This high-risk fund is ideal for investors who require maximum capital growth over the long-term through investments in predominantly the equity market. The recommended investment time horizon is 7+ years.
This high risk fund is ideal for investors seeking meaningful growth of capital from a focused portfolio of JSE-listed securities. The fund’s aim is to outperform peers investing only in South African equity markets. An investment time horizon of at least 7 to 10 years is recommended.
Returns reflected below the chart are annualised. Source: Bloomberg, MorningStar and Northstar Asset Management.
Benchmark Return
Outperformance
Benchmark Return
Outperformance
We can assist you with making direct investments but without financial advice. Direct investments via Northstar are subject to certain minimums. Simply get in touch with our client service team by emailing admin@northstar.co.za
Northstar’s funds are available via all the major local and offshore LISPS (linked Investment Services Providers). Please contact us for further information on how to invest via a LISP should that be your preference.
Our unit trust range can be accessed via a number of platform providers. Please contact us for further information.
Performance Review
Global equities performed well during the second quarter of 2024, with the MSCI World Index adding +2.8% to first quarter gains of +9.0%. Emerging markets continue to lag developed markets year-to-date (+7.7%), but performed well ahead during the second quarter, returning +5.1%. From a regional perspective, Latam continued to struggle in Q2 at -12.5%, EMEA was up +1.8%, while Asia recorded a very strong quarter led by Taiwan (+15.2%), India (+10.4%), and China (+7.2%). The MSCI South Africa Index had its strongest quarter since 2022, returning +12.5% in US Dollars, taking its year-to-date performance back into positive territory (+5.0%).
While inflation expectations continue to dominate the narrative across markets, increased hopes of a soft-landing scenario in the U.S. proved to be highly supportive for equity markets. Despite the effect of high rates being felt in the U.S., with data starting to come in below expectations since May, the Fed remains hawkish, and the market is now looking for only one rate cut in 2024. Similarly, in Europe, sticky service inflation and regional politics have dampened the pace and path of interest rate normalization, with the ECB’s actions likely to be less aggressive than previously expected and more data-dependent. Finally, the move from the Chinese regulator to support its property sector has had a positive effect on its equity market and proved supportive for various commodity prices, particularly in the bulks and base metal complexes.
Locally, economic conditions remain constrained, but interest rate cuts, likely to start in September, should provide much relief to consumers. In addition, improved performance from Eskom, with a suspension of load shedding since March 2024, should lead to improved and better-than-expected growth numbers in 2024. Finally, the outcome of South Africa’s general elections and the subsequent formation of a government of national unity (GNU) has had a profound effect on SA-sensitive assets, with local bonds rallying by more than 1%, the Rand strengthening below R18.0 against the U.S. Dollar, and cyclical equities rebounding heavily.
The JSE Capped Swix Index was up +8.2% in Q2 2024. From a sector perspective, SA financials rebounded strongly following its pre-election slump to return +15.9% during the quarter. A strong performance was also seen across SA resources and industrials, which respectively returned +3.6% and +5.2%. The banks, insurers, hospital groups, and clothing retailers recorded the largest gains, with TFG (+34%), Capitec (+23%), Discovery (+23%), Truworths, FirstRand (+18%), and Life Healthcare (+18%) leading the way. Against this, the universe of Rand hedges and various diversified miners recorded a loss during the quarter.
The Northstar BCI Equity fund had a strong quarter returning +8.8% (net of fees), ahead of JSE Capped Swix (+8.2%) and the (ASISA) South African Equity General Peer Average which returned +7.8%. The fund benefitted, relative to its benchmark, from an overweight position in SA financials (banks, insurers), clothing retailers, and general industrials, and an underweight position in underperforming PGM miners. Conviction calls in Standard Bank, Bidvest, Raubex, Anglo American, Absa, Mr Price, and Pick ‘n Pay in the fund added to performance. Against this, the fund’s rand hedge component, with BAT and Anheuser-Busch as standouts, underperformed and detracted against the benchmark.
During the quarter, and broadly during the course of the year, we strategically took advantage of a pullback in SA-sensitive assets to increase the fund’s exposure to banks, retailers, and general industrials. While this strategy has paid off with markets rebounding after elections, we think that the opportunity embedded in these sectors remains compelling, with valuation still looking very attractive.
Latest Allocation
