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 lengthened relative to the JSE All Bond Index (ALBI) due to the attractive real yields available.
During the quarter we retained our positive view on foreign equity exposure in both funds (Stable Fund exposure at 17% and the Balanced Fund exposure was 32%) and maintained our neutral weighting to SA shares as they remain attractive on a relative basis.
The fund ended the quarter marginally overweight resources and industrials and remained underweight financials relative to the FTSE/JSE Capped SWIX. We increased our weight to the listed property sector for both the Stable Fund, up to 3.5% and the Balanced Fund up to 6.5%, on improving property metrics and the expectation of further rate cuts by the SARB.
| MULTI-ASSET STRATEGIC ASSET ALLOCATION |
STABLE FUND |
BALANCED FUND |
|---|---|---|
| Cash | Underweight | Underweight |
| Bonds | Neutral | Neutral |
| Property | Positive | Positive |
| Local Equity | Neutral | Neutral |
| Foreign Equity | Positive | Positive |
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 reduced our exposure to SA Inc shares and increased our weight in the rand hedges as local valuations are still looking relatively attractive.
The fund ended the quarter marginally overweight resources and industrials and remained underweight financials relative to the FTSE/JSE Capped SWIX.
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 switched to a relative overweight position in Emira Property Fund Limited, Equities Property Fund, Fortress REIT Limited, Resilient REIT Limited and Vukile Property Fund Limited.
Our underweight positions are in Burstone Group Limited, Lighthouse Capital Limited, NEPI Rockcastle, Redefine Properties Limited and SA Corporate 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 maintained our exposure to foreign equity at ~85%, while foreign fixed income was also maintained at ~10% with cash (~5%) making up the balance of the fund. We maintained a shorter modified duration of 4.8 relative to our fixed income benchmark duration of 6.5. As anticipated, the US Fed cut rates in September by 25bps, and the market is pricing in two further rate cuts of 25bps each this year. 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 are neutral 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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