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 lengthened relative to the JSE All Bond Index (ALBI) due to local bonds still offering real attractive yields at current levels with an expected forward yield greater than our CPI + 4% benchmark.
During the quarter, we maintained our foreign equity exposure in the fund at 32% and maintained our exposure to SA shares as they remain attractive on a relative basis.
The fund ended the quarter marginally overweight industrials and neutral resources while remaining underweight financials relative to the FTSE/JSE Capped SWIX, and we increased our weight to the listed property sector for both the Stable, up to 3.5% and the Balanced Fund up to 5.0% on improving property metrics.
| MULTI-ASSET STRATEGIC ASSET ALLOCATION | BALANCED FUND |
|---|---|
| Cash | Underweight |
| Bonds | Neutral |
| Property | Positive |
| Local Equity | Neutral |
| Foreign Equity | Positive |
Accorn BCI Equity Fund, following its top-down and bottom-up investment process, we increased our foreign equity allocation to 32%, while maintaining our exposure to SA Inc shares to benefit from the relative attractiveness of the local market.
The local equity allocation was overweight industrials, neutral resources while remaining underweight financials relative to the FTSE/JSE Capped SWIX benchmark.
Accorn BCI International Fund of Funds follows a top-down investment process, and in line with our house view, we increased foreign equities to approximately 82%, 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 while we remain neutral weight to equities domiciled in the US relative to their MSCI World benchmark weights.
Foreign equity valuations remain attractive when compared to foreign fixed income instruments, for now, and as expect the US Fed has continued to delay cutting interest rates while other developed market central banks around the world, excluding Japan, have continued cutting rates.
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