Top South African asset manager betting on Woolworths, Shoprite, and SPAR

Coronation’s premier Top 20 fund increased its exposure to Shoprite, SPAR, and Woolworths throughout 2025, as the weak local economy resulted in these companies being undervalued. 

South African-focused companies had a relatively difficult 2025 compared to the rest of the market, with the JSE’s returns largely driven by precious metals miners. 

Both local and foreign investors remain doubtful of the South African economy’s ability to grow at a fast enough rate to meaningfully boost the top and bottom line of local companies. 

This led many of them to invest in local government bonds, which offer attractive yields, and companies listed locally that have significant operations outside of the country. 

As a result, companies that derive most of their income from South Africa were left behind, which has presented investors with an opportunity to buy shares at attractive valuations. 

This is feedback from Coronation’s Top 20 fund managers, Neville Chester, Nic Stein, and Nicholas Hops, who recently explained the portfolio allocations.

The fund has largely missed out on the surge in precious metals miners on the JSE, with it significantly underperforming its benchmark in 2025. 

This is because the managers believe the rally in precious metals is likely near its peak, and historically, such rallies have not translated into cash being returned to shareholders. 

Chester, Stein, and Hops have maintained minimal exposure to gold in the fund and have steadily reduced their investments in platinum miners. 

The only commodity-related company the fund has increased its exposure to is Glencore, whose share price underperformed in 2025 due to its focus on industrial metals. 

Glencore is set to benefit from surging copper demand in the coming years, which is more easily predictable than demand for precious metals.

Forecasting commodity prices is tricky for industrial commodities, and even more difficult for speculative commodities, which have little industrial use, such as gold.  

“After many decades of investing in commodity-driven markets, we are, however, very certain of the cyclicality of all commodity industries and are very wary of investing heavily at the top of the cycle,” the managers said.  

“Calling when exactly the cycle will peak is an inexact science, but given the extreme price rises we have seen in commodity prices, we are undoubtedly in the top part of the cycle.”

Betting big on retail

As the Top 20 fund steadily reduced its exposure to precious metals, it took the opportunity to bulk up its investments in other areas of the market. 

Chester, Stein, and Hops explained that throughout 2025, they took advantage of the weak domestic macroeconomic conditions to buy up low-rated South African-fosuced companies. 

They increased the fund’s exposure to large retailers, such as Shoprite, SPAR, Pepkor, and Woolworths, during this period.

“While trading remains tough and low inflation has seen anaemic topline growth, we believe the very low levels of inflation driven by the declining oil price and strong rand will result in further interest rate cuts in 2026,” the managers said. 

This should support domestic demand through 2026 as consumers’ disposable income increases with reduced debt repayments. 

Retail spending is also expected to continue its strong growth on the back of early withdrawals made under the new two-pot retirement system. 

However, economists have warned that this is unlikely to last forever, as with any cycle, it will come to an end at some point. 

The fund has maintained its exposure to the South African banks, with particular high exposure to Standard Bank, given its strong African growth profile.

“We have also added to our position in Sanlam, given its relatively attractive valuation and exposure to growth markets in Africa and India,” the managers said. 

“The Africa theme is getting strong support from the high commodity prices. While lower oil means weakness for some markets, improved reforms in key markets like Nigeria, and strong metal prices for an economy like Ghana, have seen significantly higher growth.”

This is coupled with Sanlam’s restructuring and investment initiatives in its Indian operations to focus on its life and insurance operations in a fast-growing and underpenetrated market.

In the last quarter, the fund also added Bidcorp, the global food services business. The company has de-rated significantly over the last few years, despite still growing its profits in hard currency. 

“While the stronger rand will be a short-term headwind for rand-denominated profit growth, we think the business model remains robust with plenty of growth in its widespread markets for many years to come,” they said. 

These changes indicate a clear shift from the portfolio managers, as they look for investment opportunities in a market that returned 43% in rand terms in 2025. 

This means that the fund is increasingly positioned defensively, with it looking to defend the gains made in the past few years.