Tuesday, 01 April 2014 - 20:00
Charts
Seed weekly - Multi Management Unveiled
I was recently asked to explain what a multi manager is and how they differ and/or compare to single managers. Afterwards, while thinking about my explanation, I decided to do a little research on the topic.
The below table compares single manager against multi managers and also serves as a broad definition:
As can be seen above, a multi manager provides an investment solution by utilising or combining the skill of more than one investment (single) manager. The idea of multi management is based on the premise that single managers are unlikely to perform well in all market conditions and in all circumstances.
To illustrate, I selected four uncorrelated single managed equity funds and then blended them together (similar to a multi manager). The results of the Risk/Return scatter plot are below:
The result shows that although all the Funds comfortably outperformed the ALSI, the Equity Blend does not quite perform as well as Funds C and D, but comfortably outperformed Funds A and B with a lower standard deviation than Funds B, C and D.
The key here is that a multi manager needs to ensure that the chosen managers are sufficiently different and uncorrelated. They need to look for a blend of managers who are able to outperform over the long term, but have complimentary styles to reduce volatility or minimise risk over shorter time periods. This ensures that proper diversification is possible and that they do not generate similar patterns of relative performance. Your end result will be a portfolio that benefits throughout the investment cycle with consistent returns and lower drawdowns (protecting capital).
The biggest argument against multi management, of course, is costs. Each underlying manager charges a fee which is added on to the multi manager’s fee. One therefore needs to control costs to avoid limiting outperformance. The extra costs are mitigated, to a certain extent, by the ability of a multi manager to negotiate down the fees with the underlying managers as they are able to invest larger amounts than retail investors.
At Seed Investments we pride ourselves as multi managers that are able to largely overcome the cost problem by structuring our portfolios on a core and satellite basis. The core is generally provided through smart beta products (see “Smart Beta” here http://www.seedinvestments.co.za/news) - hence significantly lowering cost. On the satellite side we utilise segregated mandates with a carefully selected group of active managers. These have been designed exclusively for us, to fit our Funds’ specific needs, and aren’t available to retail investors.
From the above findings it is evident that a multi manager, able to combine superior performing, uncorrelated fund managers, at a competitive cost, will have a place in most investors’ portfolios as it enables investors to achieve their investment objects more efficiently and at a lower risk. There are other advantages to multi management, such as tracking manager movements and keeping an eye on Manco AUM, which will be addressed in a future newsletter.
Kind regards,
Renier Hugo
www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966
Tue, 01 Apr 2014
Top News
Local markets
By close of day on Tuesday, the JSE All Share had climbed 0.82% with gains almost across the board, barring gold mining shares. This can be attributed to positive remarks on future US fed tapering. Full story
Anglo American Platinum has sent force majeure notices to some of the suppliers to its South African mines, the world's top platinum producer said on Tuesday, underscoring the widening economic impact of an almost 10-week-old strike.
