Out Outcom ome Mat Matter ers November 2019 Jako de Jager Head of - - PowerPoint PPT Presentation

Out Outcom

• me Mat

Matter ers

November 2019

Jako de Jager Head of Retail Portfolio Solutions

Back to basics: Portfolio delivery and positioning

Page | 39

AGENDA

Momentum Investments | 2019 Page | 39

The importance of setting a strategic asset allocation Understanding the market environment Fund delivery and positioning Managing towards your objectives Incorporating responsible investing principles Closing 01 | 02 | 03 | 04 | 05 | 06 |

The importance of setting a strategic asset allocation

Asset allocation framework

• Asset allocation views are devised and implemented in an outcome‐based solution for the

following reasons:

• To determine the asset class exposure to deliver on the longer‐term client objectives
• To inform the dynamic direction of asset class returns that will influence the path to the client objective
• To inform shorter‐term anomalies in the market to inform a risk management overlay on the fund
• Asset allocation views are implemented within funds in relation to the objectives and influence

delivery and success

70% Asset allocation 15% Investment strategy 8% Investment mandate 7% Other

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Strategic asset allocation Dynamic asset allocation Tactical asset allocation Long‐term perspective Strategic view and departure point (10 years) Not influenced by current valuations Medium‐term perspective Dynamic asset allocation views (three to five years) Influenced by valuations – Scenario based views and analysis Provides a shorter‐term perspective Tactical asset allocation views (one year) Strongly influenced by valuations – Macro and micro risks

Asset allocation framework

LISTED PROPERTY INVESTMENT TEAM

Philosophy and process

Market delivery

Asset class returns

One year to October 2019 6.1% 8.1%10.1% 6.0% 0.8% 2.4% 13.0% 7.3% 16.1% 11.2% 21.9% 7.3% 7.7% 7.4% 0% 5% 10% 15% 20% 25% CPI +2% CPI +4% CPI +6% Local Equity Local Property Local ILB Local Bond Local Cash Global Equity Global Bonds Global Property (ASISA) MA High Equity (ASISA) MA Medium Equity (ASISA) MA Low Equity

Sources: Momentum Investments, Morningstar, Iress, msci.com, yieldbook.com, ft.com

Sources: Momentum Investments, Morningstar, Iress, msci.com, yieldbook.com, ft.com

Real returns achieved

One year to October 2019 1.9% ‐3.3% ‐1.7% 8.9% 3.2% 12.0% 7.1% 17.8% ‐5% 0% 5% 10% 15% 20% Local Equity Local Property Local ILB Local Bond Local Cash Global Equity Global Bonds Global Property Real Return Achieved (12m) Long Term Real Return Expectation

6.7% 8.7% 10.7% 3.2% ‐3.1% 1.3% 8.5% 7.4% 15.0% 6.2% 13.9% 5.3% 5.6% 6.1% ‐4% ‐2% 0% 2% 4% 6% 8% 10% 12% 14% 16% CPI +2% CPI +4% CPI +6% Local Equity Local Property Local ILB Local Bond Local Cash Global Equity Global Bonds Global Property (ASISA) MA High Equity (ASISA) MA Medium Equity (ASISA) MA Low Equity

Sources: Momentum Investments, Morningstar, Iress, msci.com, yieldbook.com, ft.com

Asset class returns

Three years to October 2019

7.0% 9.0% 11.0% 3.5% 2.3% 3.2% 7.5% 7.2% 13.8% 8.2% 14.5% 5.4% 5.4% 6.2% 0% 2% 4% 6% 8% 10% 12% 14% 16% CPI +2% CPI +4% CPI +6% Local Equity Local Property Local ILB Local Bond Local Cash Global Equity Global Bonds Global Property (ASISA) MA High Equity (ASISA) MA Medium Equity (ASISA) MA Low Equity

Sources: Momentum Investments, Morningstar, Iress, msci.com, yieldbook.com, ft.com

Asset class returns

Five years to October 2019

Our commitment to

TRANSFORMATION Fund delivery and positioning

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Contributors and detractors from returns

