Northstar BCI Global Flexible Feeder Fund (ZAR)

This medium-high risk fund is ideal for investors who require long-term capital growth by investing in various asset classes. The recommended investment time horizon is 7+ years.

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Fund Performance

Northstar BCI Global Flexible Feeder Fund (ZAR)

Who should invest

This medium-high risk fund is ideal for investors who require long-term capital growth by investing in various asset classes. The recommended investment horizon is 7+ years.

Returns reflected below the chart are annualised. Source: Bloomberg, MorningStar and Northstar Asset Management.

Horizon:

  • 3 Years
  • 5 Years
  • 7 Years
  • 10 Years
  • SINCE INCEPTION
FUND RETURN

Benchmark Return

Outperformance

Benchmark Return

Outperformance

  • Invests in various asset classes worldwide.
  • A high conviction portfolio.
  • Provides maximum capital growth over the long-term.
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Invest with Northstar directly

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

Speak to your financial advisor

Our unit trust range can be accessed via a number of platform providers. Please contact us for further information.

Requirements For This Fund

  • R 10 000
  • R 500
    • Certified Copy of both sides of ID Document with 3 specimen signatures.
    • Proof of Address (not older than 3 months) e.g. utility bill, rates, Telkom.
    • Proof of Banking details (not older than 3 months).
    • SARS document containing name and tax number.
  • 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.

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Further Reading

Commentary for the quarter ended 31 December 2023

Performance review

The MSCI World Index returned a healthy 24.4% in 2023 and 11.53% in Q4. Despite extreme levels of volatility, the global aggregate bond index gained 5.72% for the year and 8.1% in the final quarter of the year.

2023 should theoretically have proven an outstanding year for investors, but the bizarre nature of where returns came from, made this improbable. The equally weighted S&P 500 index underperformed the cap-weighted S&P 500 index by 12% for the year under review with 7 of the 11 equal weighted sectors under performing their cap weighted counterparts.

The skewness in market returns was evident in the performance of the average global large cap equity manager last year – the average returns of funds constituting the EAA Large Cap Manager sector was 19.21%, thus underperforming the MSCI by just over 5%. It has become household knowledge that 7 companies drove most of the S&P’s returns last year – Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla account for 28% of the market capitalization of the index and accounted for about 66% of the returns of the index in 2023.

Despite great market returns in 2023, the stars were hardly well aligned for risk assets at the beginning of the year. The Federal Reserve raised interest rates four times last year and US corporate earnings (the US accounts for approximately 70% of the MSCI World Index) will probably end the year flat versus 2022 – we await the results of quarter 4, 2023.  But the key and that is where it all came together, is that expectations at the beginning of the year were low, following on a terrible 2022, where the MSCI World Index ended in the red by 18%.

A few important features of the market this past year are worth discussing. As mentioned above, expectations were bombed, yes, earnings were flat 2022/2023, but they were expected to be much worse than this. Then the dollar weakened (Euro +3.5%, Sterling +6% and Swiss frank +9.9% – only the Yen weakened against the dollar as the BOJ has kept rates at very low levels), a weaker dollar has the propensity to loosen financial conditions, buoying markets.

Despite a lower dollar, the US +26.6% outperformed Europe +20.7%, Pacific +15.6% and the UK +14.1%. Japan returned a very respectable +20.8% last year, especially considering the Yen’s 6.4% depreciation against the greenback. Emerging markets gained +10.3% in US$ in 2023, excluding China this would have been +20.6% and dispersion was immense, with LATAM +33.5% versus EMEA’s +8.6% and Asia’s +8.2%, dragged down by China -11%.

Of course, the dollar was the tell-tell signal that the market was watching the inflation cycle turning down and thus preparing for lower rates in 2024. The global economy also proved much more resilient than has been the case during past higher rate cycles – so far, the inverted yield curve has been a red herring. The final feature of the year was the visit by the AI angel, more than 50% of the surge in the technology sector’s earnings growth is attributable to the staggering profit surge from Nvidia.

Specifically, with regards to the Northstar BCI Global Flexible Fund, it returned +21.9% in 2023 in rands and +11.9% in dollars.  For the final quarter, the dollar return was +7.44% and the rand return was +5.12%. The equity component of the fund returned +17.75% over 12 months and +9.32% for the quarter. This significantly outperformed the S&P Equally Weighted Index but underperformed the MSCI World Index. The fund was on average 65.4% exposed to equities for the year, with bonds at 19.4%, gold at 6.9% and cash 8.4%.

Strong performances and sizable exposures to financials and industrials worked during the year, as did low levels of exposure to underperforming real estate. What hurt was being underweight Tech (fund at 6.7% versus the B/M at 21.1%), when Tech returned 58% in 2023; being overweight Consumer staples (fund at 14.1% and B/M at 7.5%) and Healthcare (Fund 22.7% and the B/M 13%). Consumer staples returned 2.5% last year and Healthcare 4.21%.

The largest gainers in the fund were Zimvie +90%, Blackstone +83%, Amazon +81%, Transdigm +67% and Alphabet +59%.  The largest detractors were Estee Lauder –40%, Bristol Myers -26%, BAT -19%, Schwab -16% and Baba -11%.

Market outlook and portfolio positioning

The portfolio is relatively conservatively positioned with equity exposure just above 65% and a healthy weighting in defensive lower duration fixed income securities after the significant rally seen in treasuries in Q4. The gold position has been retained.

Sell-side consensus is for Healthcare to show the strongest earnings growth in 2024, if this is the case, the fund should benefit from its large overweight position. Being overweight Consumer services should also be useful as this is another area of the market expected to deliver premium earnings growth.  The S&P 500 is anticipated to grow earnings at an index level for 2024, by 12%. One area where the fund is overweight but earnings growth at 6% is anticipated to lag the market is Consumer staples. Exposure is being maintained as the companies held are extremely lowly priced relative to our view of intrinsic value. Little good news is needed to result in a meaningful improvement in ratings.

We feel that the most important requirements in 2024 for outperformance will be a strong valuation framework and the ability to move with fluidity. We anticipate a volatile year where the index finds new leadership.

Quarterly Fund Video as at 31 December 2023

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About This Fund

Latest Allocation

  • Fixed Income
  • Cash
  • Equity
  • Alternatives
Management Date
11 July 2017
Sector
Global - Multi Asset - Flexible
Fund Size
R 238 million
Minimum Investment
Lump sum: R 10 000
Monthly: R 500
Latest Distribution
0.00 cpu (30/06/2019)
INVESTMENT MANAGEMENT FEE
0.35 p.a. (Excl VAT)
Risk Profile
Moderate Aggressive
Allocation
Time Horizon
7 Years +
Regulation 28
No
Benchmark
EEA Fund USD Flexible Allocation
Fund Classification
Global - Multi Asset - Flexible