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 The Sharenet Daily 
Wednesday, 02 March 2016 - 20:00
Top News
SA Business
Company News
Company Results
World Markets (Spot Prices)
JSE Today
JSE Trading Statistics
Major Moves
Index Summary
Latest Consensus Changes / Results Expected
Recent Dividends / Ex Div
Upcoming AGMs
Stock Exchange News Service (SENS)

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Seed Weekly - Diversification - How is it a Free Lunch?

Diversification is a term in investments that is often bandied about, but typically not much thought goes into what it actually means. Phrases such as the ones below are often thrown around:

“Make sure you don’t have all your eggs in one basket.”
“Diversification is the only free lunch in investing.”
“Don’t worry I have a diversified portfolio!”
“Is your portfolio diversified or diworsified?”

Diversification is a very important concept and, when used correctly, is a powerful way to build robust portfolios. Essentially, diversification is the process of investing across a range of asset classes/investment styles/strategies that produce returns that aren’t 100% correlated with each other. In a perfect world they will have negative correlations with each other, but practically the lower the correlation the better. A consistent correlation profile is also a highly sought after trait.

To unpack the above statement I’ll more fully explain the concept of correlation and give some practical examples. Correlation ranges from -100% to 100%, where -100% is when assets move perfectly inversely to each other and 100% where they move perfectly in line with each other. The chart below shows the monthly returns of 3 hypothetical assets. As can be seen, Asset A and Asset B move broadly in line with each other and have a correlation of 66%, while it is obvious that the monthly returns of Asset A and Asset C don’t move in line with each other – here the correlation is -68%.

Over this period all 3 assets have generated a return slightly in excess of 5% with a volatility of around 9.5%. While blending Asset A and Asset B together enhances an investor’s return and reduces the risk (volatility used as a proxy for risk in this case), blending Asset A and Asset C further enhances the return and dramatically reduces the portfolio’s risk – this is shown in the chart below.

Consistent relationships are also highly sought after. In times of market stress correlations tend to rise (i.e. move closer to 100%) which puts the portfolio at risk. The last thing an investor wants when one portion of their portfolio is under stress, is for the rest of the portfolio to follow suit. It is in these times of stress that a robust portfolio (i.e. one built with assets that are truly uncorrelated) show its true colours.

You may be saying that this is all good and well when discussing theoretical concepts, but at the same time be asking whether this can be practically implemented? The chart below shows the actual return and volatility of the Seed Stable Fund as well as the return and volatility of each of the Fund’s underlying strategies (in mid-2014 – when there was a very low correlation between strategies). If all of the strategies were perfectly correlated with one another then the Fund’s volatility would have been 6%, but by carefully constructing a portfolio of uncorrelated strategies the Fund’s actual volatility was less than 3%. By diversifying properly, the Fund was therefore able to deliver to investors a “free lunch” of a 50% reduction in volatility.

Investors that seek to diversify their investments will undoubtably leave some upside potential on the table. Investors that combine a range of assets in the hope that they are diversified will find out (typically in times of market stress) that all they’ve done is ‘diworsify’ their portfolio. What investors who properly diversify will achieve, however, is robust portfolios that can stand the test of time and deliver consistent risk adjusted returns.

Take care,

Mike Browne

Tel +27 21 914 4966
Fax +27 21 914 4912
Email info@seedinvestments.co.za

Seed is hiring: Visit the Seed Analytics LinkedIn profile to view vacancies.


Wed, 02 Mar 2016
Top News
Local markets On Wednesday, the JSE ended 1.30% higher after gains in industrial and resource shares offset 4.98% losses in gold miners.  Full story

South African short-term insurer Santam's full-year earnings beat expectations by rising 28 percent jump largely due to fewer claims, sending its shares seven percent higher. Santam said diluted headline earnings per share rose to 1,844 cents in the year to end-December from 1,446  Full story
Donald Trump consolidated his lead in the 2016 Republican presidential race with Super Tuesday victories but failed to eclipse his rivals or draw reluctant party leaders into his corner.  Full story
China sent several ships to a disputed atoll in the South China Sea, preventing Filipino fishermen from accessing traditional fishing grounds and raising tensions in the volatile region, Philippine officials said on Wednesday.  Full story
A massive quake struck on Wednesday off the Indonesian island of Sumatra, a region devastated by the 2004 Indian Ocean quake and tsunami, but initial fears of another region-wide disaster faded as tsunami warnings were cancelled.  Full story
SA Business
South Africa's rand fell by more than one percent to the dollar on Wednesday as global risk appetite faded following the. . .  Full story
South Africa's Association of Mineworkers and Construction Union (AMCU) said on Wednesday fewer jobs would be lost at platinum producer Lonmin. . .  Full story
A deal struck between South Africa's government, companies and unions has prevented the immediate loss of 16,000 jobs in an industry. . .  Full story
South Africa's rand steadied against the dollar in early trade on Wednesday as risk appetite returned after gains in oil prices. . .  Full story

