Oasis Crescent Balanced Progressive Fund of Funds Report - 3rd Quarter 2020

Transcription

1. OASIS COLLECTIVE INVESTMENT SCHEME KEY INVESTOR INFORMATION OASIS CRESCENT BALANCED PROGRESSIVE FUND OF FUNDS 3RD QUARTER 2020 Investment Manager Adam Ebrahim Min . Monthly Investment R 500 Launch Date 2 March 2005 Min. Lump - Sum Investment R 2,000 Risk Profile Low to Medium Fund Size R 1.41 billion Benchmark CPI Rate + 1% Total Expense Ratio 1.70% Fund Classification South African Multi Asset-Medium Equity Class D Distribution Period Quarterly Distribution 0.0000 cents per unit Investment Objective and Policy The Oasis Crescent Balanced Progressive Fund of Funds invests in other funds that have holdings in many possible asset classes. This allows for significant diversification within the ethical parameters of Shari’ah governed investments. The underlying asset classes comprise of listed equities, property, long and short term Shari’ah income products and money market instruments. The Oasis Crescent Balanced Progressive Fund of Funds may be held by a retirement fund as it is managed in accordance with Regulation 28 of the Pension Funds Act 24 of 1956. The Oasis Crescent Balanced Progressive Fund of Funds is a specialist Shari'ah compliant fund. It has a widely diversified portfolio that is consistent with most retirement funds that impose restrictions on the maximum holding of each asset class. The exposure to equity instruments is relatively moderate and is consistent with the medium equity fund classification. The portfolio will seek to derive medium to long-term capital appreciation (from the rising value of assets) and a relatively small stream of income (from rentals and sukuk instruments). This document constitutes the minimum disclosure document and quarterly general investor’s report 1
2. Cumulative Returns (JunDec) 2006 2007 2005 Cumulative Performance 2008 YTD Return Since Inception 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Sept 2020 Cum Ann Oasis Crescent Balanced Progressive Fund of Funds* 18.4 29.8 15.3 (18.2) 16.6 10.4 4.9 14.7 15.9 7.7 2.1 3.7 4.1 0.1 8.9 0.8 238.9 8.1 CPI Rate** 3.2 8.5 6.1 5.6 5.3 5.8 4.8 6.6 4.6 5.2 3.6 2.7 133.8 5.6 5.4 10.6 5.8 3.6 Annual returns for every year since inception are reported in this table and the highest and lowest annual returns are disclosed. Annualised Returns % Growth % Growth % Growth % Growth % Growth 10 years 1 year 3 years 5 years 7 years Annualised Returns Return Since Inception Annualised Oasis Crescent Balanced Progressive Fund of Funds* 4.2 3.2 4.3 4.4 6.7 8.1 CPI Rate** 3.1 4.1 4.6 4.9 5.1 5.6 *Performance (% returns) in Rand, net of fees, gross of non permissible income of the Oasis Crescent Balanced Progressive Fund of Funds since inception to 30 September 2020. (From the 4th quarter of 2016 the disclosure of performance changed from “gross of fees”, “gross of non permissible income” to “net of fees”, “gross of non permissible income”.) (Source: Oasis Research; I-Net Bridge) **Note : CPI benchmark lags by 1 months. The benchmark for this fund is CPI Rate + 1% Annualised return represents the compound growth rate of the fund over the respective period and calculated in accordance with Global Investment Performance Standards. Investment Manager Commentary Global economic activity rebounded strongly into 3Q 2020 following the worst contraction on record since the Great Depression in 2Q due to simultaneous COVID-19 related lockdowns over March and April. The composite global manufacturing and services PMI recovered over 3Q 2020 to an average level of 51.9 after just 36.8 in 2Q during which the historic low of 26.2 was recorded in April, at the height of the global lockdowns1. Global monetary policy continued to remain highly supportive, a combination of near zero policy rates and ongoing quantitative easing. Of note, the Federal Reserve moved to adopt an average inflation targeting framework at its September FOMC meeting, indicating that they would not raise interest rates until inflation had been higher than 2% “for some time”. At face value, it would seem that monetary policy tightening from the Federal Reserve is not likely over the next few years. Despite the explicit and committed support from monetary authorities, the sustainability of the global economic rebound is at risk from 2 sources: namely, signs of a rapidly developing 2nd wave of global COVID-19 infections, particularly in Europe, and the associated re-imposition of lockdown measures as well as premature withdrawal of fiscal stimulus. In the US, for example, the provisions of the CARES Act expired on 31st July against the backdrop of a still-historically weak labor market, placing millions of vulnerable families at risk. While Congress is debating a fresh fiscal stimulus package, and chances of a deal look good once the 3rd November Presidential election is out of the way, political jockeying ahead of the election has so far appeared to stymie the chances for a much needed near-term deal. The European Union meanwhile announced a fiscal stimulus package