"Suppliers of goods and services whose contractu Full story |
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The last words from
the cockpit of a missing Malaysian jet were a standard "Good
night Malaysian three seven zero", Malaysian authorities said,
changing their account of the critical last communication from a
more casual "All right, good night". Full storyNATO suspended all practical cooperation with Russia on Tuesday in protest at its annexation of Crimea and ordered military planners to draft measures to strengthen its defences and reassure nervous eastern European countries. Full storySurvivors of a
mudslide that left dozens dead or missing in Washington state
said they would like to turn the disaster site into a shrine for
the victims once bulldozers clear away the mud and debris. Full story |
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Markets | World equity markets added to
recent gains on Tuesday as Wall Street hit a record high after
strong factory data, while soft manufacturing. . . Full story | | U.S. stocks rose on Tuesday,
with the S&P 500 advancing to an intraday record after the
latest economic data indicated that economic growth. . . Full story | | European stocks climbed on
Tuesday, extending their two-week rally, helped by M&A fever as
well as robust French and U.S. factory data.. . . Full story | | Britain's top share index
touched a three-week high on Tuesday, with cyclical stocks
rallying on the back of an improving U.S. economic outlook. . . Full story |
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| Gold fell on Tuesday after firm
U.S. economic data lifted Wall Street stocks, easing back
towards the seven-week low it hit in early. . . Full story | | U.S. stocks edged up on
Tuesday, putting S&P 500 on track for a third straight advance,
after the benchmark index closed out its. . . Full story | | Investors took reassurance from
remarks by the head of the Federal Reserve and stronger-looking
emerging markets helped keep a world stocks rally alive. . . Full story | | UK shares kicked off the quarter
on a high note, fueled by gains from miners on optimism over
ongoing stimulus from China, with. . . Full story |
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SA Business | South African stocks scaled record peaks on Tuesday, with Anglo American Platinum blazing the uphill trail after sending force majeure notices. . . Full story | | South Africa's Adcock Ingram said on Tuesday its chief executive officer has resigned in a widely expected move after the drugmaker's. . . Full story | | South Africa's new vehicle sales fell 0.2 percent year-on-year in March to 55,363 units, data from the trade and industry department. . . Full story | | South Africa Finance Minister Pravin Gordhan on Tuesday estimated a budget deficit of 4 percent of gross domestic product for the. . . Full story |
