31 October 2021
INVESTING
Laurium launches its first active global equity fund BY KIM ZIETSMAN Head: Business Development and Marketing, Laurium Capital
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aurium has been investing in global markets for many years as a key component of our multi-asset franchise, with Murray Winckler leading
the team on global strategy, given his previous experience as head of global markets (equity and debt) at Deutsche Bank. This has been done mostly through active asset allocation to passive indices, with the team focussed on stock picking in South Africa and the rest of Africa. As global allocations become an increasingly large part of multi-asset funds in South Africa, it is important to develop a dedicated global capability. Major shifts in the global research environment have provided a boost to smaller teams in South Africa analysing the global equity universe. From a macro perspective, there has been a globalisation of industry trends, boosted by technology and knowledge transfer, and we have seen increased global capital flows and market (and sector) correlations. There is a greater access to information through the formalisation of investor relations roles at listed companies, improved comparability of financial reporting standards, and raw data availability with vast computing power and resources (Bloomberg etc) that allows improved quantitative screening.
The Laurium team combines this strong base of information with deep industry knowledge and economic understanding to seek out the best investment opportunities. The investment process identifies companies with a greater ‘growth and quality’ bias than the SA local equity selection process. Laurium Global Active Equity Fund The section 65 Laurium approved Global Active Equity Fund is an actively managed, concentrated portfolio of 20-25 global shares that aims to outperform the MSCI All Country World Index (ACWI) over the long term. Portfolio construction is not constrained by reference to either geography or benchmark. Position size is based purely on the combination of the expected return from each position and the degree of confidence and conviction gained from the investment research process. Laurium’s modest base of assets allows the manager to include special situations and shorter-term trade ideas without compromising the core long-term focus of the fund.
Rob Oellermann, Portfolio Manager, Laurium Capital
About the Portfolio Manager – Rob Oellermann The Laurium Global Active Equity Fund is managed by Rob, with support from the rest of the combined Laurium team. Rob began managing international equities in 2000 as part of Coronation’s initial foray into offshore markets. Over his career, Rob has more than seven years of experience investing in global equities. He was a founding member of Tantalum Capital where he was CIO. Laurium acquired Tantalum Capital in December 2020. The Tantalum team, led by Rob Oellermann, had been building its global equity capability, which complements Laurium’s efforts in this area.
Lower interest rates can lead to risky investor behaviour BY KATHY DAVEY Investment Manager, Ashburton Investments
federal funds rate peaked – and now account for almost as much equity trading volume as mutual and hedge funds markets combined.
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ince the start of the Coronavirus (COVID-19) pandemic, we have seen an unprecedented response from central banks globally, and the use of monetary policy tools to stimulate growth. Although interest rates in developed markets were already very low going into the pandemic, we have seen further cuts, and the notion that interest rates will be ‘lower for longer’ is now widely accepted. These stimulus efforts work in part because they encourage more risk-taking, and low interest rates are generally very positive for equities for a couple of reasons. Firstly, lower interest rates reduce the discount rate used to assess the present value of a company’s future cashflows, thereby increasing the value of the company. Secondly, a company’s future profits are likely to be higher if consumers have more money to spend due to lower interest rates. However, we need to be aware that investors who are discouraged by the lower returns offered by safer asset classes due to lower interest rates may be taking excessive risks or even fall prey to fraudulent activities as they attempt to achieve higher returns in riskier assets. As indicated in the accompanying graph, retail traders have been growing their share of United States equity trading volumes continuously since 2019 – when the US
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such as social media sites. In addition to this, retail investors tend not to consider the benefits of a diversified portfolio, and may make big and leveraged bets (through options as indicated in the chart below) on individual stocks, putting their future savings at risk as the long-term nature of equity investing is less of a consideration.
Source: Bloomberg Intelligence, Financial Times
The lure of stronger equity returns against a backdrop of declining interest rates has no doubt been a factor for this. However, increased retail activity in equity markets has been further compounded by the COVID-19 pandemic, as individuals in many countries have received stimulus cheques and have increased savings due to having fewer activities on which to spend money. Investing in the stock market is clearly not limited to professional investors. There are different levels of sophistication when it comes to retail investors. However, many retail investors may be less inclined to consider the fundamentals of the companies they are investing in, and can often trade on speculation gathered on platforms
Source: Bloomberg Intelligence, Financial Times
For all these reasons, we encourage investors who are looking to achieve higher returns through investing in riskier asset classes (such as equities) to put their money into diversified portfolios such as the Ashburton Global Leaders Equity Fund, where each individual stock has been chosen for its ability to generate sustainable, compounding returns over the longer term. The fund invests in quality megacap companies that offer exposure to attractive thematic themes of the future, such as electrification, technology and healthcare.