worth €750bn in late July to facilitate economic recovery in Europe where almost one-third of funds is allocated toward the ‘green’ economy2. From an investment, economic and social perspective, the outlook remains exceptionally challenging. Looking ahead, much will fundamentally depend on the evolution of the COVID-19 pandemic itself. Consecutive infection waves combined with re-imposition of lockdown measures will hamper a sustained economic recovery until a proven vaccine is available. Until such time, politicians and policymakers will continue to grapple with profound social and economic trade-offs between literally saving lives, on the one hand, while trying to protect economic livelihoods, on the other, especially of low- to middle-income workers in face-to-face services sectors such as retail and hospitality who have borne the brunt of job losses. South Africa’s real GDP growth suffered a historic setback in 2Q 2020, as the economy contracted a record -17.1% YoY after the country had been shut down for 6 weeks from 26 March due to the response to the COVID pandemic. The economic shock was clearly highlighted in the labour market data for 2Q 2020 which was only released in September and revealed that 2.2mn individual lost their jobs3. This took the employment ratio (employed ÷ working age population) to a record low of 36.3% from 42.1 in 1Q 2020. Due to complications with undertaking the Labour Force Survey during the lockdown, the unemployment rate was somewhat counter-intuitively recorded as falling by -6.8ppt to 23.3% in 2Q 2020, the lowest rate since 1Q 2009. A practical adjustment to the official size of the labour force (adding back some 5.0mn individuals who were recorded as having exited the labour force due to an inability to officially ‘seek work’ during lockdown), would instead have seen the unemployment rate rise to 39.6% and the extended measure of unemployment, which includes ‘discouraged’ workers, at 50.2%. On a more positive note, South Africa’s manufacturing PMI rose to a 21-year survey high of 58.3 in September indicating a sharper-than-expected snapback in activity in the short-term4. The COVID outbreak has exposed South Africa’s already existent vulnerabilities: slowing economic growth, significant fiscal pressure, a jobs crisis and intense social inequalities. Although the Reserve Bank left the repo rate unchanged at 3.50% in its September MPC meeting, monetary policy is likely to remain very accommodative for the foreseeable future. At this point, it is imperative that government, labour and business pick up the baton and build a genuine social compact to implement much-needed structural reform to reinvigorate the economy. The November Medium-Term Budget statement will be a critical staging post for the Ramaphosa government to communicate how it expects to tackle the unsustainable rise in sovereign debt and implement policies to boost economic growth. Against the backdrop of the MSCI World Index continuing to recover during Q3 2020 with an increase of 8.0%, the JSE ALSI lagged with an increase of only 0.7%. The stronger performance of the Resources sector with an increase of 5.7% was offset by the Industrial sector declining by 2.4% while Financials declined by 1.6%. The massive support from fiscal and monetary policy continue to offset the impact of revenue loss and decline in profits due to the contraction in demand and job losses as well as the impact of corporate margin compression. However, there remains a lot of uncertainty around how fast corporates will be able to recover their profits and this could lead to substantial market volatility. The key difference between the SA and Global Property market is that the sector entered Covid-19 with a weaker economy and property fundamentals. We have already seen that SA REITS are suspending their dividend payments over the short term in order to protect their balance sheets. A positive is that we will see very low levels of capital investment and development activity which curtails new supply and creates an improving environment for existing property owners over the medium to longer term. It is also important to remember that property valuations are based on the long term cash flows that will be generated by the property and the biggest disruption caused by this pandemic is of a short term nature. The local fixed income market had a tumultuous year so far as investors strive to navigate between emergency monetary policy support by the South African Reserve Bank (SARB) and worsening fiscal conditions, adversely impacting the back end of the yield curve. The SARB has acted swiftly to stabilise the market and cut the repo rate by 300bps to an all-time low of 3.5% in an effort to protect an already fragile economy from the negative effects of the Covid-195. Despite the interest rate cuts this year, South African bonds offer attractive returns compared to both developed markets and emerging market peers. At 6.3%, the real 10-year yield remains far above its long-term average of 3.5%6. However, as we enter Q4:20, the