Actions and positioning that detracted from returns Subdued asset class returns from domestic growth asset classes Active underperformance from global building blocks compared to market benchmarks, but positive in nominal terms and vs peers Active underperformance from SA Flexible Fixed Interest Fund in short term Lower global allocation in more conservative fund (Focus 3 and Target 3) Actions and positioning that contributed to returns Increased global allocation after strategic asset allocation changes in the second and third quarters of 2018 Tactical overweight to local equities compared to local property Tactical overweight to cash compared to local inflation‐linked bonds Active outperformance from most local building blocks compared to market benchmarks Inclusion on global listed real estate Currency hedge overlays

Focus Fund of Funds: Outcomes

One year to October 2019

CIS disclosure Collective investment schemes in securities are generally medium‐ to long‐term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future

• performance. Momentum Collective Investments (RF) (Pty) Ltd (the manager) does not provide any guarantee, either with respect to the capital or the return of a portfolio. For certain portfolios the manager has the right to close these

portfolios to new investors to manage them more efficiently, in accordance with their mandates. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. The collective investment scheme may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Different classes of participatory interests apply to these portfolios and are subject to different fees and charges. A schedule of fees, charges and maximum commissions is available on request from the manager, or is available on the website (www.momentum.co.za/collectiveinvestments).Forward pricing is used. Source: Morningstar, Momentum Investments

0.7% 0.7% 0.9% 0.3% 0.3% 0.8% 1.0% 0.1% ‐0.9% ‐0.3% ‐1.0% ‐0.5% 0.0% 0.5% 1.0% 1.5% Momentum Focus 7 Fund of Funds B2 Momentum Focus 6 Fund of Funds C Momentum Focus 5 Fund of Funds B2 Momentum Focus 4 Fund of Funds C Momentum Focus 3 Fund of Funds B2 Relative to Strategic Asset Allocation Relative to Asisa Peer Group Average

CIS disclosure Collective investment schemes in securities are generally medium‐ to long‐term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future

• performance. Momentum Collective Investments (RF) (Pty) Ltd (the manager) does not provide any guarantee, either with respect to the capital or the return of a portfolio. For certain portfolios the manager has the right to close these

portfolios to new investors to manage them more efficiently, in accordance with their mandates. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. The collective investment scheme may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Different classes of participatory interests apply to these portfolios and are subject to different fees and charges. A schedule of fees, charges and maximum commissions is available on request from the manager, or is available on the website (www.momentum.co.za/collectiveinvestments).Forward pricing is used. Source: Morningstar, Momentum Investments

Target Fund of Funds: Outcomes

One year to October 2019 2.0% 1.9% 1.8% 1.1% 0.7% 2.8% 2.9% 1.5% 0.8% 0.3% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Momentum Target 7 Fund of Funds C Momentum Target 6 Fund of Funds C Momentum Target 5 Fund of Funds C Momentum Target 4 Fund of Funds C Momentum Target 3 Fund of Funds C Relative to Strategic Asset Allocation Relative to Asisa Peer Group Average

7.8% 10.2% 12.5% 8.3% 9.6% 10.0% 0% 2% 4% 6% 8% 10% 12% 14% Momentum Focus 3 FoF B2 Momentum Focus 5 FoF B2 Momentum Focus 7 FoF B2 CPI + objective Momentum Focus FoF ASISA peer group

Focus Fund of Funds: Outcomes

Average rolling returns

CIS disclosure Collective investment schemes in securities are generally medium‐ to long‐term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future

• performance. Momentum Collective Investments (RF) (Pty) Ltd (the manager) does not provide any guarantee, either with respect to the capital or the return of a portfolio. For certain portfolios the manager has the right to close these

portfolios to new investors to manage them more efficiently, in accordance with their mandates. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. The collective investment scheme may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Different classes of participatory interests apply to these portfolios and are subject to different fees and charges. A schedule of fees, charges and maximum commissions is available on request from the manager, or is available on the website (www.momentum.co.za/collectiveinvestments).Forward pricing is used. Source: Morningstar, Momentum Investments

