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Welcome to InPerspective
Spring 2019

October 2019
By Natalie Phillips, Deputy Managing Director

We are pleased to share that we have reached another important milestone in our journey towards independence. Our proposed demerger and listing have received all key regulatory approvals and are now targeted to take place in the first quarter of 2020. The changes will effectively establish Investec Asset Management as a separate business from Investec Group, while retaining the stability and continuity you have come to expect of us.

The leadership team that has built this business over the past three decades remains in place and on listing, Hendrik du Toit, now the Joint CEO of Investec, will return as CEO and John Green and Domenico “Mimi” Ferrini will assume Deputy CEO roles.

We are thrilled that Hendrik was presented with Die Burger and Cape Town Business Chamber Business Leader of the Year award earlier this year. Now in its 30th year, the award recognises business leaders with a Cape Town connection who have achieved national or international success. Hendrik was honoured alongside Chief Justice Mogoeng Mogoeng, who was named Ambassador for the Business Chamber for 2019, for his courage in upholding and protecting the Constitution.

Three key themes that are shaping our future

In a recent media interview following Hendrik’s award, he identified three themes that are changing the world:

  • Technology. Advances in technology have been a game changer for businesses across the globe. Technology has also been an important engine of growth for Investec Asset Management. Some people in the investment industry believe machines should do the work of asset managers. We’d rather let computers support our people. You need human insight to manage risk, so it is about harnessing technology and human insight to achieve better investment outcomes.
  • The rise of Asia. In the 1980s, wide-spread cynicism about China’s economic might prevailed. But the giant has awoken from its long slumber, with India hot on its heels. As the world pivots to the East, businesses and investors need to adapt to this sea change. South African businesses are well placed to benefit from the rise of Asia, thanks to our multi-cultural heritage and innate understanding of emerging market risks. Asset allocators will not be able to ignore the massive shift in the global economy towards Asia.
  • The environment and sustainability. China is playing a leading role to combat environmental ruin. As the world’s biggest polluter, it makes sense that China is now championing climate change mitigation, as such policies are benefiting its own citizens materially. The environmental revolution – how we combat global warming, address plastic waste and build a sustainable ocean economy – will be the driving force of the business sector worldwide. There are many opportunities and risks, but the future looks bright for innovative businesses that can grasp the challenges to build a better world. It brings us back to the purpose of our business – it’s about building a better business and investing better for a better world. Better business, better investing, better world.

Our InPerspective newsletter is packed with insight from our investment team, with some of our articles exploring these three themes.

Co-Head of Multi-Asset Growth, Philip Saunders, and Strategist Sahil Mahtani, share their views on the evolution of the US-China trade war to a technology war and the implications for investors. The twists and turns of the US-China relationship require active managers to be nimble in managing the political uncertainty.

In his piece, Asia Beyond China, Strategist Michael Power shows the benefits of his extensive travels (91 countries so far and counting), in understanding the opportunities arising from the re-emergence of the East.

Brian Kahn and Sisamkele Kobus from our Fixed Income team share their insights on the global and local inflation environment, posing the question: Is inflation dead?

Duane Cable joined us earlier this year as Portfolio Manager in our Quality team and has a wealth of experience in managing absolute return strategies and equities. He discusses the benefits of a globally integrated approach to Quality investing, which he experienced first-hand while spending time in our London office earlier this year.

Hannes van den Berg, Co-Head of our 4Factor SA Equity and Multi-Asset capability, and Portfolio Manager, Terry Seaward, explain the benefits of combining quantitative and fundamental analysis in equity selection and portfolio construction. By harnessing human insight and technology, the team has produced more consistent returns for our investors – a true partnership of human and machine.

Head of SA Investments, Nazmeera Moola, discusses how we are integrating ESG factors (environmental, social and governance) into our investment process and the importance of engaging with management to effect improvements for the benefit of our clients and our communities.

In light of this, it is encouraging that our ESG efforts are enjoying recognition. At the recently hosted Environmental Finance Sustainable Investment Awards, the Investec Global Environment strategy won the category for 'Best Initiative for ESG Investment Process'.

We also bring you an update on our flagship Promaths programme. Our involvement in Promaths and the success of students like Kamva Goso from Phillipi, is a testament to how hard work, aptitude and opportunity can spark success.

I couldn’t sign off this note without some reference to the markets, and it seems fitting to quote Tolstoy: "The two most powerful warriors are patience and time." Markets have been challenging for investors over the last three years and it is easy to become disheartened. But a long-term view shows the benefit of following Tolstoy’s advice. Our flagship Investec Balanced strategy (with international) has generated returns of over 16% p.a. since inception in 1991 and consistently outperformed its peer median. *

This year’s stronger markets have largely been on the back of global monetary policy easing and more reasonable valuations following the sell-off in 2018. But there have been bouts of volatility due to geopolitical issues. While volatility is uncomfortable, it creates opportunities for astute investors. We trust you find the articles from our investment team insightful.

As we look ahead to 2020, we are excited about the opportunities arising from this new chapter in our firm’s journey. We appreciate your support.

Natalie Phillips
Deputy Managing Director

*Source: Investec Asset Management. Returns are calculated on a true daily time-weighted basis gross of fees. Periodic returns are geometrically linked. Peer median: Alexander Forbes Global Large Manager WatchTM Median monthly compounded. From 01.04.10 the investable Median monthly compounded. Performance inception: annualised returns for the period 31.12.90 to 31.08.19.

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All information provided is product related and is not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such information without appropriate professional advice after a thorough examination of a particular situation. This is not a recommendation to buy, sell or hold any particular security. Past performance is not necessarily a guide to future performance. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. We endeavour to provide accurate and timely information, but we make no representation or warranty, express or implied, with respect to the correctness, accuracy or completeness of the information and opinions. We do not undertake to update, modify or amend the information on a frequent basis or to advise any person if such information subsequently becomes inaccurate. Any representation or opinion is provided for information purposes only. This is the copyright of Investec and its contents may not be re-used without Investec’s prior permission. Investec Asset Management (Pty) Ltd is an authorised financial services provider. Issued by Investec Asset Management, October 2019.