South Africa has allowed American chicken, pork and beef products to go on sale throughout the country, meeting benchmarks for resolving a trade dispute. . .  Full story
The United States will not suspend duty-free benefits for South Africa as threatened after Pretoria met the requirements of a trade. . .  Full story
South Africa's finance minister will miss a Wednesday deadline set by police to answer questions on his role in the setting. . .  Full story
South Africa's finance minister will miss a Wednesday deadline set by police to answer questions on his role in the setting up of. . .  Full story

South Africa's Police Minister Nkosinathi Nhleko said on Wednesday that questions put to Finance Minister Pravin Gordhan by an elite police unit do not. . .  Full story
South Africa's fourth-largest lender Nedbank forecast slower profit growth this year as it feels the effects of weak consumption and. . .  Full story
The South African government's forecast of a 7.2-million-tonne maize harvest this year is "optimistic" and will almost certainly be revised down, the country's largest. . .  Full story
South Africa's Clover Industries will no longer invest in Nigeria due to a financial crisis there, the dairy products company said. . .  Full story
Company News
Shareholders are referred to BidvestĘs unaudited results for the half-year ended December 31 2015 released on SENS on 29 February 2016.. . .  Full story
Holders of Astrapak preference shares are advised that the salient dates for the nineteenth dividend declaration in respect of the non-. . .  Full story
Bondholders of the Shoprite Investments Convertible Bond are hereby advised that the SHPCB convertible bond will commence trading ex-interest, with respect. . .  Full story
Bondholders are advised that interim results of Eqstra Holdings Limited for the period ended 31 December 2015 are available for inspection. . .  Full story
Company Results
Revenue for the year decreased by 19.2% to R3 044.7 billion (2014: R3 767.5 billion). Gross loss came in at R39.8. . .  Full story
Revenue for the year increased by 14% to R4.510 billion (2014: R3.968 billion). Gross profit rose by 13% to R1.067 billion. . .  Full story
Revenue from continuing operations for the period increased to R4.113 billion (2014: R4.004 billion). Operating profit rose to R436 million (2014:. . .  Full story
Interest and similar income climbed to R61.0 billion (2014: R54.8 billion). Profit attributable to ordinary equity holders increased to R9.7 billion. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0050966.93651.841.30%
JSE Top 4017:0045266.30645.771.45%
JSE Gold17:001977.74-103.70-4.98%
JSE Financial17:0040281.95423.831.06%
JSE Industrial17:0077280.10970.931.27%
JSE Indust 2517:0069932.46835.351.21%
JSE Resource17:0028537.82560.872.00%
DJ Futures19:5216800.00-49.00-0.29%
DJ Ind20:0016849.95-15.13-0.09%
SP 50020:001976.77-1.58-0.08%
FTSE 10017:006114.31-38.57-0.63%
All Ords07:445083.5093.901.88%
NZSE 5007:306313.0732.170.51%
NameTimeRPMove% Move
Gold $19:591240.219.330.76%
Gold R20:0019353.48177.210.92%
Gold R/kg20:00622214-1428-0.23%
Silver $19:5914.98500.18601.26%
Platinum $19:59934.41-2.30-0.25%
Palladium $19:59514.281.280.25%
Brent Crude19:4836.700.732.03%
USD / ZAR19:5915.60500.03470.22%
GBP / ZAR19:5521.93330.21600.99%
EUR/ ZAR19:5516.94190.00080.00%
NZD/ ZAR19:5910.35430.01320.13%
AUD / ZAR19:5511.36280.16331.46%
USD / JPY19:59113.7590-0.3020-0.26%
EUR / USD19:591.0852-0.0014-0.13%
GBP / USD19:591.40640.01160.83%

Click here for the Sharenet Spot Price page
The JSE Today

Trading Statistics
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 THARISA  85013018.06.%10884
2 DIAMONDCP  2442913.49.%11307
3 Trellidor  5505912.02.%22000
4 MPACT  514550810.96.%123013
5 BASREAD  279249.41.%83589
6 GoldBrand  11498.57.%1295
7 NORTHAM  40613118.29.%2534679
8 OCEANA  125009468.19.%126606
9 SANTAM  2115414547.38.%116002
10 LONMIN  22191497.20.%630111
11 HULAMIN  577325.87.%141552
12 METAIR  22901245.72.%386912
13 EOH  143507495.51.%199900
14 REDEFINE  1087565.43.%28072096
15 AFROX  1740855.14.%94333
16 ALEXANDER  634315.14.%727867
17 INVICTA  42002005.00.%33249
18 PALLINGHT  320154.92.%2854830
19 DIPULA-B  837394.89.%50539
20 BLACKSTAR  820384.86.%6671

