Table 1: Asset class returns in rand terms (%)

Source: PSG Investment Management 

PSG Investment Management domestic Funds of Funds

Despite a challenging quarter the three domestic multi-asset solutions continued to generate positive absolute returns year to date. The fixed income building block used in all three solutions continued to add value as fixed income assets came under pressure. The equity building block drove perfomance as stock selection within industrials and financials added the most value. Wilson Bayly Holmes (WBHO). AECI and Standard Bank were among the largest contributors to returns while Afrimat and AngloGold Ashanti detracted. 

The three domestic multi-asset funds of funds added absolute returns over 3Q23 2023 despite a tough quarter for growth and fixed income assets. The solutions remain top quartile performers in their respective sectors since inception.

Table 2: Fund performance versus sector average

Source: PSG Investment Management

Sector and asset allocation 

No changes were made to the underlying funds used in the solutions. In the fixed income building block our underlying managers added duration given attractive yields they saw on offer. This was funded from trimming shorter-dated and inflation-linked bonds as well as from deploying cash. 

In the PSG Investment Management Multi-Asset Income FoF, allocations to inflation-linked bonds and cash were trimmed over the quarter. Proceeds were deployed to longer-duration bonds as our underlying managers sought to take advantage of attractive yields. 

Allocations to resources ticked lower over the quarter while financials saw a marginal 
upweight. Overall, the solution generated a positive absolute return in 3Q23 contributing to consistent above-average performance relative to peers over its minimum recommended investment period of two years and since inception.

The equity building block used in both the PSG Investment Management Cautious and PSG Investment Management Growth FoFs added value over the quarter, with AECI, WBHO and Sun International among the largest contributors to returns. South 32, Discovery and Telkom delivered muted returns. The PSG Investment Management Cautious FoF added value on an absolute basis over the quarter maintaining its longer-term track record as a top quartile performer relative to the average Multi-Asset Low Equity peer since inception. 

The fund also maintained top-quartile performance over its minimum recommended holding period of three years. The PSG Investment Management Growth FoF benefitted from its larger weight to the equity building block, used in both solutions. with its absolute returns generated over the quarter contributing to it maintaining top quartile returns relative to its ASISA peer group since inception.

The PSG Investment Management MA Income FoF has remained a top quartile performer in the ASISA MA Income category since inception as positive absolute returns year to date bolstered longer-term performance.

The PSG Investment Management Cautious FoF delivered a positive quarterly return, supporting its long-term track record as a top quartile performer relative to sector peers over its recommended minimum holding period. The PSG Investment Management Growth FoF delivered an absolute return year to date, supporting its longer-term performance relative to the average balanced fund sector peer.

The PSG Investment Management Global Flexible Fund of Funds (USD) had a tough quarter as offshore assets stumbled. A tough quarter for global equities saw our growth-minded underlying managers detract the most from performance on an absolute basis. Our value-orientated underlying managers cushioned losses, as their security selection added value. Veritas was the largest contributor to returns over 3Q23 while Baillie Gifford and Ninety One detracted the most. In terms of fund composition. no changes were made to the solution over the quarter.

Table 4: Relative ranking

Source: Morningstar Direct