Fund factsheet motivation: Allan Gray balanced fund

Jacques Plaut, Portfolio Manager at Allan Gray.

The Allan Gray Balanced Fund’s performance over the past quarter was helped by overweight positions in KAP Industrial Holdings and British American Tobacco, and by underweight positions in BHP Billiton and Steinhoff. It was hindered by being overweight Sasol and Remgro, and by being underweight in Richemont and Naspers. The fund increased its exposure to Mr Price and MMI, and reduced exposure to Standard Bank and Nedbank.

The ‎Portfolio Manager at Allan Gray, Jacques Plaut, says asset allocation can add value, but typically not as much as stock selection.

“We estimate that asset allocation has added somewhere between 0.60% and 0.75% alpha since inception. We can’t be more precise than this, because the Balanced Fund uses a peer benchmark, which has varying weights to each asset class. These don’t sound like big numbers, but they compare well with the 1% that our imaginary asset allocator has added over time. The vast majority of the Balanced Fund’s outperformance has come from stock selection,” he says.

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