RE:CM GLOBAL FUND
* Raging Bull Award for the Best Offshore Global Equity Fund – the top-performing fund on straight performance in ProfileData’s offshore global equity general sector over three years to December 31, 2010
Local boutique manager RE:CM attributes its second Raging Bull Award for best offshore global equity fund in as many years to investment decisions based on the thorough research of companies.
Despite volatile markets, the RE:CM Global Fund returned 2.5 percent a year over the past three years in rands against its benchmark, the MSCI World index, which returned a negative 7.92 percent in rands, ProfileData figures show.
The fund, established in March 2006, is just a few months shy of having a solid five-year track record.
“Our approach to stock-picking is to focus on building knowledge and have an in-depth understanding of a select number of well-established and well-known businesses that have a proven record of accomplishment and ability to deliver,” Piet Viljoen, the co-founder of RE:CM, who manages the fund with Daniel Malan and Wilhelm Hertzog, says. Viljoen says if he does not find enough high-quality equity investments available at attractive prices, he can invest a portion of the fund in conservative asset classes such as cash.
Among global equity funds that are registered with the Financial Services Board and can be marketed in South Africa, the RE:CM Global Fund is one of only two funds to provide a positive return in rands for the three years to December 2009 that were dominated by the global credit crisis.
Viljoen says emerging markets have strongly out-performed developed markets, to the extent that valuations of emerging markets are trading at all-time highs relative to developed markets.
“The fund eliminated almost all emerging market exposure over the second half of 2010.
“In 2009, when valuations of global equity markets (and thus prospective risk) were low, the fund was fully invested in global equities – and, as a result, we grew capital. Now, valuations of global equities are high, because prospective risks are high, and we are back into protection mode again,” Viljoen says.
The fund’s currency exposure is still predominantly in United States dollars. Viljoen says although the US is trying to devalue its currency to boost economic growth, so are most other monetary regimes around the world. “At present, according to purchasing power parity calculations, the US dollar is still significantly undervalued,” he says.
“In the aggregate, the companies owned by the fund generate more than 20 percent of their revenues from emerging markets despite almost none of them being listed in those parts of the world.”
Looking at the year ahead, Vijoen says the fund has almost completely sold off any residual emerging market exposure it had and has increased its holdings of good-quality companies (with global franchises) that are listed predominantly on developed market bourses.