AAB Value Fund report

1. BOTSWANA VALUE FUND
DECEMBER 2016
Statutory disclosure and general terms and conditions: Unit trusts are generally medium to long term investments. The value of units may go down as well as up and past performance is no indication of future growth. Allinformation
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FUND PARTICULARS
Fund Managers: Justin de Klerk, Chandapiwa Majola &
Lorato Kedisitse
Fund Type: Botswana Balanced Fund
Currency: BWP denominated
Composite Benchmark: 65% Domestic Equities Index & (35% Cash
+ 2%)
Fund Start Date: 17 December 1998
Fund Size: BWP 68.5 Million
Minimum Investment: BWP 200 lump sum or BWP 100 monthly
Initial Fee: Max 5%
Annual Management Fee: Max 2%
Income Distribution: April and October
Trustee & Custodian: Stanbic Bank Botswana
Auditors: KPMG
RETURNS TO UNIT HOLDERS AS AT 31 DECEMBER 2016
Value Fund Benchmark
Quarter -4.79% -2.42%
Six months -3.90% -3.99%
1 Year -2.85% -6.68%
3 Years (annualized) 8.65% 1.83%
Inception (annualized) 12.01% 5.05%
Fund returns are gross of standard management fees and net of all other costs
TOP FIVE EQUITY HOLDINGS AS AT 31 DECEMBER 2016
Security % of Fund
Letshego 9.67%
Sefalana 8.91%
Choppies 7.03%
RDC Properties 6.61%
Turnstar 5.22%
PORTFOLIO COMPOSITION AT 31 DECEMBER 2016
CONTACT DETAILS
African Alliance Botswana
African Alliance House, Fairgrounds Office Park, Gaborone
PO Box 2770, Gaborone
Telephone: +267 364 3900 Facsimile: +267 318 8956
Email: info@africanalliance.co.bw
Internet: www.africanalliance.com
FUND MANAGER’S COMMENTS
The AA Botswana Value Fund was down 4.79% for the period under
review, underperforming its benchmark by 2.37%. Underperformance
was primarily due to security selection, whilst asset allocation had
minimal impact on relative returns due to our neutral position in
equities. The DCI was down 4.04% over the quarter, falling for the
sixth consecutive quarter, while the FABI was up 1.09%. The fund’s
overweight positions in property stocks, RDC Properties and Turnstar
were positive contributors to relative performance. However, the
fund’s overweight positions in Choppies and Sefalana, as well as off-
benchmark positions, Lucara and NewGold, were the key detractors
from performance. Choppies’ share price fell following the release
of lower earnings in the prior quarter, poor sentiment in the SA
retail sector and a challenging trading environment in some key
markets. Sefalana successfully completed a rights issue in
December, with 100% of the offer shares taken up by shareholders,
including the fund.
We continue to favour equities over bonds and money market
instruments, as we believe equities remain relative attractive in
terms of valuation. Within equities, we remain cautious on the
banking sector, however we remain positive on businesses with a
strong regional presence. We also favour property stocks with
limited exposure to the commercial space, given the oversupply of
property in this space and consequently pressure on yields. Within
fixed income, we remain biased towards shorter duration and
floating instruments in the corporate sector, as we maintain our
view that we are at the bottom of the interest rate cycle and see
significantly more value in corporate versus government paper.
INVESTMENT AIM
The primary objective of this Fund is to seek long-term capital
growth, consistent with moderate investment risk and a reasonable
level of current income, by investing in domestic financial
instruments.
INVESTMENT UNIVERSE
The Fund invests in securities listed on the Botswana Stock
Exchange, as well as government bonds and short-term money
market instruments. Some cash will be held at all times in order to
facilitate ease of exit.
WHO SHOULD INVEST?
The Fund is ideally suited and tailored for Botswana pension and
provident funds and private individuals who want to build long-term
savings that will maintain purchasing power. Investors should have a
medium to long-term investment horizon.
RISK PROFILE
This is a medium risk fund.
REGULATORY
The Fund is registered and approved by the Bank of Botswana and
NBFIRA and as such is subject to the Collective Investment
Undertaking Act 1999.
20%
65%
15%
Cash
Equity
Fixed Income
Lower risk RISK Higher risk
Income OBJECTIVE Capital Growth
Money Market,
e.g. African
Alliance Botswana
Liquidity Fund
Fixed Income,
e.g. African
Alliance
Botswana Global
Income Fund
Balanced,
e.g. African
Alliance Botswana
Value and Global
Allocation Funds
Equity