Top performing Cadiz Equity Ladder Fund now exceeds R1 billion

Strong net inflows, as a result of the Cadiz Equity Ladder Fund consistently meeting investor expectations by delivering on its ‘protected equity’ mandate, have for the first time pushed the fund’s assets under management above the R1 billion mark.

Paul Hutchinson, Head of Cadiz Collective Investments said; ‘In the difficult investment environment of the past 18 months, the Cadiz Equity Ladder Fund has appealed to retail and multi-manager investors who wish to remain invested in the equity market but who require an element of downside protection. Specifically the fund aims to achieve equity returns with substantially less risk, while targeting capital preservation over the short term through equity portfolio protection’.

Hutchinson added that the benefits of ‘protected equity’ as an investment strategy are most evident in the accompanying Morningstar graph. It illustrates the performance of the Cadiz Equity Ladder Fund and the FTSE/JSE Africa Top40 Index since the top of the South African equity market on 23 May 2008 to 31 August 2009.
(Click on image to enlarge)

The graph shows that while the market was down 26.84% over this period, the Cadiz Equity Ladder Fund was up 19.12%, a difference in performance of some 46%. At its worst the Cadiz Equity Ladder Fund was down by approximately 18%, less than half the market’s approximate 43%.

Francois Finlay, the fund manager of the Cadiz Equity Ladder Fund commented: ‘The level of protection provided over this period has been particularly pleasing given that, on average, we target an effective market exposure of 75% of the portfolio. What this effective market exposure means is that if the market were to fall by 10%, we would expect the fund to fall by 7.5%. When we are negative on the market, as we were in April / May of last year, we will reduce this effective market exposure to as low as 50% by putting in place derivative strategies that increase the fund’s downside protection. When positive we will increase the effective market exposure to as high as 90%’.

Finlay concluded that following the recent bounce in equity markets and the Cadiz Equity Ladder Fund from their lows of March 2009, the fund had once again increased its level of protection.