69.6% 15.2% 70.7% 43.1% 64.3% 55.7% 53.7% 53.1% 61.7% 61.7% 0% 10% 20% 30% 40% 50% 60% 70% 80% Momentum Focus 7 Fund of Funds B2 (ASISA) MA High Equity Momentum Focus 6 Fund of Funds C (ASISA) MA High Equity Momentum Focus 5 Fund of Funds B2 (ASISA) MA Medium Equity Momentum Focus 4 Fund of Funds C (ASISA) MA Medium Equity Momentum Focus 3 Fund of Funds B2 (ASISA) MA Low Equity

CIS disclosure Collective investment schemes in securities are generally medium‐ to long‐term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future

• performance. Momentum Collective Investments (RF) (Pty) Ltd (the manager) does not provide any guarantee, either with respect to the capital or the return of a portfolio. For certain portfolios the manager has the right to close these

portfolios to new investors to manage them more efficiently, in accordance with their mandates. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. The collective investment scheme may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Different classes of participatory interests apply to these portfolios and are subject to different fees and charges. A schedule of fees, charges and maximum commissions is available on request from the manager, or is available on the website (www.momentum.co.za/collectiveinvestments).Forward pricing is used. Source: Momentum Investments. Momentum Focus 3,5 and 7 Fund of Funds include Momentum Classic returns (adjusted for TERs) before February 2012. Momentum Focus 4 and 6 Fund of Funds include Momentum Classic returns (adjusted for TERs) before May 2017.

Long‐term realised probabilities of success

CIS disclosure Collective investment schemes in securities are generally medium‐ to long‐term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future

• performance. Momentum Collective Investments (RF) (Pty) Ltd (the manager) does not provide any guarantee, either with respect to the capital or the return of a portfolio. For certain portfolios the manager has the right to close these

portfolios to new investors to manage them more efficiently, in accordance with their mandates. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. The collective investment scheme may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Different classes of participatory interests apply to these portfolios and are subject to different fees and charges. A schedule of fees, charges and maximum commissions is available on request from the manager, or is available on the website (www.momentum.co.za/collectiveinvestments).Forward pricing is used. Source: Morningstar, Momentum Investments

Focus Fund of Funds mandate delivery

One year to October 2019 2.0% 3.4% 0.0% ‐0.8% 0.1% 1.5% 3.1% 0.3% ‐6% ‐4% ‐2% 0% 2% 4%

Local Equity Composite Return Momentum SA Real Growth Property Fund Momentum Flexible Fixed Interest Fund Momentum Inflation Linked Bond Fund Momentum Diversified Income Fund Momentum Enhanced Yield Fund Momentum Global Growth Fund Momentum Global Cautious Fund iShares Global Property Index Fund

Active vs Peer Group Active vs Benchmark

CIS disclosure Collective investment schemes in securities are generally medium‐ to long‐term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future

• performance. Momentum Collective Investments (RF) (Pty) Ltd (the manager) does not provide any guarantee, either with respect to the capital or the return of a portfolio. For certain portfolios the manager has the right to close these

portfolios to new investors to manage them more efficiently, in accordance with their mandates. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. The collective investment scheme may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Different classes of participatory interests apply to these portfolios and are subject to different fees and charges. A schedule of fees, charges and maximum commissions is available on request from the manager, or is available on the website (www.momentum.co.za/collectiveinvestments).Forward pricing is used. Source: Morningstar, Momentum Investments

Target Fund of Funds mandate delivery

One year to October 2019 4.3% 3.2% 3.4% 2.5% 0.1% ‐2.1% 2.0% 3.4% ‐6% ‐4% ‐2% 0% 2% 4% 6%

Momentum Core Equity Fund Momentum Real Growth Property Index Fund Momentum SA Real Growth Property Fund Momentum Bond Fund Momentum Inflation Linked Bond Fund Momentum Enhanced Yield Fund Coreshares ACWI/Momentum Intl. Equity Feeder Fund Stanlib Global Government Bond Index Feeder Fund Stanlib Global REIT Index Feeder Fund

