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AAB value fund 31 december 2016
- 1. BOTSWANA VALUE FUND DECEMBER 2016 Statutory disclosure and general terms and conditions: Unit trusts are generally medium to long term investments. The value of units may go down as well as up and past performance is no indication of future growth. Allinformation and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such information or opinion without appropriate professional advice after a thorough examination of a particular situation. We endeavour to provide accurate and timely information but we make no representation or warranty, express or implied, with respect to the correctness, completeness of the information and opinions. We do not undertake to update, modify or amend the information or accuracy on a frequent basis or to advise any person if such information subsequently becomes inaccurate. Any representationor opinion is provided for information purposes only. FUND PARTICULARS Fund Managers: Justin de Klerk, Chandapiwa Majola & Lorato Kedisitse Fund Type: Botswana Balanced Fund Currency: BWP denominated Composite Benchmark: 65% Domestic Equities Index & (35% Cash + 2%) Fund Start Date: 17 December 1998 Fund Size: BWP 68.5 Million Minimum Investment: BWP 200 lump sum or BWP 100 monthly Initial Fee: Max 5% Annual Management Fee: Max 2% Income Distribution: April and October Trustee & Custodian: Stanbic Bank Botswana Auditors: KPMG RETURNS TO UNIT HOLDERS AS AT 31 DECEMBER 2016 Value Fund Benchmark Quarter -4.79% -2.42% Six months -3.90% -3.99% 1 Year -2.85% -6.68% 3 Years (annualized) 8.65% 1.83% Inception (annualized) 12.01% 5.05% Fund returns are gross of standard management fees and net of all other costs TOP FIVE EQUITY HOLDINGS AS AT 31 DECEMBER 2016 Security % of Fund Letshego 9.67% Sefalana 8.91% Choppies 7.03% RDC Properties 6.61% Turnstar 5.22% PORTFOLIO COMPOSITION AT 31 DECEMBER 2016 CONTACT DETAILS African Alliance Botswana African Alliance House, Fairgrounds Office Park, Gaborone PO Box 2770, Gaborone Telephone: +267 364 3900 Facsimile: +267 318 8956 Email: info@africanalliance.co.bw Internet: www.africanalliance.com FUND MANAGER’S COMMENTS The AA Botswana Value Fund was down 4.79% for the period under review, underperforming its benchmark by 2.37%. Underperformance was primarily due to security selection, whilst asset allocation had minimal impact on relative returns due to our neutral position in equities. The DCI was down 4.04% over the quarter, falling for the sixth consecutive quarter, while the FABI was up 1.09%. The fund’s overweight positions in property stocks, RDC Properties and Turnstar were positive contributors to relative performance. However, the fund’s overweight positions in Choppies and Sefalana, as well as off- benchmark positions, Lucara and NewGold, were the key detractors from performance. Choppies’ share price fell following the release of lower earnings in the prior quarter, poor sentiment in the SA retail sector and a challenging trading environment in some key markets. Sefalana successfully completed a rights issue in December, with 100% of the offer shares taken up by shareholders, including the fund. We continue to favour equities over bonds and money market instruments, as we believe equities remain relative attractive in terms of valuation. Within equities, we remain cautious on the banking sector, however we remain positive on businesses with a strong regional presence. We also favour property stocks with limited exposure to the commercial space, given the oversupply of property in this space and consequently pressure on yields. Within fixed income, we remain biased towards shorter duration and floating instruments in the corporate sector, as we maintain our view that we are at the bottom of the interest rate cycle and see significantly more value in corporate versus government paper. INVESTMENT AIM The primary objective of this Fund is to seek long-term capital growth, consistent with moderate investment risk and a reasonable level of current income, by investing in domestic financial instruments. INVESTMENT UNIVERSE The Fund invests in securities listed on the Botswana Stock Exchange, as well as government bonds and short-term money market instruments. Some cash will be held at all times in order to facilitate ease of exit. WHO SHOULD INVEST? The Fund is ideally suited and tailored for Botswana pension and provident funds and private individuals who want to build long-term savings that will maintain purchasing power. Investors should have a medium to long-term investment horizon. RISK PROFILE This is a medium risk fund. REGULATORY The Fund is registered and approved by the Bank of Botswana and NBFIRA and as such is subject to the Collective Investment Undertaking Act 1999. 20% 65% 15% Cash Equity Fixed Income Lower risk RISK Higher risk Income OBJECTIVE Capital Growth Money Market, e.g. African Alliance Botswana Liquidity Fund Fixed Income, e.g. African Alliance Botswana Global Income Fund Balanced, e.g. African Alliance Botswana Value and Global Allocation Funds Equity