Medium-term budget policy statement (MTBPS), S&P/Moody’s SA SovereignRatings Update, developments around Covid-19 vaccine and the U.S. Presidential Elections are expected to play a significant role in shaping the path of local yields, the currency and the yield curve. Our balanced portfolios are well diversified across geographies, currencies, asset classes, sectors and instruments. This appropriate level of diversification allows for a relatively lower level of risk and the fund is positioned to generate real returns for our clients over the long term. 1. Bloomberg economic statistics, Oasis Research 2. IMF, Policy Responses to COVID-19. https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19 3. Statistics South Africa: Quarterly Labour Force Survey 2Q 2020; http://www.statssa.gov.za/?p=13652 4. Bloomberg economic statistics, Oasis Research 5. SARB MPC Statement, September 2020 6. Bloomberg, Oasis Research 2020 2
3. Investment Performance Asset Allocation Split R Million 3 .9 Oasis Crescent Balanced Progressive Fund of Funds* SA CPI Rate** 3.4 2.9 R2.3 m 2.4 1.9 Jan-20 Asset Class Weight % Equity SA 41 Equity Global 22 Property 21 Income 16 Total 100 Asset Allocation Split of the Oasis Crescent Balanced Progressive Fund of Funds, 30 September 2020 (Source: Oasis Research) Sep-20 Oct-18 Jun-19 Feb-18 Oct-16 Jun-17 Jul-15 Mar-16 Nov-14 Jul-13 Mar-14 Apr-12 Nov-12 Aug-11 Apr-10 Dec-10 Dec-08 Aug-09 May-08 Jan-07 Sep-07 May-06 Feb-05 0.9 Sep-05 1.4 (Source: Oasis Research; I-Net Bridge) R3.4 m R1m invested at inception would be worth R3.4m at present. **Note : CPI benchmark lags by 1 month. The bechmark for this fund is CPI Rate + 1% Risk Analysis Risk Analysis Oasis Crescent Balanced Progressive Fund of Funds Risk and Reward Profile Sharpe Sortino Ratio Ratio (0.02) (0.03) Lower risk Typically lower rewards 1 Calculated net of fees, gross of non permissible income since inception to 30 September 2020 (Source: Oasis Research, I-Net Bridge) Dec-19 Mar-20 Oasis Crescent Balanced Progressive Fund of Funds 2 Typically higher rewards 3 4 5 6 7 The risk and reward indicator: • The above risk number is based on the rate at which the value of the Fund has moved up and down in the past • The above indicator is based on historical data and may not be a reliable indication of the risk profile of the Fund • The risk and reward category shown is not guaranteed and may shift over time • The lowest category does not mean ‘risk free’. Distribution Distribution Higher risk Jun-20 Sept-20 The Fund may also be exposed to risks which the risk number does not adequately capture. These may include: • The value of stock market investments, and the income from them, will fluctuate. This will cause the Fund price to fall as well as rise and you may not get back the original amount you invested • Any investment in international companies means that currency exchange rate fluctuations will have an impact on the Fund • The Fund invests in a variety of geographic regions and countries. It is therefore exposed to the market sentiment of that specific geographic region or country. This level of diversification is appropriate to deliver on our objective to generate real returns at a lower volatility for our clients over the long term. 2.9138 0.0000 2.3628 0.0000 Distribution (cents per unit), of the Oasis Crescent Balanced Progressive Fund of Funds over the past 4 quarters. (Source: Oasis) Fees and Charges* Fee Type Financial Advisor Initial Maximum 3% deducted prior to each investment being made. Where ongoing fee is greater than 0.5% then initial fee is limited to 1.5%. Ongoing Maximum 1% per annum of the investment account. Where the initial fee is more than 1.5% then the maximum ongoing fee is 0.5%. Administrator Investment Manager No charge No charge 0% 1% to 3% Based on portfolio performance relative to benchmark * Excluding VAT. Total Expense Ratio Class D of the portfolio has a Total Expense Ratio (TER) of 1.70% for the period from 1 July 2017 to 30 June 2020. 1.70% of the average Net Asset Value of the portfolio was incurred as charges, levies and fees related to the management of the portfolio. A higher TER does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER cannot be regarded as an indication of future TERs. The ratio does not include transaction costs. Transaction cost was 0.03%. Total Expense Ratio 1.70% Service Fees 1.00% Performance Fees 0.01% Other Costs 0.47% VAT 0.21% Class D: performance fees are payable in the case of outperformance of the underlying portfolio, relative to its benchmark. Performance is calculated for the portfolio, and individual investor performance may differ as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. The sharing ratio of the performance fee is 20% of the outperformance, and the total fees are capped at 3%. This fee is calculated and accrued daily, based on the daily market value of the Investment Portfolio, and paid to the Investment Manager on a monthly basis. 3
