Quarterly Commentary - Q1 2020

The Granate SCI Balanced Fund was launched on 3 February 2020 and we are pleased to share our first quarterly commentary.

Food for thought – and feelings

The purpose of quarterly commentaries is firstly to provide transparency: it’s important for you to understand what we are doing with your money and why we are doing it. That’s for ‘head comfort’. But – perhaps more importantly – we also want to provide ‘heart comfort’. Investing is often perceived to be all about numbers, but it is quite the opposite. It is an emotional rollercoaster. Why then write only about numbers, when there are serious emotions involved? We will strive to do both.

This fund is small in size but big in significance

It already contains many of our colleagues’, families’ and friends’ savings. We would like to make special mention of our children, nephews and nieces, because they will be our most important yardstick. They will invest for at least a decade but perhaps even a few decades. We need to buy them companies that will grow their profits for many years to come, and that they will be proud to own.

Share and bond prices have been under pressure since this fund was launched

This has largely been due to concerns around COVID-19. We were therefore fortunate to have been handed your savings in cash just as some of the best companies in South Africa and globally reached share prices lower than we deem them to be worth.

We have bought a diversified portfolio of companies that we believe have the balance sheets to survive a protracted recession, as well as management teams and business models able to grow profits for many years. We also acquired bonds, all guaranteed by the South African government. These bonds have been on offer at attractive yields that don’t come around in good times.

While the ride may be bumpy for some time yet, we are excited about the prospects for the fund

We look forward to managing it for you for a very long time.

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Written by Paul Bosman

Portfolio Manager

Paul joined Granate Asset Management in July 2019 as an Executive Director and Investment Professional. Prior to this he was a portfolio manager at PSG Asset Management, where he was responsible for the PSG Stable and PSG Balanced Funds. Before being appointed portfolio manager, he served as an equity analyst in various subsidiaries of the PSG Group.

CFA Charterholder
BCom Hons from the University of Stellenbosch