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Major Moves Down
SharenameSaleMove% MoveVolume
1 GLOBAL  150-50-25.00.%25000
2 NIVEUS  2000-299-13.01.%33379
3 Gaia  769-81-9.53.%25246
4 PAN-AF  262-23-8.07.%1726678
5 GFIELDS  6100-505-7.65.%3155409
6 LEWIS  4608-365-7.34.%141991
7 KUMBAIO  7486-514-6.42.%961599
8 INSIMBI  103-7-6.36.%32300
9 LABAT  123-7-5.38.%197562
10 SIBANYE  5380-298-5.25.%9115204
11 HARMONY  5105-245-4.58.%1582361
12 CMH  1320-60-4.35.%100805
13 ADAPTIT  1270-55-4.15.%214746
14 RANGOLD  200-8-3.85.%21826
15 ALTRON  512-18-3.40.%23898
16 SEPHAKU  430-15-3.37.%85392
17 BIDVEST  35459-1212-3.31.%1703829
18 SABVEST-N  3000-100-3.23.%50299
19 TRUSTCO  310-10-3.12.%174396
20 ANGGOLD  19521-629-3.12.%1876736

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New Highs
SharenameSaleHighMove% MoveVolume
1 THARISA  85085013018.06.%10884
2 MPACT  5145520050810.96.%123013
3 STEINHOFF  877589002933.45.%17462518
4 S-InzaloB  27612761762.83.%308
5 JSE  14975152502751.87.%611106

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New Lows
SharenameSaleLowMove% MoveVolume
1 GLOBAL  150150-50-25.00.%25000
2 CMH  13201225-60-4.35.%100805
3 CSG  1041000.142550

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Index Summary
Index NameRPMove% Move
Top 4045,266.30645.771.45%
Mid Cap69,841.01338.890.49%
Small Cap55,597.92414.130.75%
Resource 2028,537.82560.872.00%
Industrial 2569,932.46835.351.21%
Financial 1514,833.65133.430.91%
Financial & Ind. 3072,744.26830.291.15%
All Share50,966.93651.841.30%
Oil & Gas 7,
Mining 19,359.18232.131.21%
Gold Mining1,977.74-103.70-4.98%
Platinum Mining20.24.794.06%
GENERAL MINING4,808.43156.483.36%
Oil & Gas Producers 38,689.88.000.00%
Basic Materials 20,120.53329.541.67%
Chemicals 22,605.11709.283.24%
Forestry & Paper 50,027.26749.511.52%
Industrial Metals 5,559.42-381.72-6.43%
Industrials 41,732.2472.840.17%
General Industrials 157.72-.31-0.20%
Consumer Goods 79,566.69566.900.72%
Automobiles & Parts 5,185.61280.795.72%
Household Goods602.21203.45%
Health Care 9,051.49200.482.27%
Beverages 313.951.240.40%
Index NameRPMove% Move
Food Producers 8,026.42159.432.03%
Personal Goods 1,017.64.800.08%
Consumer Services 16,737.07465.452.86%
General Retailers 7,129.2460.170.85%
Travel & Leisure 5,116.02131.902.65%
Media 435.3415.033.58%
Support Services 1,876.56-.07-0.00%
Telecommunications 7,291.34-83.91-1.14%
Financials 40,281.95423.831.06%
Banks 6,373.94143.822.31%
Non-life Insurance 53,989.683710.937.38%
Life Insurance 36,731.89224.190.61%
General Financial 4,453.729.280.21%
Technology 53,920.202498.714.86%
SHARIAH TOP40 2,902.90612.16%
FTSE/JSE SHARIAH ALL3,190.03521.65%
COAL MINING8,997.14-262-2.83%
FTSE JSE Fledgling 6,422.54470.73%
FTSE/JSE Alt X 1,496.93140.97%
RESOURCE 16,054.142631.67%
DIVIDEND PLUS195.7621.19%
FTSE/JSE RAFI 408,997.63750.84%
Capped Top 4024,049.493331.40%
Capped All Share25,957.413211.25%
JSE TABACO 11,120.78190.17%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
03/03/2016ASPENDecember 2015 (Interim)
03/03/2016ASPENPREFDecember 2015 (Interim)
03/03/2016EXXARODecember 2015 (Final)
03/03/2016MTN GROUPDecember 2015 (Final)
03/03/2016NEDBANKDecember 2015 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
B-AFRICA01/03/1601/04/1611/04/16ZAR 5.5000
ABSABANK-P01/03/1601/04/1611/04/16ZAR 33.9548
CASHBIL01/03/1616/03/1629/03/16ZAR 5.1300
METROFILE29/02/1601/04/1611/04/16ZAR 0.1100
CAPITEC-P29/02/1616/03/1629/03/16ZAR 4.0421
Ex Div**
Share NameDec-DateLDTPay-DateAmount
HUDACO29/01/1626/02/1607/03/16ZAR 3.4500
RESILIENT03/02/1626/02/1607/03/16ZAR 2.3246
WOOLIES11/02/1626/02/1607/03/16ZAR 1.3300
INDLU10/02/1626/02/1607/03/16ZAR 0.2293
ITLTILE11/02/1626/02/1607/03/16ZAR 0.1400

