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Asset management news - October 2020

We are thrilled to share some of the asset management developments taking place at BACCI Investment Solutions, including the first anniversary of the BACCI SNN Equity fund, the launch of the BACCI Global Equity Fund (with the appointment of Pendulum Advisors as subadvisors to the fund) and expanding the mandate of the BACCI SNN Protected Equity QI Hedge Fund.

To recap our history as a business, BACCI Securities was established in 2002 as a securities trading business specialising in South African long only equities and derivative markets. We launched the BACCI SNN Protected Equity QI Fund in 2010. As the business grew, BACCI started to manage portfolios across the asset class spectrum both locally and globally. BACCI Investment Solutions was established in 2016 to provide a fully comprehensive wealth management solution to a growing client base. Having established a credible track record for both our domestic and global share portfolios, we decided to include a local and a global equity fund to our solutions.

BACCI SNN Equity Fund

We launched the domestic equity fund in September 2019 to provide an efficient portfolio management solution for your domestic equity allocation. Taking a long-term view, the fund provides a diversified portfolio of high-quality shares. Our approach to stock selection is based on in-depth fundamental analysis as we believe that the facts always win. The chosen benchmark for the fund is the FTSE/JSE Capped All Share Index.  

To enhance the risk and return characteristics of the fund, we utilise an offshore allocation in the order of 30%, in line with unit trust regulations. This includes an investment in the BACCI Global Equity Fund.  

Prescient ICAV BACCI Global Equity Fund

We launched the BACCI Global Equity Fund on 1 July 2020, a Dublin based UCITS fund. The investment objective of the BACCI Global Equity Fund is to achieve long-term capital growth by investing across global equity markets. The investment philosophy is to invest in dominant, high quality businesses which have a history of developing both growth and real economic value. The chosen benchmark is the MSCI All Country Index.

It is with great pleasure to announce that Pendulum Advisors have been appointed as subadvisors to the fund on 1 September 2020 to assist Warren, Ulf and Vanessa in the stock selection of the fund.

The Pendulum team comes with extensive experience and an established track record and includes Arjan Buikema, James Campbell and Gerard Pacak. Arjan, is an industry veteran such as Paul, Vanessa and Ulf and is the founder of Pendulum Advisors. He started in the industry in 1993 as an investment analyst, establishing a career in the stock broking industry, asset management and ultimately in mergers and acquisitions at Naspers before establishing Pendulum Advisors in 2012. He is supported by James and Gerard, two exceptional analysts that joined Pendulum Advisors in 2015 after completing their studies. Their website is should you wish to find out more. We hope to introduce you to the team in future when we host functions, but in the meantime, please look out for some interesting insights and research into the companies and ideas that the team review in their stock selection process.

BACCI SSN Protected Equity QI Hedge Fund

For many years we have managed this fund in a very cautious, low risk mandate and it has served us well, but we have now decided to expand the mandate considerably. In South Africa we have a fairly small stock market and other than Naspers, there is absolutely, no ‘tech’ (and never shall we be capable of developing a tech giant). Global ‘tech’ players have dominated virtually all of the upside on the MSCI World Index for the past 10 years. Emerging markets and their currencies, by stark contrast have either traded lower or at best have traded sideways. We think that this trend is long term in nature – namely a further concentration of very large market cap businesses!

We have recently applied to the FSCA (the regulators here in South Africa) to expand the mandate of the fund so as to allow us to trade more aggressively in and out of stocks on the JSE and also to gear up to 200% should we see opportunity. We think that a more actively traded local fund with fewer shares is more appropriate for a smaller emerging market as South Africa.

As mentioned, we have our BACCI SNN EQUITY fund which invests on both the JSE, around 70%, and the balance globally to cover all our long-term South African based equity needs and our BACCI GLOBAL EQUITY FUND to cover all of the developed world including Asia. In summary, we think that an active trading mandate will fill the gap for a small portion of our client’s investable cash – probably for about 5% of their portfolios.

Your savings can save you

The past year has certainly been a time of change and disruption that was not foreseen at the onset of 2020. Economies, markets, businesses, families & friends and so many aspects of our lives have had to adjust to the crazed new order of a COVID world.

In our readings, we reflect on some apt and pertinent lessons learnt during the pandemic:

  1. Life is short.

  2. Jobs are temporary.

  3. Your greatest wealth is your health.

  4. Nature deserves our respect.

  5. Your savings can save you.

We could not agree more. Our business continues to evolve to ensure we provide the optimal solution for your savings and unique wealth management needs. We believe that these enhancements to our solutions are adding more substance to our client offering.

Should you wish to discuss anything further, please do not hesitate to contact us. We look forward to hearing from you.

October 2020


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