Ninety One Plc · LSE:N91
Ninety One — Ninety One SA Duane Cable webinar (September 2020)
19 slides from Ninety One's conference presentation, September 2020
Slide 1: When time is not on your side
When time is not on your side Duane Cable Portfolio Manager and Head of SA Quality September 2020
Slide 2: Important information
Important information All information and opinions provided are of a general individual investor performance may differ as a result of discretion of the manager without notice. References to nature and are not intended to address the circumstances initial fees, actual investment date, date of any su
Slide 3: Deepest growth contraction in SA since World War II
Deepest growth contraction in SA since World War II Nominal Gross Domestic Product (GDP), year-on-year %-change since 1945 Source: SARB 3
Slide 4: Looking backward, the attractiveness of cash is understandable
Looking backward, the attractiveness of cash is understandable Local assets have not rewarded investors for taking risk 40% 30% 30.0% 20% 10% 15.7% 4.2% SA Cash 5.4% 4.8% 4.2% 4.7% 7.6% 1.1% 0% -3.4% -10% -14.3% -20% -30% -40% -44.2% -50% Global Equity SA Bonds SA Equity SA Listed Property (ASISA) S
Slide 5: Investors are still despondent
Investors are still despondent Income funds remain the dominant benefactor of flows R117bn R84bn R82bn (R8bn) R41bn R61bn R36bn R54bn Netflows (Rm) R37bn R34bn R23bn Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Equity Income Multi Asset Real Esta
Slide 6: Returns from cash are going to be significantly lower
Returns from cash are going to be significantly lower 8% Average yield over 7% 7.1% the last 5 years 6% 5% SARB inflation target 4% What you are going to 3.4% 3% get going forward 2% Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Source: Bloomberg as at 21 September 202
Slide 7: When time is not on your side
When time is not on your side 1. You need a defensive investment strategy… – Best local opportunity remains government bonds – Deploy capital when attractive investment opportunities become available Real Capital Returns Preservation 2. … but not so defensive that you miss out on attractive investme
Slide 8: What is Ninety One Cautious Managed Fund?
What is Ninety One Cautious Managed Fund? A conservative multi-asset fund for retirement savings and annuities Low Equity Multi-Asset Growth Quality Approach Bias to income- Bottom-up Asset Allocation generating assets Limited Drawdowns Income Real Returns Source: Ninety One as at 31 August 2020 8
Slide 9: Consistent inflation-beating returns over long-term
Consistent inflation-beating returns over long-term Annualised performance in ZAR 10.4% 9.7% 9.3% 9.1% 9.0% 8.7% 8.6% 8.4% 8.0% 7.6% 7.6% 7.5% 5.7% 5.4% 5.1% 5.0% 4.8% Cautious Managed A Inc 4.6% 4.1% Cautious Managed H Inc^ 3.2% SA CPI (Lagged) (ASISA) South African MA Low Equity 1 year 3 years p.a
Slide 10: Upside participation with limited drawdowns
Upside participation with limited drawdowns One of 156 rolling 18 months periods had a negative return Rolling 18 months returns since inception 40% Participation in 30% up markets 20% 10% 0% -10% Protection in -20% down markets -30% Sep-07 Jun-08 Mar-09 Dec-09 Sep-10 Jun-11 Mar-12 Dec-12 Sep-13 Jun
Slide 11: Resilience in all markets conditions
Resilience in all markets conditions Cautious Managed - relative performance since inception 12.6% 12.3% 8.7% 7.1% 7.6% 6.1% -0.1% -1.8% Strong markets Moderate markets Falling markets All markets 45 months 114 months 3 months Since inception p.a. Sector > 10% 0% < Sector < 10% Sector < 0% Ninety On
Slide 12: Ninety One Cautious Managed Fund
Ninety One Cautious Managed Fund Asset allocation as at 31 August 2020 Commodities SA Property 2.3% 0.9% 1 High Quality Global Equities – Preferred asset class – High quality global franchises on attractive valuations Global Equities SA Bonds 2 25.4% 41.1% South African Bonds Growth – Bonds and ILBs
Slide 13: The types of Quality equities to own during times of uncertainty
The types of Quality equities to own during times of uncertainty Four categories of business look attractive: Structural growth businesses Risk to thesis short term is e.g. Estée Lauder valuation Defensive slow growth Risk to thesis long term is businesses e.g. Nestlé below market growth Quality Cyc
Slide 14: The fixed income underpin
The fixed income underpin Compelling real returns to inflation SA Bonds – Average yield: 8.6% p.a. 41.1% – Compelling real returns Growth inflation 35.9% – Compliments offshore equities Income 64.1% Global Cash 4.5% Currency diversification SA Cash Average yield: 4.0% Defensive holding 18.5% Provide
Slide 15: SA bonds offer an attractive return relative to cash
SA bonds offer an attractive return relative to cash SA 10 year bond minus cash 8 6 4 2 0 -2 -4 -6 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 SAGB10 – Cash Mean -1SD +1SD Source: Bloomberg & Ninety One, 2 September 2020 15
Slide 16: Local opportunities emerging
Local opportunities emerging AVI Clicks JSE Consumer staple Structural growth Quality cyclical ‒ Strong brands ‒ Significant market share opportunity ‒ Dominant market position ‒ Highly rated management team ‒ Supply chain integration key ‒ Beneficiary from market volatility ‒ Strong balance sheet a
Slide 17: Positioning for the future
Positioning for the future Range of expected annual returns for current holdings over five years 20.0% 15% 15% 15.0% 13% 12% 12% 10.0% 5% 10% 5.0% 7% 1% 5% 6% 2% 4% 3% 0.0% -3% -1% -5.0% -10.0% -15.0% -20.0% Global Equity SA Bonds SA ILB SA Equity SA Property SA Cash Global Bonds USD Cash Previous 5
Slide 18: Targeting consistent real returns to conservatively grow your savings
Targeting consistent real returns to conservatively grow your savings ‒ Capital preservation is paramount ‒ Global equities still provide the best opportunity for growth ‒ Bonds are the best local opportunity ‒ SA equities are cheaper, but stock selection remains key ‒ The best security is in qualit
Slide 19: Thank you
Thank you www.ninetyone.com
Ninety One — Ninety One SA Duane Cable webinar (September 2020) on 6ix