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Global Feeder fund reaches ZAR100m as local desire to externalise assets continues

10 September 2019 Stonehage Fleming

South Africans have a healthy appetite for global feeder investments in the current environment of domestic political and economic uncertainty, as we have seen with our feeder fund which launched less than a year ago and has already surpassed the ZAR100 million mark in assets under management.

Feeder funds are Rand denominated funds that ‘feed’ investments into a ‘Master’ offshore fund denominated in foreign currency. The Stonehage Fleming Global Best Ideas Equity Feeder Fund (GBI Feeder Fund) gives South African investors direct access to Stonehage Fleming’s flagship Global Best Ideas Equity Fund (GBI Fund or Master Fund).
Since inception on 16 August 2013 to 31 August 2019, the Master Fund’s annualised return is +10.8% per annum in USD (versus the MSCI AC TR’s annualised return of +7.5% per annum in USD for the equivalent period) 1. The GBI Feeder Fund launched in December 20182.

Not only do feeder funds allow you to forego the complications of investing directly offshore using your investment allowance or other foreign currency, they also typically offer lower investment minimums and also the facility to make frequent investments through a debit order. This is helpful, as the minimums of most direct offshore funds – whether they’re expressed in US dollars, Euros, or UK pounds - are often too dear for many investors when converted into Rands.

Investors can invest in the GBI Feeder Fund through a range of investment platforms from managers such as Glacier, Momentum and Investec, or directly through Stonehage Fleming. Looking at the minimum investment, were you to invest directly in the GBI Fund using your offshore allowance, you’d need US$50,000 or GB£35,000, compared to the minimum ZAR10,000 needed to invest in the GBI Feeder Fund. Further, certain local investment platforms are prepared to waive the minimum, at their discretion. Subsequent investments from ZAR500 per month may be made.

The GBI Fund itself is managed from London by a South African, Gerrit Smit. His investment philosophy is to invest in high quality listed businesses that operate globally with strong competitive advantages. But not too many different businesses. Smit’s strategy is to hold a maximum of 30 shares in a high conviction focused portfolio to keep them for the long term until they may become overvalued.

Currently over 70% of the GBI Fund is invested in US listed shares, and the top ten holdings include names like Visa, Nike, Microsoft, Accenture, Estee Lauder and Nestlè – shares that aren’t available to investors through the JSE. However, looking at where the underlying companies in the GBI Fund derive their revenues from, a good split of regions is revealed, showing the fund is regionally well diversified:

Estimated Regional Revenues % of GBI Fund

North America

46.4

Emerging Markets

31.7 (predominantly Asia)

Continental Europe

17.7

UK

4.2

Total:

100

Source: Stonehage Fleming Investment Management Limited; Link Fund Administrators (Ireland) Limited, July 2019

It is also well diversified in terms of sectors with positions in Technology, Staples, Discretionary, Healthcare, Communication, Financials, Industrials and a residual amount in cash.

 


Disclaimer: https://www.stonehagefleming.com/investments/sa

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