Northstar BCI Managed Fund

This medium-risk fund is ideal for investors who require a moderate to high long-term total return. The recommended investment time horizon is 5+ years. Managed in accordance with Regulation 28.

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Fund Performance

Northstar BCI Managed Fund

Who should invest

This medium-risk fund is ideal for investors seeking steady long-term growth of their capital and income from a diverse portfolio of actively managed South African and global assets. The fund is managed in accordance with Regulation 28, making it suitable for building up long-term retirement capital. An investment time horizon of at least 5 to 7 years is recommended.

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

  • A core multi-asset fund.
  • Diversified asset exposures to protect against risk.
  • Moderate to high long-term total returns.
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Invest Now

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

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.

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

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Further Reading

Commentary for the quarter ended 31 March 2024

Q1 2024 Performance Review

After a lengthy period of strong peer outperformance leading into late 2023, the Northstar BCI Managed Fund returned just over 1.3% for the first quarter of 2024, placing the returns slightly behind the peer median for the period under review.

The stark difference in returns between the South African market (MSCI SA Index) of -3.4% (ZAR) and World markets (MSCI World Index) +12.9% (ZAR) detracted from the performance of the fund over the quarter under review. Over the year, the Capped SWIX has gained 2.87% (ZAR) whereas the MSCI World has risen a staggering 34.2% (ZAR).

The rand depreciated by 3.4% against the dollar in 2024, on top of its 7% fall in 2023. The ZAR is not unique with regards to its performance in 2024, the dollar has been rampant against most cross rates, with even the Swiss franc down about 7% this year. A combination of buoyant US economic data and sticky inflation prints changed the course of US interest rate expectations in November 2023, and this has continued into 2024. Both the performance of the dollar and the price momentum in US stocks this year, reflects these changing dynamics.

Market Outlook and Portfolio Positioning

The Northstar BCI Managed Fund has had approximately 26% of its capitalization in foreign markets, with 16% exposed to global equities. In contrast, 47% of the fund has been invested in the South African equity market, and 22% in SA fixed income. In 2023, the management team of the fund navigated the stark differences in performances between the domestic and global markets with smart interventions in the fund, such as value adding hedge instruments, less such opportunities could be capitalized upon in the first few months of 2024 and consequently, the fund’s SA bias detracted from its performance over the quarter relative to peers.

It is heartening to report to investors, that despite the fund’s allocation of assets working against it so far in 2024 (being underweight offshore versus some large peers), the SA equities held within the fund, outperformed the Capped SWIX, implying that Northstar’s domestic equity team added value, this value being 0.26% for the quarter. Over the year, the fund’s domestic equity portfolio was ahead of the market by 0.5%.

The same applies to the performance of the fixed income component of the fund, over 0.5% of alpha was added for the quarter under review and so too for the year. Despite the global equities held in the fund returning a very respectable 28.2% over 12 months in rand terms, this was behind the market, but for the quarter, our global equities held returned 12.1%, not far off the MSCI World Index, at 12.8%.

It is important to contextualize the asset positioning of a fund, at these times, when the fund is clearly skewed away from the best performing asset class – global equities and weighted to underperforming SA equities. Its asset allocation is propelled by our bottom-up asset allocation framework which incorporates our intrinsic value upsides on the various asset classes into which the Northstar BCI Managed Fund can invest.

Northstar’s global equity buy lists’ intrinsic value upside, has been steadily declining throughout 2023 and in 2024 has reached the lower bands of its historical range since its initiation over a decade ago, this as global stocks have rerated. We caution that numerous stocks on our global buy list currently trade above what we deem them to be worth. From our experience, what follows is that global markets produce muted returns, consequently, we believe that much of the global market’s current performance is momentum, rather than valuation driven.

In contrast, our South African equity buy list trades at a deep discount to our calculated intrinsic value and for a number of months, has been exhibiting prospective returns ranging between 20% and 30% annualized. We acknowledge that the South African market has been an awful performer for over a decade, in fact, in dollar terms, excluding Russia and Turkey, it has delivered negative returns over 10, 5, 3 and 1 year. It is also true that these returns have not materialized and are being pushed out.

However, our buy list discounts have historically been informative of future market returns, in addition, the local market is not immune to sharp rallies after periods of stagnation. When the interest rate cycle in the US is firmly reversing (rates are cut) and assuming developed markets do not enter a recession, emerging markets should rally on a weaker $ and the JSE should do so in sympathy. It is important to clarify that most emerging markets have underperformed developed markets since the GFC (2008), and the strong dollar has been key in this regard – the JSE is not alone as a struggler.

The obvious key risks that could counter the local bourse delivering an improved performance in the months and years ahead, include firstly, that market participants have negated the probability of a US recession, this tends to be a contra cyclical indicator, and the inverted US yield curve, historically is an accurate recession indicator, and it remains inverted. The second is well documented and is that the local national election in May, delivers a

Quarterly Fund Video as at 31 March 2024

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About This Fund

Latest Allocation

  • Fixed Income
  • Cash
  • Equity
  • Alternatives
Management Date
01 August 2011
Sector
South African - Multi Asset - High Equity
Fund Size
R 1 billion
Minimum Investment
Lump sum: R 10 000
Monthly: R 500
Latest Distribution
2.28 cpu (31/12/2023)
INVESTMENT MANAGEMENT FEE
1.10% p.a. (Excl. VAT)
Risk Profile
Medium
Allocation
Time Horizon
5 Years +
Regulation 28
Yes
Benchmark
ASISA Category Avg: SA - Multi Asset - High Equity
Fund Classification
South African - Multi Asset - High Equity

* This is the date from when Northstar commenced management of the fund