The investment team at PSG Asset Management recently completed a country-wide roadshow sharing their market and portfolio views with clients and advisers and have some insights to share regarding the PSG Stable Fund and the PSG Equity Fund.
Low equity funds back in the sweet spot
According to Chief Excecutive Officer Anet Ahern, PSG Asset Management believes that, for the first time in some years, the large fixed income portion of low-equity funds (like the PSG Stable Fund) has moved into a sweet spot.
“For a long time, large portions of the fixed income market offered investors negative real returns, making low equity funds dependent on equity markets to achieve their real return targets of 3-4%. Lately, however, the PSG Stable Fund has been spoilt for choice,” Ahern said. “This has enabled us to lock in real yields and acquire well-priced equities:
· we have been able to lock in real yields of up to 4% above inflation for five-year NCDs and also in shorter term credit without taking excessive duration risk;
· fear and uncertainty have driven government bond yields higher and real yields in excess of 3% have been available for the first time in years in 2016; and
· we have been able to acquire high quality equities at attractive valuations – both domestically and globally.”
Since inception, the PSG Stable Fund has returned 10.3% per year and has provided investors with an annualised real (above inflation) return of 4.7% at a very satisfactory level of risk.
PSG Equity Fund driving ahead
The PSG Equity Fund is a multi-award-winning fund with a long track record of outperformance. R1m invested in the fund in 2002 would have been worth around R12m at the end of September 2016 (net of all fees and costs) – an index investment would have yielded around R7m, an outperformance of nearly R5m.
“The fund has been able to acquire shares in some great companies at attractive valuations. We believe that this means that we will be able to continue to provide investors with solid returns,” says Ahern.
The fund is invested in quality companies with proven management teams like FirstRand, Imperial and Discovery.