4. Disclaimer This document is the Minimum Disclosure Document in terms of BN92 of 2014 of the Collective Investment Schemes Control Act , 2002 and also serves as a fund fact sheet. Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests (units) may go down as well as up and past performance is not necessarily a guide to the future. Different classes of units apply to some of the Oasis Funds, which are subject to different fees and charges. A schedule of fees and charges and maximum commissions is available from the management company on request. Commission and incentives may be paid and if so, would be included in the overall costs. CIS are traded at ruling prices and forward pricing is used. CIS can engage in borrowing and scrip lending. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. No guarantee is provided with respect to capital or return. Portfolios are valued at 15h00 daily. All necessary documentation must be received before 10h00. CIS are calculated on a net asset value basis which is the total value of all assets in the portfolio including any income accruals and less any permissible deductions from the portfolio which may include brokerage, commissions, STT, auditor’s fees, bank charges, trustee and custodian fees. CIS prices are available daily on www.oasiscrescent.com. Class D: performance fees are payable in the case of outperformance of the underlying portfolio, relative to its benchmark. Performance is calculated for the portfolio, and individual investor performance may differ as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. The sharing ratio of the performance fee is 20% of the outperformance, and the total fees are capped at 3%. This fee is calculated and accrued daily, based on the daily market value of the Investment Portfolio, and paid to the Investment Manager on a monthly basis. For a full disclosure on performance fees FAQs visit www.oasiscrescent.com. The manager may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Oasis is a member of the Association for Savings and Investment SA. The above portfolio performance is calculated on a NAV to NAV basis and does not take initial fees into account. Income is reinvested on the ex dividend date. Actual investment performance will differ based on the initial fees applicable, the actual investment date and the date of reinvestment of income. Figures quoted are from Micropal and I Net Bridge for the period ending 30 September 2020 for a lump sum investment using NAV-NAV prices with income distributions reinvested. A fund of funds is a portfolio that invests in portfolios of CIS, which levy their own charges, which could result in a higher fee structure for these portfolios. All information and opinions provided are of a general nature and the document contains no express or implied recommendation, warranty, guidance, advice or proposal that the product is appropriate to the investment objectives, financial situation or needs of any individual or entity. Oasis Crescent Management Company Ltd. is registered and approved in terms of the Collective Investment Schemes Control Act, 2002. Investment performance is for illustrative purposes only and is calculated by taking the actual initial fees and all ongoing fees into account for the amount shown and the income is reinvested on the reinvestment date. The manager has a right to close the portfolio to new investors in order to manage it more efficiently in accordance with its mandate. This Minimum Disclosure Document is published quarterly. Additional investment information (including brochures, application forms, annual and half-yearly reports) can be obtained free of charge from Oasis. Oasis Crescent Capital (Pty) Ltd. is the investment management company of the manager and is authorized under the Financial Advisory and Intermediary Services Act. 2002 (Act No.37 of 2002). Data are sourced from Oasis Research; I-Net Bridge (30 September 2020). Kindly note that this is not the full Terms and Conditions. To view the latest Terms and Conditions please visit www.oasiscrescent.com. GIPS compliant & verified PROTECTING AND GROWING YOUR WEALTH Product Provider: Oasis Crescent Management Company Ltd. Oasis House, 96 Upper Roodebloem Road University Estate, Cape Town 7925 South Africa Tel: +27 21 413 7860 Fax: +27 21 413 7900 Oasis Share Call Helpline: 0860 100 786 Email : info@oasiscrescent.com www.oasiscrescent.com Custodian: The Standard Bank of South Africa Limited Standard Bank Trustee Services Corporate and Investment Banking 20th Floor, Main Tower Standard Bank Centre Heerengracht Cape Town 8000 Investment Company: Oasis Crescent Capital (Pty) Ltd. Oasis House, 96 Upper Roodebloem Road University Estate, Cape Town 7925 South Africa Tel: +27 21 413 7860 Fax: +27 21 413 7900 Oasis Share Call Helpline: 0860 100 786 Email : info@oasiscrescent.com www.oasiscrescent.com 4 Complaints: Oasis Ombudsman Postal Address : PO Box 1217 Cape Town 8000 Telephone: 021 413 7860 Email : ombudsman@za.oasiscrescent.com The Financial Services Providers Ombudsman Postal Address : PO Box 74571 Lynnwood Ridge 0040 Toll Free : 0860 324 766 Email : info@faisombud.co.za