PALMYRA ASSET MANAGEMENT
Palmyra Asset Management manages local equity and multi-asset funds on behalf of its institutional and individual clients, following a bottom-up relative valuation methodology to seek out true value and innovative opportunities.
The Palmyra BCI Stable and Palmyra BCI Balanced Funds maintained their neutral exposure to South African nominal bonds over the quarter while shortening the effective duration relative to the JSE All Bond Index (ALBI) in early March to reduce interest rate sensitivity due to the increased geopolitical risks surrounding the USA, Israel and Iran conflict.
During the quarter we maintained our neutral view on foreign equity exposure in both funds while increasing our exposure to the US Dollar (Stable Fund offshore exposure at 17.5% and the Balanced Fund offshore exposure at 34%). We reduced our allocation to SA shares (~5%) to derisk the funds, although we believe SA shares remain attractive on a relative basis.
Both funds ended the quarter marginally overweight industrials, neutral financials and underweight resources relative to the FTSE/JSE Capped All Share Index. Our exposure to the listed property sector for both the Stable and the Balanced Fund was maintained at 2% and 4% respectively.
| MULTI-ASSET STRATEGIC ASSET ALLOCATION | STABLE FUND | BALANCED FUND |
|---|---|---|
| Cash | Underweight | Underweight |
| Bonds | Neutral | Neutral |
| Property | Neutral | Neutral |
| Local Equity | Positive | Positive |
| Foreign Equity | Neutral | Neutral |
The Palmyra BCI SA Equity Fund is a general equity fund that follows a bottom-up relative value investment philosophy and only invests into South African equities. We reduced our exposure to both SA Inc and rand hedge shares to derisk the fund during the heightened geopolitical tensions in the Middle East. We still believe that local valuations are looking relatively attractive.
The fund ended the quarter marginally overweight industrials, neutral financials and underweight resources relative to the FTSE/JSE Capped All Share Index.
The Palmyra BCI Property Fund is a benchmark cognisant fund that follows a 12-month total return momentum factor investment strategy. The fund is rebalanced quarterly and at the end of the quarter we held a relative overweight position in Fortress REIT Limited, Growthpoint Properties Limited, Redefine Properties Limited, Resilient REIT Limited and Vukile Property Fund Limited.
Our underweight positions are in Burstone Group Limited, Lighthouse Capital Limited, MAS Plc, NEPI Rockcastle and Sirius Real Estate Limited.
The Palmyra BCI Global Flexible Fund of Funds is managed according to a top-down investment process and in line with our house view, we decreased our foreign equity exposure to ~82% and foreign fixed income to ~8% while total ZAR and USD cash was increased 10%. We maintained a shorter modified duration of 5.7 relative to our fixed income benchmark duration of 6.2. As anticipated, the US Fed kept rates unchanged, and the market is still pricing in one potential rate cut of 25bps for 2026. We will continue to adjust our duration in line with these moves.
Our geographic allocation favours an overweight exposure to developed market equities, and we finished the quarter marginally overweight equities domiciled in the US relative to their weight in the MSCI World benchmark.
Please click on the Palmyra logo for a link to its website where you will find more information on the company and funds managed.
The below FSCA regulated companies, who conduct asset management and investment services, are owned by Orion Investment Managers (OIM). These subsidiary companies operate in a number of different jurisdictions, and each provides investment management and products to their clients. Orion Investment Managers, is, in turn, owned by Spirit Invest International, which owns a portfolio of companies in the investment sector...
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