ACCORN INVESTMENT MANAGEMENT
Accorn is a multi-asset and long-only equity fund manager, following a top-down and bottom-up investment process that ensures a diversified selection of investments.
The Accorn BCI Balanced Fund maintained its exposure to South African nominal bonds over the quarter. However, the effective duration of the funds was shortened relative to the JSE All Bond Index (ALBI) due to increased volatility and risk. We feel that local bonds are still offering real attractive yields at current levels with an expected forward yield greater than our CPI +4% benchmark.
During the quarter, we reduced our foreign equity exposure in the fund to neutral and increased our exposure to SA shares as they looked more attractive on a relative basis.
During the quarter we took profits and reduced our weight to listed property for the Balanced Fund down to 6.0%.
| MULTI-ASSET STRATEGIC ASSET ALLOCATION | BALANCED FUND |
|---|---|
| Cash | Underweight |
| Bonds | Neutral |
| Property | Positive |
| Local Equity | Positive |
| Foreign Equity | Neutral |
Accorn BCI Equity Fund, following its top-down and bottom-up investment process, we reduced foreign equity allocation to 28%, while increasing our exposure to SA Inc shares to benefit from the relative attractiveness of the local market. The local equity allocation was overweight industrials, and underweight financials and resources.
Accorn BCI International Fund of Funds is a top-down managed fund and in line with our house view, we increased our position in foreign equities to approximately 75%, while decreasing our exposure to developed market fixed income instruments and cash. We maintained our marginally shorter duration relative to our fixed income benchmark.
Our geographic allocation favours an overweight exposure to developed market equities domiciled in US.
Foreign equities still look more attractive to us than foreign fixed income instruments, for now, and we expect developed market central banks around the world, excluding Japan, to continue cutting interest rates although the depth of the cuts is expected to be shallower than originally thought.
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