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PSG flexible fund 20100930
- 1. Β
- 2. PSG has a track record in value creation CAGR = 56%* R100k invested in 1995 = R60m today * - Source : PSG Annual Report, Including unbundling of Capitec and re-investment of all dividends
- 3. By aligning themselves with great entrepreneurs... 2 PSG Tanzanite
- 4. Our Culture : Partnership . Which factors have the greatest predictive power in future out-performance by an investment firm? β β - Source: Institutional or Entrepreneurial Management? An analysis of organizational factors and their effect on manager performance. By David Finstad Factors PSG Tanzanite (Pty) Ltd Equity ownership in firm ο Low personnel turnover ο Small portfolio sizes ο Bottom-up stock selection ο Value philosophy ο
- 6. Simplified Product Offering Simplified product offering spanning the risk spectrum
- 8. The Year to 30 Sep 2010 Sources: Β© 2010 Morningstar, Inc. All Rights Reserved, I-Net Bridge PSG Flexible Fund average asset allocation for the year to 30 Sep 2010: 54% domestic equity, 20% foreign equity & 26% cash PSG Flexible Fund +25.0% ZAR appr. vs. USD 7.4% Inflation (Aug) +3.5% ZAR appr. vs. EUR 13.9% All Share (incl. div) +21.1% ZAR appr. vs. GBP 9.2% Resource 20 +10.4% DJ Industrial - ZAR +2.8% Industrial 25 +26.3% FTSE 100 β ZAR -1.8% Financial 15 +19.1% DAX β ZAR -5.5% Money Market +7.2% MSCI World - ZAR -3.1% All Bond +15.3% Brent Oil - ZAR +12.6%
- 11. Benefits of a Flexible Mandate A flexible mandate can help you navigate difficult markets Source: I-Net
- 15. Risk vs. Return The blue line joins the risk-free Govt Bond (bottom left) with the JSE ALSI (top right) β funds positioned above this line added value by delivering higher returns given the risk taken Source: PSG Tanzanite Research, Morningstar
- 16. Return & Asset Allocation We buy when there is fear and panic - our equity exposure increased to almost 100% in Mar 09, but has reduced over the past year as equity valuations recovered Source: PSG Tanzanite Research
- 17. Fund vs. JSE All Share Index The PSG Flexible Fund is 31% above its May 2008 high, whereas the JSE ALSI needs to increase by a further 5% to reach a new high Source: PSG Tanzanite Research
- 18. Price Earnings Ratio (βPEβ) = 13.8 Growth in underlying earnings per unit was 13.1%pa vs. growth of Fund at 19.1%pa. Despite the strong rand, earnings in rand is showing growth again Source: PSG Tanzanite Research
- 19. Price to Book Ratio = 1.8 Average price to book is 1.7 - similar to current levels. Growth in underlying NAV per unit was 17.2%pa, slightly behind growth of Fund at 19.1%pa. Source: PSG Tanzanite Research
- 21. The Fundβs Exposures β Strong Stable Businesses
- 23. Breakdown of Returns Good contribution from Capitec, Steinhoff, CIC, SABMiller, Anglo & Shoprite. Disappointing contribution from Liberty International & Berkshire Hathaway (ZAR appreciation). Source: PSG Tanzanite Research
Editor's Notes
- Each investment firm will have a different culture. Understanding a firmβs culture and how they think is very important to understanding how they will treat and view your money. We have an equity stake in this business, so we are owners, though we are more than that, we view ourselves as a partnership. We have a significant investment in this partnership both in terms of our time and wealth, but also in terms of our personal investment in the funds we run. We have our own money tied up in this. However, more importantly, we view the investors in our funds as partners and that creates a special set of rules that we take very seriously. We view ourselves as stewards of our clients capital , meaning we treat it exactly the same as our own. From that comes a culture of diligence β we had better understand how we apply the money entrusted to us β and that comes through diligent research in the companies that we invest in. You can expect us to keep turning over as many stones so that we can get the odds in our favour to eliminate mistakes and generate long term performance for you.
- There is a great study which asks which factors are the most important in choosing an investment firm that will deliver great performance in the future . Those who rely on past performance to select managers will likely be disappointed: research by the Frank Russell Company shows there is a negative correlation between a managerβs past three yearsβ performance and the subsequent three yearsβ performance. What it does say, based on an exhaustive study of a large sample of US investment firms is that those companies where: Managers have a high ownership in the firm, Which have low personnel turnover, Who run small portfolios of assets and have a rigorous, bottom up approach to selecting companies will most likely generate superior returns in the future for you. Interestingly β over the past 10 years we have only had one staff member leave, and that was to move into a different career.