Upcoming AGMs**
CodeCompany NameDateStatus
TCPTransaction Capital Ltd.03/03/2016Confirmed
TLMTeleMasters Holdings Ltd.04/03/2016Confirmed
HDCHudaco Industries Ltd.09/03/2016Confirmed

Stock Exchange News Service
02/03/201617:42JSE LIMITED - 20160322 March 2016 Quarterly Review ICA
02/03/201617:40ECSPONENT LIMITED - Issue and listing of Class A, Class B and Class C Preference...
02/03/201617:16REBOSIS PROPERTY FUND LIMITED - TRP121: Notification of disposal of beneficial i...
02/03/201617:13Denel Soc Limited - New Financial Instrument Listing - Deng63
02/03/201617:05THE BIDVEST GROUP LIMITED - Dividend declaration
02/03/201617:03CAPEVIN HOLDINGS LIMITED - Unaudited interim results for the six months ended 31...
02/03/201617:00TSOGO SUN HOLDINGS LIMITED - Disclosure of beneficial interests in Tsogo Sun sec...
02/03/201616:56JSE LIMITED - Dealings in securities by directors and by the company secretary
02/03/201616:42AFRICAN AND OVERSEAS ENTERPRISES LD - Trading statement
02/03/201616:40REX TRUEFORM CLOTHING COMPANY LIMITED - Trading statement
02/03/201616:39PINNACLE HOLDINGS LIMITED - Dealing in securities
02/03/201616:35HUDACO INDUSTRIES LIMITED - Director dealing in securities
02/03/201616:26EFFICIENT GROUP LIMITED - Dealings in securities by a director of the company an...
02/03/201616:23enX GROUP LIMITED - Change to the board of directors
02/03/201616:05OLD MUTUAL PLC - Form 8.3 - Public Opening Position Disclosure
02/03/201616:05RCL FOODS LIMITED - Dealings in securities by a director of a major subsidiary
02/03/201616:00PINNACLE HOLDINGS LIMITED - Dealing in securities by associate of director
02/03/201615:52PLATFIELDS LIMITED - Renewal of Cautionary Announcement
02/03/201615:50COMMISSIONER STREET NO 11 (RF) LIMITED - TPDA06 - Interest Rate Reset
02/03/201615:45TRANSNET SOC LIMITED - TSP204; TSP205 Short Term Issue
02/03/201615:45TRANSNET SOC LIMITED - TSP191 Short Term Tap Issue
02/03/201615:45TRANSNET SOC LIMITED - TN25; TN30 Bond Tap Issue
02/03/201615:40TORRE INDUSTRIES LIMITED - Resignation of alternate director
02/03/201615:00SANTAM LIMITED - Audited summary consolidated financial statements for the year ...
02/03/201614:59PRESCIENT LIMITED - Assets under Management
02/03/201614:53ASTRAPAK LIMITED - Dividend Declaration In Respect Of Astrapaks Non-redeemable, ...
02/03/201614:52IVUZI INVESTMENTS LIMITED - IVA613 and IVA621 - Listing of New Instruments
02/03/201614:31REDEFINE PROPERTIES LIMITED - Interest rate reset: RDFC28
02/03/201614:30REDEFINE PROPERTIES LIMITED - Interest rate reset: RDFC27
02/03/201614:30OLD MUTUAL PLC - Form 8.3 - Public Opening Position Disclosure
02/03/201614:30KIBO MINING PLC - Kibo Mining Agrees Unsecured, Interest Free Loan Facility of ...
02/03/201614:20OLD MUTUAL PLC - Form 8.3 - Public Opening Position Disclosure
02/03/201614:18GROUP FIVE LIMITED - Dealing in securities by the company secretary and director...
02/03/201614:16KUMBA IRON ORE LIMITED - Dealings in securities by a director and the company se...
02/03/201614:15OLD MUTUAL PLC - Form 8.3 - Public Opening Position Disclosure
02/03/201614:10OLD MUTUAL PLC - Form 8.3 - Public Opening Position Disclosure
02/03/201614:00CLOVER INDUSTRIES LIMITED - Dealings in share appreciation rights (SARs) by an e...