Active vs Peer Group Active vs Benchmark

11.9% 9.0% 0% 2% 4% 6% 8% 10% 12% 14%

Aylett Equity Prescient… Momentum Equity A SIM Top Choice Equity… Investec Equity R Marriott Dividend… Coronation Equity A ABSA Prime Equity A Sasfin BCI Equity A STANLIB Equity R Nedgroup Inv Private… STANLIB MM… Coronation Top 20 A PSG Equity A Gryphon All Share… Prudential Equity A Kagiso Equity Alpha A Prudential Dividend… Allan Gray Equity A PSG Wealth Creator… Foord Equity A Peer Group Average

CIS disclosure Collective investment schemes in securities are generally medium‐ to long‐term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future

• performance. Momentum Collective Investments (RF) (Pty) Ltd (the manager) does not provide any guarantee, either with respect to the capital or the return of a portfolio. For certain portfolios the manager has the right to close these

portfolios to new investors to manage them more efficiently, in accordance with their mandates. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. The collective investment scheme may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Different classes of participatory interests apply to these portfolios and are subject to different fees and charges. A schedule of fees, charges and maximum commissions is available on request from the manager, or is available on the website (www.momentum.co.za/collectiveinvestments).Forward pricing is used. Source: Morningstar, Momentum Investments

Momentum Equity Fund annualised returns

Ten years to October 2019 compared to the 20 top‐performing funds

Remain invested

40% 45% 50% 55% 60% 65% 70% 75% 80% 1 2 3 4 5 6 7 8 9 10 11 12 Probability (beta) CPI+2% Profile CPI+3% Profile CPI+4% Profile CPI+5% Profile CPI+6% Profile Extended holding period

CIS disclosure Collective investment schemes in securities are generally medium‐ to long‐term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future

• performance. Momentum Collective Investments (RF) (Pty) Ltd (the manager) does not provide any guarantee, either with respect to the capital or the return of a portfolio. For certain portfolios the manager has the right to close these

portfolios to new investors to manage them more efficiently, in accordance with their mandates. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. The collective investment scheme may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Different classes of participatory interests apply to these portfolios and are subject to different fees and charges. A schedule of fees, charges and maximum commissions is available on request from the manager, or is available on the website (www.momentum.co.za/collectiveinvestments).Forward pricing is used. Source: Morningstar, Momentum Investments

Probabilities of success – stay invested!

1% 6% 9% 11% 14% 16% 18% 20% 24% 24% 0% 5% 10% 15% 20% 25% 30% 1 2 3 4 5 6 7 8 9 10

CIS disclosure Collective investment schemes in securities are generally medium‐ to long‐term investments. The value of participatory interests or the investment may go down as well as up. Past performance is not necessarily a guide to future

• performance. Momentum Collective Investments (RF) (Pty) Ltd (the manager) does not provide any guarantee, either with respect to the capital or the return of a portfolio. For certain portfolios the manager has the right to close these

portfolios to new investors to manage them more efficiently, in accordance with their mandates. Collective investment schemes are traded at ruling prices and can engage in borrowing and scrip lending. The collective investment scheme may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Different classes of participatory interests apply to these portfolios and are subject to different fees and charges. A schedule of fees, charges and maximum commissions is available on request from the manager, or is available on the website (www.momentum.co.za/collectiveinvestments).Forward pricing is used. Source: Morningstar, Momentum Investments

Probabilities of success – stay invested!

Average increase in probability of success (betas)

Our commitment to

TRANSFORMATION Responsible investing

Summary

• Peer competitive
• utcomes
• Lagging peers in the

short/medium term in the most conservative funds

Peer competitive Higher returns from growth asset classes Enhancements to funds

• Valuations are

compelling

• Improvement on peer

relative delivery

• Ongoing management of

asset class exposures

• Changes to local and

global equity components

• Asset modelling to

improve longer‐term success rates

Summary