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 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. However, the effective duration of the funds was shortened relative to the JSE All Bond Index (ALBI) due to increased volatility and risk. The fund continues to benefit from the attractive real yields available.

During the quarter we reduced our foreign equity exposure in both funds to neutral from positive (Stable Fund exposure was reduced from 16.5% to 15% and Balanced Fund exposure from 32% to 28%) 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 both the Stable (down to 3.0%) and Balanced Funds (down to 6.0%).

The Palmyra BCI SA Equity Fund is a general equity fund that follows a bottom-up investment philosophy and only invests into South African equities. We increased our exposure to SA Inc shares vs rand hedges as our local valuations still look relatively more attractive. 

The fund ended the quarter marginally underweight financials and resources, while industrials were overweight.

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 December held a relative overweight position in Attacq Limited, Fortress REIT Limited, Fairvest Limited, Resilient REIT Limited and Hyprop Investments Limited.

Our underweight positions are in Equities Property Fund Limited, Lighthouse Capital Limited, MAS Real Estate, NEPI Rockcastle and Sirius Real Estate Limited.

The Palmyra BCI Global Flexible Fund of Funds is a top-down managed fund and in line with our house view, we increased our exposure to foreign equity to 81.85%, while foreign fixed income and cash were reduced to 18.15. We maintained a marginally shorter modified duration of 5.9 relative to our fixed income benchmark duration of 6.5. 

We expect that developed market central banks, excluding Japan, will continue to cut interest rates during 2025, however, the number of the cuts is expected to be less than previously anticipated, and we will adjust our duration in line with these cuts. 

Our geographic allocation continues to favour an overweight exposure to developed market equities domiciled in the US.