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| Anglo American Platinum has sent force majeure notices to some of the suppliers to its South African mines, the world's top. . . Full story | | Naspers named Jim Volkwyn head of its pay-television business on Tuesday as South Africa's largest company by market value pushes the. . . Full story | | South African transport group Barloworld Ltd said on Tuesday it has sold its Australian auto retail unit for 1.3 billion rand. . . Full story | | South Africa's rand hovered around a three month high against the dollar on Tuesday as emerging markets were supported by comments. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:00 | 48104.98 | 334.06 | 0.70% | JSE Top 40 | 17:00 | 43320.65 | 324.02 | 0.75% | JSE Gold | 17:00 | 1436.92 | -10.21 | -0.71% | JSE Financial | 17:00 | 35502.56 | 211.08 | 0.60% | JSE Industrial | 17:00 | 62329.17 | 519.76 | 0.84% | JSE Indust 25 | 17:00 | 55066.98 | 495.64 | 0.91% | JSE Resource | 17:00 | 55842.24 | 274.06 | 0.49% | DJ Futures | 19:22 | 16425.00 | 52.00 | 0.32% | DJ Ind | 19:58 | 16513.98 | 56.32 | 0.34% | SP 500 | 19:58 | 1880.31 | 7.97 | 0.43% | Nasdaq | 19:58 | 4245.58 | 46.59 | 1.11% | FTSE 100 | 15:43 | 6645.63 | 47.26 | 0.72% | DAX | 18:10 | 9603.71 | 47.80 | 0.50% | CAC40 | 18:10 | 4426.72 | 35.22 | 0.80% | Nikkei | 08:32 | 14791.99 | -35.84 | -0.24% | Shanghai | 09:28 | 2047.46 | 14.15 | 0.70% | Hang-Seng | 10:28 | 22448.54 | 297.48 | 1.34% | All Ords | 07:38 | 5394.90 | -8.10 | -0.15% | NZSE 50 | 06:50 | 5122.52 | -17.46 | -0.34% |
| | Name | Time | RP | Move | % Move | Gold $ | 19:59 | 1279.13 | -5.14 | -0.40% | Gold R | 19:59 | 13536.75 | 18.08 | 0.13% | Gold R/kg | 19:58 | 435288 | -1796 | -0.41% | Silver $ | 19:59 | 19.7000 | -.0390 | -0.20% | Platinum $ | 19:59 | 1424.40 | 11.54 | 0.82% | Palladium $ | 19:59 | 779.50 | 7.60 | 0.98% | R157 | 17:34 | 6.80 | .00 | 0.00% | R186 | 17:34 | 8.49 | .06 | 0.77% | R204 | 17:34 | 7.84 | .04 | 0.51% | R207 | 17:34 | 8.12 | .06 | 0.81% | Brent Crude | 19:58 | 106.05 | -2.02 | -1.87% | Rand / Dollar | 19:59 | 10.5822 | 0.0561 | 0.53% | Rand / Pound | 19:55 | 17.5717 | 0.0506 | 0.29% | Rand / Euro | 19:55 | 14.5964 | 0.0859 | 0.59% | Rand / NZD | 19:59 | 9.1573 | 0.0264 | 0.29% | Rand / AUD | 19:55 | 9.7816 | 0.0188 | 0.19% | Yen / Dollar | 19:59 | 103.6300 | 0.4540 | 0.44% | Euro / Dollar | 19:59 | 0.7251 | -0.0010 | -0.14% | Dollar / Euro | 19:59 | 1.3792 | 0.0019 | 0.14% | Pound / Dollar | 19:55 | 0.6008 | 0.0009 | 0.15% |
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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01/04/2014 | 205 | 165 | 66 | 436 | 255,037,208 | R14,323,236,425 | 174247 | 1523320 | 31/03/2014 | 204 | 161 | 71 | 436 | 276,970,113 | R18,660,659,588 | 194615 | 1403246 | 28/03/2014 | 267 | 123 | 62 | 452 | 245,718,773 | R16,536,716,659 | 194343 | 1677788 | 27/03/2014 | 167 | 208 | 62 | 437 | 236,215,308 | R15,115,215,370 | 161381 | 177093 | 26/03/2014 | 223 | 137 | 72 | 432 | 250,380,133 | R18,483,332,797 | 166798 | 182661 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 43,320.65 | 324.02 | 0.75% | Industrial | 62,329.17 | 519.76 | 0.84% | Mid Cap | 60,877.93 | 282.46 | 0.47% | Small Cap | 51,807.07 | 71.28 | 0.14% | Resource 20 | 55,842.24 | 274.06 | 0.49% | Industrial 25 | 55,066.98 | 495.64 | 0.91% | Financial 15 | 13,620.38 | 91.89 | 0.68% | Financial & Ind. 30 | 58,855.86 | 504.86 | 0.87% | All Share | 48,104.98 | 334.06 | 0.70% | Oil & Gas | 44,215.89 | -399.56 | -0.90% | Mining | 33,194.02 | 268.31 | 0.81% | Gold Mining | 1,436.92 | -10.21 | -0.71% | Platinum Mining | 50.49 | .70 | 1.41% | GENERAL MINING | 9,591.82 | 87.41 | 0.92% | Oil & Gas Producers | 23,774.07 | -214.83 | -0.90% | Basic Materials | 29,363.41 | 200.36 | 0.69% | Chemicals | 24,056.30 | -66.02 | -0.27% | Forestry & Paper | 31,087.81 | -232.37 | -0.74% | Industrial Metals | 20,655.99 | 221.73 | 1.09% | Industrials | 43,778.81 | 145.00 | 0.33% | General Industrials | 138.41 | .75 | 0.54% | Consumer Goods | 56,774.68 | 317.53 | 0.56% | Automobiles & Parts | 9,725.85 | 33.97 | 0.35% | Household Goods | 357.66 | 11 | 3.18% | Health Care | 76,410.72 | 383.31 | 0.50% | Beverages | 179.08 | -.44 | -0.25% |
