SIM unit trust performance on the up and up
The unit trust performance of South Africa's second largest asset manager, Sanlam Investment Management (SIM), has undergone a radical five year turnaround which has seen it move from the bottom quartile to top five according to the latest PlexCrown ratings the biggest improvement in placement of any company over the period. The Sanlam Small Cap fund has been the top performing unit trust in South Africa for the past five years and the company scooped two Raging Bull Awards and three S&P Awards in 2007 alone.
The success can be attributed to strong leadership and deep-rooted changes at the investment house. Now a lean and modern unit trust business, SIM uses a pragmatic, value-driven investment style. This form of active asset management coupled with heavy investment in research and investment professionals is delivering outstanding, broad based performance.
Claude van Cuyck, head of equities at SIM, said, "We believe superior returns are generated through a systematic, disciplined and focused research driven process. We have one of the most sophisticated decision support systems in the country; much of it developed in-house, and have 18 analysts generating outstanding and innovative research."
Unlocking value in South African companies sometimes means active involvement, according to Van Cuyck, "We do, at times, play a hands-on role in unlocking shareholder value. I think our active involvement in Barloworld was a true success story for us and an example of how we are able to help unlock value. When choosing which companies to invest in there are certain critical criteria that we need to consider like having top quality management, a sustainable competitive advantage, sound industry and growth prospects and critically, the importance of buying businesses below our calculated fair intrinsic value."
Van Cuyck said that, right now, one sector SIM was watching closely was banking. "Standard Bank is a particular favourite, although we also favour MTN because of its potential in developing countries. We have limited our exposure to cyclical retail stocks given the increased risks related to the recent interest rates hikes".
Van Cuyck outlined further factors that contributed to the improved performance: "Along with the rest of the businesses within Sanlam's investment cluster, we have constructed our business into boutiques which incentivise individuals to take ownership of their products and exhibit entrepreneurial flare. It is this focus and desire to perform which has allowed us to achieve these great results."
