Evan Walker is one of South Africa’s top fund managers and serves as a portfolio manager at 36One, where he assists with numerous equity funds.
Before joining 36One in August 2012 as an investment team member, he was the fund manager of the award-winning Momentum small and mid-cap fund.
Speaking at the recent Morningstar Investment Conference, Walker said he was optimistic about the prospects of JSE-listed companies.
Commenting on South Africa’s weak economic growth, he highlighted that 70% of JSE-listed company earnings are generated outside South Africa.
Walker said JSE-listed companies are professional businesses that are constantly re-inventing themselves, innovating and improving their offerings to compete with disrupters.
He said South African equities are not only cheap, but they also have good visibility of future earnings.
While Walker is upbeat about local stocks, he believes that a portfolio should still be properly diversified from a global perspective.
While South Africa offers between 60 and 80 good investable companies, there are many more large businesses worldwide that are attractive.
International markets also offer access to many sectors that you cannot get exposure to in South Africa.
Walker plans to make full use of their 45% offshore allocations allowed under regulation 28 to take advantage of rising interest rates and the subsequent low equity prices overseas.
He said money taken offshore should not just sit idle but earn a yield while they wait for attractive opportunities.
He prefers to invest in dollar-denominated bonds of local companies that he knows well, like Absa and Sasol. These corporate bonds earn a significantly higher interest rate than US treasuries.
If he had the freedom to put any allocation on his asset classes, he believes that 15% to 20% should be in South African equities.
36One BCI Flexible Opportunity Fund
The 36One BCI Flexible Opportunity Fund has no minimum or maximum exposure to equities but is capped to a maximum of 45% exposure to international assets.
Below is a breakdown of the fund’s share portfolio on 30 June 2022.
|Holding||% of Fund|
|Suncor Energy Incorporated||5.19|
|British American Tobacco plc||5.11|
|Absa Group Ltd.||4.17|
|Mediclinic International plc||3.58|
|Northam Platinum Holdings Ltd.||2.89|
|Distell Group Holdings Ltd.||2.10|
|Altria Group Incorporated||2.06|
|36ONE BCI Global Equity Feeder Fund||1.87|
|Investec Property Fund Ltd.||1.17|
|Swedish Match AB||1.10|
|Alphabet Inc C||0.95|
|Charter Communications Inc||0.94|
|Anheuser-Busch InBev SA/NV||0.93|
|Mr Price Group Ltd.||0.86|
|Gold Fields Ltd.||0.65|
|AngloGold Ashanti Ltd.||0.55|
|Sea Harvest Group Ltd.||0.52|
|Coronation Fund Managers Ltd.||0.51|
|Meta Platforms Inc||0.49|
|Nedbank Group Ltd.||0.49|
|Sirius Real Estate Ltd.||0.41|
|The Bidvest Group Ltd.||0.41|
|Aspen Pharmacare Holdings Ltd.||0.39|
|Impala Platinum Holdings Ltd.||0.23|
|Truworths International Ltd.||0.22|
|Grand Parade Investments Ltd.||0.14|
|Ninety One Ltd.||0.07|