(For financial advisors & professional investors by Ryan Jamieson.)
The flagship, multi-asset fund solution, the Fairtree Balanced Prescient Fund, has produced stellar inflation-beating returns over the last 5 years and continues to challenge the larger, traditional fund solutions in the popular >R1tn multi-asset fund category.
According to Morningstar, this top performing fund, managed by Jacobus Lacock and Stephen Brown, ranks 2nd over 5 years and 3rd over 3 years in the multi-asset, high-equity fund category.
Investors looking to include a well-diversified, multi-asset fund solution in their portfolios have embraced the fund. The fund typically holds a strategic asset allocation that is regularly rebalanced and is exposed to predominantly growth assets over time, i.e., SA Equity 50%, Global Equity 17.5%, SA Bonds 17.5% (representing 85% of the fund through market cycles).
The fund has excelled due to the combined capabilities, skills, and alpha generation of various Fairtree standalone fund solutions with proven and enviable track records of top fund performance. The combination of these capabilities in the fund forms the bedrock structure of this multi-asset fund. The funds and managers included in the Fairtree Balanced Prescient Fund are specialist managers, who manage their own fund solutions.
The Fairtree Balanced Prescient Fund, as a multi-asset solution, appeals to investors seeking broad asset class exposure, seeking out specific building blocks in their models, and those who prefer to select and include specific capabilities and skills when building solutions for investors across asset classes while providing inflation beating returns.
The Fairtree Equity Prescient Fund and the Fairtree Global Equity Prescient Fund have carved out a very relevant presence in this regard, and while both are included in the Fairtree Balanced Prescient Fund as standalone solutions, the funds rank highly in their respective peer groups with commensurate track records as a top performing funds. Both the Fairtree Equity Prescient Fund and the Fairtree Global Equity Prescient Fund rank 3rd in their respective fund categories over both 3 and 5 years (to end-December 2022).
The Fairtree Equity Prescient Fund has already got impressive runs on the board and boasts a decade-plus return stream that has outstripped the fund benchmark (and almost all of the category peer group). The Fairtree Global Equity Prescient Feeder Fund is certainly on its heels, with a track record exceeding 6 years and a return stream confirming that a South African-rooted asset manager can generate competitive returns on the global equity stage. The benchmark of the global equity fund is the S&P Global 1200 Index.
Anticipated, heightened levels of volatility during the calendar year ahead are sure to create an advantage for active managers to add value when it comes to mispriced assets and higher levels of uncertainty. 2023 could indeed be the year of active managers and stock-pickers – with alternative investments a close second. Time will certainly tell!
If DM global equity markets remain subdued in 2023 (in the grip of recession fears and/or an earnings slowdown in the US and Europe, or both), and if the mighty USD finally show some cracks and weakens, it may be an opportune time to reconsider increasing exposure to global equities and upweight global growth assets. Especially in light of the changes to Regulation 28 and the adjusted global exposure limits.
The Fairtree Global Equity Prescient Feeder Fund has proven its mettle. The fund is managed by Cornelius Zeeman and André Malan and is suitable for investors that invest in a traditional building block, model portfolio approach, or investors that simply want to up-weight global equity as an asset class within a ‘core and explore’ solution for clients.
The Fairtree Global Equity Prescient Funds’ exemplary track record is illustrated in the graph above (left) that shows a sample of 57 investment houses with a global equity fund with a track record of 3 years on the X-axis and their ‘best’ SA equity fund over the same period on the Y-axis.
The graph above (right) captures the same global equity / local equity fund inputs (a sample of 41 investment houses with a relevant global equity fund track record) and return outcomes but over a 5-year term. The graph illustrates how few asset managers in South Africa have the depth and skill in both capabilities worthy of attracting both local and global equity flows on a sustained basis.