Q3, 2013 Letter to investors
As far as searching for the best available investment managers goes, we are pleased to announce the appointment of a new Best of Breed™ manager, the US-based First Pacific Advisors (FPA). FPA assumed investment management responsibility for the Nedgroup Investments Global Balanced Fund in June 2013 and replaced Sarasin & Partners. The name of the fund has changed from the Nedgroup Investments Global Balanced Fund to the Nedgroup Investments Global Flexible Fund. This change also impacts the Nedgroup Investments Global Balanced Feeder Fund, which is a rand denominated feeder fund that gives investors exposure to the Nedgroup Investments Global Flexible Fund.
The benchmark, fees, and likely asset allocation limits are not changing; however the maximum allowable equity exposure has been increased from 75% to 100% to allow for additional flexibility in extreme market conditions. It is still expected that the fund will typically hold between 40-75% in equity.
The fund will be managed by Steven Romick, a managing partner at FPA and a Morningstar Fund Manager of the Decade Nominee in 2009. Steven founded and has managed their Contrarian Value strategies since 1993. This includes the Crescent Fund, which the Nedgroup Investments Global Flexible Fund will be modelled on. Over this 20-year period, Steven and his team have developed an enviable performance track record.
FPA’s independence, skill set, focus and alignment of interests make them a natural choice to manage the Nedgroup Investments Global Flexible Fund. The article by Steven Romick provides further details on their business, investment philosophy and current market views.
As for continually reviewing our selected managers to ensure the reasons for selecting them remain in place, the article on page 8 relates to one of our managers who is currently experiencing a period of poor relative performance. Short-term underperformance is one of the uncomfortable but inevitable realities of good active managers. We believe it is critical that investors acknowledge this but also that we communicate clearly and honestly the reasons and thinking behind the performance. The article by Piet Viljoen at RE:CM, who manages the Nedgroup Investments Managed Fund, attempts to do this.
One of our key objectives this year is to enhance awareness of our brand and we are pleased to have launched a new brand campaign. It highlights the important roles that calmness, reason and experience play when it comes to investing, and uses the story of “The Miracle on the Hudson” to illustrate this point. For more on this read here and click here to view the campaign.
Nedgroup Investments has continued to see very strong flows and growth of assets in the first quarter. Many thanks for the support. We will make every effort to repay this faith with good long-term returns.