02/03/201613:42HUGE GROUP LIMITED - Notice of a disposal of a beneficial interest in securities
02/03/201613:35FAMOUS BRANDS LIMITED - Dealing in securities by a director
02/03/201613:30MAS REAL ESTATE INC - Investment strategy update and joint venture agreement
02/03/201613:30INVESTEC BANK MAURITIUS LIMITED - Preference share dividend announcement
02/03/201613:30HOSKEN CONSOLIDATED INVESTMENTS LIMITED - Directors dealings in securities
02/03/201612:45BLUE TITANIUM CONDUIT (RF) LIMITED - New Financial Instrument Listing Announceme...
02/03/201612:40BLUE TITANIUM CONDUIT (RF) LIMITED - New Financial Instrument Listing Announceme...
02/03/201612:36INVICTA HOLDINGS LIMITED - Director and associates of directors dealings in secu...
02/03/201612:30CAPITAL & COUNTIES PROPERTIES PLC - Notification of Major Interest in Shares
02/03/201612:24NEWFUNDS COLLECTIVE INVEST SCHEME - NFGOVI; NFILBI and NFTRCI - Interest distrib...
02/03/201612:05SHOPRITE INVESTMENTS LIMITED - SHPCB - Interest Payment
02/03/201612:00INTERNATIONAL HOTEL GROUP LIMITED - Acquisition of the Gatwick Hotel, placement ...
02/03/201611:40PEREGRINE HOLDINGS LIMITED - Dealings in securities by an associate of a directo...
02/03/201611:00ZCI LIMITED - Updated Cautionary Announcement
02/03/201610:30MASSMART HOLDINGS LIMITED - Trading of Massmart ordinary shares on behalf of the...
02/03/201610:26GLOBAL ASSET MANAGEMENT LIMITED - Further renewal of cautionary announcement
02/03/201610:00AFRICAN BANK LIMITED - African Bank Restructuring: Comprehensive Results Announc...
02/03/201609:50PREMIUM PROPERTIES LIMITED - New financial instrument listing - PMM23
02/03/201609:44TIGER BRANDS LIMITED - Dealings in securities
02/03/201609:39STEINHOFF INTERNATIONAL HOLDINGS N.V. - Confirmation of approach of Darty plc
02/03/201609:30GROWTHPOINT PROPERTIES LIMITED - Condensed Unaudited Resultsfor the six months e...
02/03/201609:01BRITISH AMERICAN TOBACCO PLC - Publication of Supplementary Prospectus
02/03/201609:00REDEFINE INTERNATIONAL PLC - Redefine International completes AUK portfolio acqu...
02/03/201609:00OLD MUTUAL PLC - Nedbank Group Limited Audited Final Results 2015
02/03/201609:00EQSTRA CORPORATION LIMITED - Availability of Guarantor Interim Results
02/03/201609:00SACOIL HOLDINGS LIMITED - Completion of Phase 2 Development Programme - Lagia Oi...
02/03/201609:00DIAMONDCORP PLC - Resource Statement
02/03/201609:00SYCOM PROPERTY FUND - Unaudited interim financial results for the six month peri...
02/03/201609:00SABMILLER PLC - Anheuser-Busch InBev agrees to the sale of SABMillers stake in C...
02/03/201608:30ANHEUSER-BUSCH INBEV SA/NV - Anheuser-Busch InBev enters into agreement to sell ...
02/03/201608:01NEDBANK LIMITED - Preliminary Audited Results for the year ended 31 December 201...
02/03/201608:00MPACT LIMITED - Audited summarised results for the year ended 31 December 2015 a...
02/03/201608:00NEDBANK GROUP LIMITED - Preliminary Audited Results for the 12 Months Ended 31 D...
02/03/201607:30ASCENDIS HEALTH LIMITED - Trading Statement
02/03/201607:05CLOVER INDUSTRIES LIMITED - Unaudited interim consolidated results for the six m...

Click here for more SENS news