Cannon Asset Managers bags a R350m fund from Absa Multi Management

Cannon Asset Managers has been awarded a R350m equity fund mandate by Absa Multi Management, one of the companies within Absa Investments.

Cannon Asset Managers is one of four equity managers chosen for the Absa targeted return suite of funds. The suite comprises five funds which target an absolute return ranging from CPIX+3% to CPIX+7%. Each of the funds has an objective of no capital loss over a pre determined rolling time period, matched to the risk profile of the fund, while aiming to outperform inflation as measured by CPIX, also on a rolling basis.

Each fund in the range utilises the same investment managers, in order to maintain consistency across the suite, although the asset allocation mix alters according to the risk/return metrics of the fund. The funds use a blend of the traditional domestic asset classes – equities, bonds, property and cash – while also containing an offshore portion, to achieve their objectives.

“We utilise a rigorous selection process in order to identify superior asset managers,” explains Neville James, Absa Multi Management’s Head of Manager Research. “We employ a layered approach to manager selection: the initial step involves a quantitative and qualitative assessment to identify top-quality managers for a short list. In other words, we will first isolate those managers which we believe will be able to add value to our portfolios.”

The second step involves the analysis and selection of a group of managers which will blend together to optimise portfolio performance. “We draw up the optimal way of combining the managers to provide the most favourable outcome. Our philosophy is to optimise the asset allocation to achieve the highest level of probability of reaching our target returns,” describes James. “We then look to add alpha to that, to further enhance the probability of achieving the CPIX+ targets.”

Cannon Asset Managers adopts a distinctive value-investing approach to managing portfolios, employing a proprietary process to remove emotion from investment decisions. Its uniqueness means that the house blends well with other managers.

“One of the attractions of Cannon Asset Managers is that with a relatively small asset base, the company has greater investment flexibility. In addition, it has access to a broader investible universe, which means greater scope for adding alpha,” James concludes.

“We are delighted with this vote of confidence from Absa Multi Management,” adds Geoff Blount, CEO of Cannon Asset Managers. “We value them as a client and look forward to a wonderful partnership.”