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Mike joined Sanlam FOUR in January 2013 as the fund manager to the Sanlam FOUR Multi-Strategy Fund. He has worked in the industry for over 26 years and prior to Sanlam FOUR, he worked at Insight Investments where he was head of the multi-asset group and responsible for the retail multi-asset funds. Before joining Insight, Mike spent 20 years at Credit Suisse where he held senior positions including Head of Special Mandates and Head of Trusts and Charities in the asset management and private banking divisions. As Head of Multi Asset Class Solutions at Credit Suisse, Mike managed a team of 14 with responsibility for £5 billion of institutional, private client, and retail fund assets.
Johan joined Sanlam FOUR in November 2012. He is an assistant portfolio manager responsible for trading and risk management on Sanlam FOUR’s multi-strategy portfolios. Prior to joining the firm, he worked at J O Hambro Investment Management for 11 years in various roles including Operations Manager, Performance and Risk Analyst and Project Manager where he was responsible for building the derivative infrastructure, as well as oversight on market risk and global derivative risk monitoring. He is IAQ qualified and has passed the CISI diploma exam in Financial Derivatives.
Christopher is an assistant fund manager in the Multi-Strategy team. Prior to joining Sanlam FOUR in January 2016, Christopher was a junior fund manager in the UK equity team with Royal London Asset Management, who he joined in November 2011. Christopher holds a BSc (Hons) in Mathematics with music from the University of Southampton. He is a CFA® charterholder and has the UKSIP Investment Management Certificate.
The Sanlam FOUR Multi-Strategy Fund aims to participate in rising markets and defend capital in falling markets. It is a global absolute return proposition. As a UCITS IV vehicle it can also be described as a liquid hedge fund.
The fund aims to deliver positive returns over three years and returns of CPI plus 4% over an investment cycle (five years). It is not constrained by benchmarks and can deviate from a classic equity path by benefitting from its multi-asset construction.
It is attractive to investors because it provides exposure to growth markets but with embedded protection. The non-discretionary stop out process means that we can forecast and continually monitor expected maximum drawdown. This has historically been in the range of -2% to -6% which is in line with the strategy's largest experienced drawdown of -5%. Probably its most distinguishing features are that it can (and will) move to 100% cash in periods of extreme market stress, but will be quick to re-enter once market stabilisation begins.
As an absolute return strategy investors should expect the greatest relative performance to come in periods of market weakness where the fund has the flexibility to exit all investments and return to a defensive cash position. The best absolute returns are expected to come after a period of weakness where the fund has the ability to re-invest quickly and fully. The combination of these "participate and defend" positions lead to a smoother path to an equity like return over the full investment cycle.
The portfolio follows a repeatable, rules-based strategy that has been shown to display the escalator profile that the "participate and defend" objective is targeting. The key to achieving the objective is having the discipline and confidence to follow the process over the investment cycle.
The fund only invests in assets that have underlying liquidity and as a result the fund itself has daily liquidity.
The fund is free to invest in a broad range of asset classes and investment strategies and as such idea generation is vital. The team has a long track record of idea generation and strategy creation and is always on the look-out for opportunities. After decades of experience in the market place, the Multi-Strategy team frequently receive and research new investment ideas for the fund. Subsequent implementation depends on investment viability and prevailing market conditions.
We see the Fund appealing to a wide constituent audience:
The fund is a credible option for investors looking for a DGF. Its liquidity, transparency and downside protection make it a very distinctive proposition. It could also be positioned as a “smart beta”.
The global multi-asset portfolio together with the disciplined risk management process and the liquidity characteristics make the fund highly appealing to this market. It has been positioned as a liquid complement to illiquid private equity within this market space.
As an absolute return fund, the fund lends itself in particular to decumulation. The asset allocation of the fund will vary a great deal in response to market behaviour ensuring that investors receive increased exposure to equity markets when they are rising, and reduced exposure to equity markets when they are falling. The equity component parts are complemented by a range of liquid alternative assets.
Market environment is likely to remain challenging for directional equity investments, but opportunities are emerging in equity alternative assets such as high yield. Stable, long life assets such as infrastructure and renewable energy should remain attractive.
Equity markets are required to post new all-time highs in an environment of slowing economic growth and in the case of the US and UK, higher interest rates.
Global equities – Equities have reacted positively to events that were originally perceived as negatives (Brexit and Trump). However, campaign promises must become reality if the positive sentiment is to continue. The 2017 calendar of events is challenging; Trump becomes reality in January, the UK government will trigger Article 50 to leave the European Union and the Dutch will go the polls in March. The French will elect a new leader in April and then we will have a gap until September when it will be Germany’s turn to vote.
Real assets – Inflation is picking up in many countries, but QE driven interest rates remain quite low. Long-term income producing assets with inflation linkage continue to offer an attractive home for investment. Infrastructure, renewable energy and selected specialist property held for 10 years will pay-out between 45% - 60% compared with 14% - 15% in a 10 year government bond.
Bonds – Forward expectations of bond yields fell across the board after the equity market lows in March 2009. However, the long run bond bull market appears to be flagging and events such as Brexit and US tightening are leading investors to focus on country specific events. We are now starting to see divergence across markets and whilst broad “normalisation” remains some way off, the rise in US bond yields my put upward pressure on other markets.
Positioning – “Barbell” strategy favouring options for equity exposure (rather than pure directional investments) alongside income producing real assets such as infrastructure, renewable energy and specialist property.
Investments and strategies with high certainty of return should remain in focus.
Predictability and control
The Fund is an actively managed multi-strategy growth portfolio structured using core and satellite assets. The core position is a global equity strategy which allocates across eight equity indices or regions and provides the majority of directional risk to the overall fund. The satellite strategies are non-directional or low beta investments capturing active alpha, emerging market, high yield and global infrastructure.
The underlying approach and building blocks of the multi-strategy Fund can be adapted to suit a range of product types to include “Diversified Growth Funds” (DC defaults), a multi-strategy hedge fund and target outcome funds (targets can be performance or volatility based).
The following forms must be completed and faxed to Sanlam Universal Funds Plc, +353 1 241 7131:
Full instructions on how to complete the forms are included, however, please contact Sanlam Universal Funds +353 1 241 7130 for further assistance.
Please ensure you read the full prospectus prior to investing.
Sanlam Universal Funds plc Prospectus Download
Sanlam FOUR Multi-Strategy Fund Supplement Download
Mike Pinggera, Senior Fund Manager, Multi-Strategy, talks about his background, career influences and what makes him tick – in and out of the office.