Wednesday, 08 June 2016 - 20:00
Seed Weekly - Different Investment Manager Styles
Seed Investments constructs and manages investment portfolios as a multi-manager. This means that in building a portfolio, we may look to combine various underlying asset classes and various types of funds into one portfolio. The rationale is simple - there are numerous types of investment styles and strategies that managers employ and the reality is that there is no one single style or strategy that has the corner on the market. Each one has merits and drawbacks.
Tawanda discussed passive versus active three weeks back (click to view article) and our conclusion is that there is a place for both of these major investment styles into a portfolio. At the same time we recognise the merits of including underlying managers with various investment styles into a portfolio.
Beside the active versus passive debate, other investment styles that active investment managers employ can be described as:
• Top down
• Bottom up
• Value investing
• Growth investing
A top down investment strategy means that the investment manager places a high emphasis on macro-economic factors and forecasts. The manager may spend up to 50% or sometime even 70% of their time trying to understand aspects such the direction of interest rates, debt levels in an economy, commodity supply and demand, foreign investment flows, investor sentiment etc. and how these impact on the consumer on various types of company earnings.
A bottom up investment strategy pays more attention to valuations of individual businesses and very little to no emphasis on macro-economic factors. The most famous bottom up investment manager is Warren Buffett, who says “The key attitude of managers that adopt this investment strategy is their view that no one can accurately and consistently predict macro events and so time is best spent analysing companies at a more micro level".
A value investment management style is one that leans to searching for an investment that on some analysis trade at a price below their assessment of intrinsic value. The key premise is that for a variety of reasons, but typically when there is a preponderance of negative news, the price of an investment trades below what the investment is truly worth. It is these type of opportunities that value investors will seek out, looking to profit as prices revert closer to intrinsic value.
A contrarian investment style is often a more extreme version of a value style. These managers are attracted to companies that are deeply out of favour with the investment community, or where investment holding companies trade at large discounts.
Often in contrast to a value investor, a growth biased investment style is one that places a higher emphasis on company earnings and specifically on those companies that are able to grow their earnings at levels at a higher rate than competitors. The key premise with this strategy is that discounted future earnings determine the current value and that those businesses that are able to grow ahead of their competitors or the overall market will reward shareholders with higher company value over time.
A more extreme version of a growth strategy is a momentum investment strategy. This is a strategy that focuses on recent price movement of shares, investing into shares that have moved up ahead of competitors. History shows that price momentum has a high degree of repeatability.
Each one of these investment strategies and styles has both merits and drawbacks. Often investment managers blend investment styles, but at the same time there is typically a dominant style that the investment manager fashions their philosophy and process around.
Investment styles themselves can move in and out of “fashion”. For example over the last few years, momentum and growth strategies have outperformed against value strategies. This can be seen in the chart below, where the momentum style of global markets is reflected against the value style. This has not always been the case and so investment managers with a strong value or contrarian bias have typically struggled versus their peers. Being in a position to blend various styles and strategies is therefore advantageous to investors.
Chart 1: MSCI Growth versus Value Indices
Ian de Lange
Tel +27 21 914 4966
Fax +27 21 914 4912
Wed, 08 Jun 2016
The board of directors announced the untimely passing of Mr Anthony Old.. . .
The board of directors (˘Board÷) of the company hereby announces the resignation of both Mr Barend Petersen from his position as chairman and non-executive director with effect from 22 May 2016. . .
A review of the financial results for the year ended 31 March 2016 by management has indicated that:
- the earnings per share is expected to be between 1 020 cents. . .
Revenue for the year lowered to R4.175 billion (2015: R4.261 billion). Gross profit increased to R1.260 billion (2015: R1.169 billion), operating profit rose to R648.8 million (2015: R561.5 million), profit attributable to equity holders of the group jumped to R445.8 million (2015: R334.9 million), while headline earnings per share grew by 9.6% to 139.9 cents per share (2015: 127.6 cents per share).
The board approved a gross dividend number 2 of 70 cents per share (2015: 6. . .
World Markets (Spot Prices)
|JSE Top 40||17:00||47716.20||-337.00||-0.70%|
|JSE Indust 25||17:00||73047.13||-793.35||-1.07%|
|USD / ZAR||19:59||14.7345||-0.1648||-1.11%|
|GBP / ZAR||19:55||21.2860||-0.3653||-1.69%|
|AUD / ZAR||19:55||10.9751||-0.1452||-1.31%|
|USD / JPY||19:59||106.8310||-0.4980||-0.46%|
|EUR / USD||19:59||1.1404||0.0049||0.43%|
|GBP / USD||19:59||1.4512||-0.0024||-0.17%|
Click here for the Sharenet Spot Price page
The JSE Today
* Includes all listed instruments on the JSE
|Index Name||RP||Move||% Move|
|Financial & Ind. 30||75,470.74||-921.32||-1.21%|
|Oil & Gas ||7,195.69||.00||0.00%|
|Oil & Gas Producers ||38,689.88||.00||0.00%|
|Basic Materials ||22,601.31||417.58||1.88%|
|Forestry & Paper ||51,507.16||-441.21||-0.85%|
|Industrial Metals ||6,564.96||126.99||1.97%|
|General Industrials ||172.14||-4.43||-2.51%|
|Consumer Goods ||79,751.12||-728.87||-0.91%|
|Automobiles & Parts ||4,590.06||-54.34||-1.17%|
|Health Care ||9,452.74||-71.39||-0.75%|
|Index Name||RP||Move||% Move|
|Food Producers ||9,350.95||-1.43||-0.02%|
|Personal Goods ||947.23||14.29||1.53%|
|Consumer Services ||18,766.07||-246.09||-1.29%|
|General Retailers ||7,857.24||-120.47||-1.51%|
|Travel & Leisure ||5,913.86||-31.27||-0.53%|
|Support Services ||2,002.39||-32.75||-1.61%|
|Non-life Insurance ||58,047.71||390.49||0.68%|
|Life Insurance ||39,134.97||-676.96||-1.70%|
|General Financial ||4,587.29||-33.97||-0.74%|
|SHARIAH TOP40 ||3,147.91||13||0.41%|
|FTSE/JSE SHARIAH ALL||3,458.97||17||0.50%|
|FTSE JSE Fledgling ||7,158.46||63||0.89%|
|FTSE/JSE Alt X ||1,511.10||-4||-0.24%|
|SA LISTED PROPERTY ||653.34||-10.40||-1.57%|
|CAPPED PROPERTY ||573.50||-1.18%|
|FTSE/JSE RAFI 40||9,670.65||14||0.14%|
|Capped Top 40||25,361.21||-155||-0.61%|
|Capped All Share||27,494.42||-163||-0.59%|
|JSE TABACO ||11,688.39||-172||-1.45%|
Click here for the Sharenet Index Summary page
Latest Consensus Changes**
|TKG||TELKOM SA LIMITED||BUY||07/06/2016|
|ARI||AFRICAN RAINBOW MINERALS||HOLD||06/06/2016|
|SPP||THE SPAR GROUP LTD||BUY||06/06/2016||
|Expected||Company Name||Fin. Date|
|09/06/2016||BSI STEEL||March 2016 (Final)|
|09/06/2016||MARSHALL||March 2016 (Interim)|
|09/06/2016||MARSHALL-||March 2016 (Interim)|
|09/06/2016||PERGRIN||March 2016 (Final)|
|09/06/2016||PERGRINP||March 2016 (Final)|
|ACG||Anchor Group Ltd.||09/06/2016||Confirmed||
Stock Exchange News Service
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