
-3.84%
21.41%
-0.94%
5.91%
1.49%
-10%
-5%
0%
5%
10%
15%
20%
25%
2015 2016 2017 2018 YTD
CalendarYearReturns
Graph 2: Calendar Year Return
to 30 Sep 2018
JSE All Share Index TR
RCIS THINK Growth QI Hedge Fund
“If one cannot
effectively time the
market, diversification
should make a portfolio
adaptable to any type
of market”
Sources: Realfin Fund Services, JSE

2. The THINK strategy was developed within a private client asset management environment over a
16-year period specifically for clients seeking exposure to the alternative source of return hedge
funds can provide. These investors however did not necessarily appreciate the often large
sacrifices of upside potential typically necessary to protect capital at all costs. In order to provide
a solution to these clients, a hedge fund strategy was developed with the following priorities
• First priority: Return generation through hedge fund skills
• Second priority: Good risk management
The 2015 return displayed the strong return generating ability of the alternative strategy, while
2018 showed strong downside protection.
The more granular outcome of this strategy is displayed in Graph 3 and Graph 4, which
respectively show our Fund’s monthly returns in JSE down-months and JSE up-months. Our
Fund’s ability to adapt to any market can be witnessed in the effective downside protection
producing returns that are uncorrelated to the JSE in equity market negative months, while in
equity up-months our Fund is able to sufficiently participate in equity returns, as can be seen by
the positive trendline in Graph 4.
Note that our Fund showed some negative returns while the JSE was down and some when the
JSE was up. However, the cumulative effect of protection and participation has resulted in the
outperformance of the JSE since inception as displayed in Graph 1. The alternative sources of
return enabled our Fund to both protect invested capital and generate return at times when
equities did not. Hedge Fund exposure is therefore a very beneficial diversifier to a more
strategically constructed portfolio.
September 2018
-4%
-2%
0%
2%
4%
-5% -4% -3% -2% -1% 0%
THINKMonthlyReturns
JSE Monthly Returns
Graph 3: RCIS THINK Growth QI Hedge
Fund Returns in JSE Down-months
1 Nov 2014 to 30 Sep 2018
-1%
0%
1%
2%
3%
0% 2% 4% 6% 8%
THINKMonthlyReturns
JSE Monthly Returns
Graph 4: RCIS THINK Growth QI Hedge
Fund Returns in JSE Up-months
1 Nov 2014 to 30 Sep 2018
Sources: Realfin Fund Services, JSE

3. IMPORTANT INFORMATION
Collective Investment Schemes are generally medium- to long-term investments. The value of participatory interests (units) may go down as well as up and past
performance is not necessarily a guide to future performance. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. A
schedule of fees and charges and maximum commissions, is available on request from RCIS. RCIS does not provide any guarantee in respect to the capital or the
return of the portfolio. RCIS reserves the right to close the fund to new investors if we deem it necessary to limit further inflows in order for it to be managed in
accordance with its mandate. CIS prices are calculated on a net asset basis, which is the total value of all the assets in the portfolio including any income accruals
and less any permissible deductions (brokerage, STT, VAT, auditor’s fees, bank charges, trustee and custodian fees and the annual management fee) from the
portfolio divided by the number of participatory interests (units) in issue. Forward pricing is used. The Fund's Total Expense Ratio (TER) reflects the percentage of
the average Net Asset Value (NAV) of the portfolio that was incurred as charges, levies and fees related to the management of the portfolio. A higher TER does
not necessarily imply a poor return, nor does a low TER imply a good return. Calculations are based on actual data where possible and best estimates where
actual data is not available. The manager has applied its mind in the calculation of the TER, taking into account the application of the ASISA standard for CIS
securities and applying it in the context of hedge fund portfolios, and using fair estimates, where necessary, to arrive at a figure that is materially correct without
being misleading. The Manager holds the view that the TER excl. performance fees represents a reliable figure until a 12 month track record exists, as any TER
reporting including performance fees is likely to be unreliable and potentially misleading as performance fees cannot be estimated/annualised without forecasting
portfolio growth and misleading investors. Performance has been calculated using net NAV to NAV numbers with income reinvested. The performance for each
period shown reflects the return for investors who have been fully invested for that period. Individual investor performance may differ as a result of initial fees, the
actual investment date, the date of reinvestments and dividend withholding tax. Full performance calculations are available from the manager on request. The
investment performance is for illustrative purposes only. The investment performance is calculated by taking the actual initial fees and all ongoing fees into
account for the amount shown. Income is reinvested on the reinvestment date. Other fees include the permissible deductions of brokerage, STT, VAT, bank
charges, trustees and custodian fees incurred in the ordinary course of running the Fund. The Portfolios are third-party named portfolios, managed by Think
Capital Investment Management Proprietary Limited (“THINK.CAPITAL”), an authorised financial services provider. RCIS retains full legal responsibility for these
Portfolios as manager in terms of CISCA. Where foreign securities are included in a portfolio there may be potential constraints on liquidity and the repatriation of
funds, macroeconomic risks, political risks, foreign exchange risks, tax risks, settlement risks; and potential limitations on the availability of market information.
Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. The investor acknowledges the
inherent risk associated with the selected investments and that there are no guarantees. Where you select a Portfolio which is a fund of funds portfolio, it invests in
portfolios of collective investment schemes that levy their own charges, which could result in a higher fee structure for the fund of funds. Excessive withdrawals
from the fund may place the fund under liquidity pressure and in such circumstances, a process of ring-fencing of withdrawal instructions and managed pay-outs
over time may be followed. Where all required documentation is not received before the stated cut off time RCIS shall not be obliged to transact at the net asset
value price as agreed to. Funds are priced monthly depending on the nature of the Fund. Prices are published monthly and are available on the RCIS website.
RealFin Collective Investment Schemes (RF) Proprietary Limited is registered and approved by the Financial Sector Conduct Authority as a manger of Collective
Investment Schemes approved in terms of the Collective Investment Schemes Control Act and has delegated the investment management function to
THINK.CAPITAL an authorised financial services provider (FSP 46714) in terms of the FAIS Act, a category IIA financial services provider. Further information on
the RCIS THINK Growth QI Hedge Fund can be found on RCIS website including brochures, application forms and annual and half-yearly annual reports.
DISCLAIMER
This document is for information purposes only and does not constitute or form part of any offer to issue or sell or any solicitation of any offer to subscribe for or purchase any particular
investments. Opinions expressed in this document may be changed without notice at any time after publication. We therefore disclaim any liability for any loss, liability, damage (whether
direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable directly or indirectly to the use of or reliance upon the
information.
RCIS - Management Company
Company Registration Number
2013/170284/07
Physical Address
1st Floor, Silverberg Terrace, Steenberg
Office Park, Silverwood Close, Tokai,
Cape Town, 7945
Postal Address
Suite 25, Private Bag X16, Constantia,
7848, Cape Town
Telephone number
+27 21 701 3777
Email Address
admin@realfin.co.za
Website
www.realfin.co.za
THINK.CAPITAL - Fund Manager
Company Registration Number
2014/171403/07
Physical Address
Unit F12, Willowbridge Centre, 39 Carl
Cronje Drive, Tyger Valley, Cape Town
Postal Address
6 Drostdy Street, Panorama, Parow, 7500
Telephone number
+27 21 001 2372
Email Address
info@thinkcapital.co.za
Website
www.thinkcapital.co.za
Financial Services Provider Number
FSP 46714
Produced on 9 October 2018
Website: www.thinkcapital.co.za
Email: info@thinkcapital.co.za
Telephone: +27 21 001 2372