| | Index Name | RP | Move | % Move | Food Producers | 67,973.62 | 687.13 | 1.02% | Personal Goods | 1,020.54 | 11.99 | 1.19% | Consumer Services | 11,550.28 | 221.18 | 1.95% | General Retailers | 61,783.54 | 255.67 | 0.42% | Travel & Leisure | 5,368.87 | 47.87 | 0.90% | Media | 259.82 | 6.24 | 2.46% | Support Services | 2,581.24 | -18.73 | -0.72% | Telecommunications | 10,364.17 | 87.44 | 0.85% | Financials | 35,502.56 | 211.08 | 0.60% | Banks | 60,771.89 | 211.28 | 0.35% | Non-life Insurance | 49,768.30 | 176.10 | 0.36% | Life Insurance | 34,715.97 | 384.93 | 1.12% | General Financial | 3,590.19 | 36.21 | 1.02% | Technology | 40,782.31 | 175.19 | 0.43% | SHARIAH TOP40 | 4,151.17 | 27 | 0.65% | FTSE/JSE SHARIAH ALL | 4,241.90 | 25 | 0.60% | COAL MINING | 18,028.41 | 330 | 1.86% | FTSE JSE Fledgling | 6,600.83 | -37 | -0.55% | FTSE/JSE Alt X | 1,214.10 | 18 | 1.53% | SA LISTED PROPERTY | 500.36 | | 0.23% | CAPPED PROPERTY | 432.37 | | 0.31% | RESOURCE | 30,495.49 | 148 | 0.49% | DIVIDEND PLUS | 218.57 | 1 | 0.40% | FTSE/JSE RAFI 40 | 9,635.68 | 49 | 0.51% | Capped Top 40 | 22,941.87 | 163 | 0.72% | Capped All Share | 24,359.23 | 166 | 0.69% | JSE TABACO | 7,463.64 | -46 | -0.61% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | WBO | WILSON BAYLY HOLMES-OVCON... | HOLD | 28/03/2014 | AFX | AFRICAN OXYGEN LTD | SELL | 28/03/2014 | CPI | CAPITEC | HOLD | 27/03/2014 | APN | ASPEN PHARMACARE HLDGS | BUY | 27/03/2014 | ABL | AFRICAN BANK INVESTMENTS ... | BUY | 26/03/2014 |
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Results Expected** Expected | Company Name | Fin. Date | 03/04/2014 | DIAMONDCP | December 2013 (Final) | 03/04/2014 | MICROMEGA | September 2013 (Interim) | 04/04/2014 | OANDO | December 2013 (Final) | 04/04/2014 | VIVIDEND | February 2014 (Interim) | 08/04/2014 | ZEDER | February 2014 (Final) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | ILRPREF1 | 31/03/14 | 16/04/14 | 29/04/14 | ZAR 12.2033 | FINBOND | 28/03/14 | 16/04/14 | 29/04/14 | ZAR 0.0210 | CAPITEC | 26/03/14 | 10/04/14 | 22/04/14 | ZAR 4.6000 | KAYDAV | 26/03/14 | 30/04/14 | 12/05/14 | ZAR 0.0750 | METAIR | 25/03/14 | 16/05/14 | 26/05/14 | ZAR 0.7000 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | ABSABANK-P | 11/02/14 | 28/03/14 | 07/04/14 | ZAR 29.7932 | NEDBANK | 24/02/14 | 28/03/14 | 07/04/14 | ZAR 5.0500 | B-AFRICA | 11/02/14 | 28/03/14 | 07/04/14 | ZAR 4.7000 | SASFIN-P | 11/03/14 | 28/03/14 | 07/04/14 | ZAR 3.5351 | STANBANK-P | 06/03/14 | 28/03/14 | 07/04/14 | ZAR 3.2994 |
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Upcoming AGMs** Code | Company Name | Date | Status | MMP | Marshall Monteagle PLC | 01/04/2014 | Confirmed | MTE | Marshall Monteagle PLC | 01/04/2014 | Confirmed | AMSP | Anglo American Platinum Ltd. | 02/04/2014 | Confirmed | AMS | Anglo American Platinum Ltd. | 02/04/2014 | Confirmed | CIL | Consolidated Infrastructure Group Ltd. | 02/04/2014 | Confirmed |
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