Retail access to the RECM global fund reopened through innovative partnership

Value investment house RECM has partnered with Prescient to reopen access for retail investors to the top ranked US dollar denominated RECM Global Fund. Retail investors can once again get exposure to a global portfolio across a range of asset classes that trade at a significant margin of safety to their intrinsic value.

“Up until the end of January 2014 South African retail investors could invest in rands and get US dollar exposure in the RECM Global Fund through an investment in the RECM Global Feeder Fund,” says Doug Thompson, RECM’s head of business development. “Unfortunately, from February the foreign retail capacity for discretionary investors was fully subscribed and we had to close the Fund to retail investors. While the Global Feeder Fund is still available for compulsory and institutional investments, we’ve been looking for ways to meet the demand for offshore exposure in rands from retail discretionary investors.”

The RECM Global Fund aims is to generate returns significantly ahead of US inflation and commensurate with equities over the long term. According to Thompson, the Fund invests mainly in large global companies at a significant discount to intrinsic value. It also uses the flexibility of its mandate to protect capital and enhance returns by investing in other mispriced global assets from time to time.

“RECM’s innovative partnership with Prescient effectively reopens the RECM Global Fund for South African retail investors through the Prescient RECM Global Feeder Fund on the same basis and at the same fees as the RECM Global Feeder Fund,” says Thompson. “Investors can access the Prescient RECM Global Feeder Fund through their financial advisors, directly from RECM’s website and through leading Linked Investment Service Providers such as Allan Gray and Investec.”

RECM’s value approach to investing has a number of important benefits for investors and the RECM Global Fund has been very successful in implementing this approach. “As an investment house, we invest with the dual goals of generating returns ahead of inflation while providing protection against the risk of significant capital loss,” says Thompson. “The RECM Global Fund has a benchmark of US CPI +6% - a hurdle the Fund has managed to beat since its inception in March 2006. We build in a margin of safety to each investment by only allocating capital at a healthy discount to an asset’s intrinsic value. This helps to limit the risk of capital loss where there is a market correction or where our investment thesis doesn’t play out as we expect.”

Thompson points out that there has been a very rapid narrowing of the margin of safety across global markets. “The US market rerated to valuations above its long term average. European markets also rerated substantially, but we were able to rotate into more attractive opportunities in Europe and the UK. The Fund has allocated capital to several sectors that are out of favour with the markets, but which we think show excellent long-term value – especially global oil and gas, and international resources and mining.

“Interestingly, our bottom up analysis is showing far fewer undervalued opportunities in developed markets,” says Thompson, “But we’re still seeing opportunities in certain unloved sectors and specific niches in some of the developing markets are starting to get interesting. We believe retail investors who haven’t been able to access the RECM Global Fund’s unique investment approach will welcome the introduction of the Prescient RECM Global Feeder Fund.”