Lessons from Paris – don’t overlook the all-rounders!

Watching the 2024 Paris Olympic Games from the warmth and comfort of my lounge has made the recent cold winter weather in Cape Town much more bearable! I have enjoyed discovering competitive rivalries that I have been completely unaware of in sports that I hardly ever follow, and observing the sometimes surprising and excessive patriotic zeal that seems to grip both athletes and spectators. It probably happens to me at every Olympic Games (which I then forget as our TV screens return to showing the more traditional team sports like rugby, soccer and cricket), but I have renewed my profound respect and admiration for the dedication and commitment required by each and every participant at these Games, in sports as diverse as badminton, weightlifting and kayaking. 

However, one of my key observations came to me while watching the Men’s Decathlon event on the athletics track. Most events are defined by an exceptional, outlying strength or skill – (examples might invite descriptions like “fastest woman on the planet”, “perfect score”, “highest jumper in the world” etc. – you get the picture). In slight contrast, the decathlon/women’s heptathlon winner seems to me defined by a lack of weakness – a holistic athlete, one who is almost certainly a highly competitive athlete in every discipline, but who might not be a gold medallist in any single one if that’s all they focused on. Instead, what defines them as exceptional athletes is their all-roundedness, their lack of weakness in any one of the events. I drew on this reflection when doing a recent presentation on the PPS Stable Growth Fund, the medium equity, medium risk balanced fund which we as Laurium Capital manage as one of the PPS Investments Partnership Asset Managers
 

A fund in this medium risk category doesn’t often (if ever) hit the headlines based on huge performance. But what a fund like this is really good at, and what Laurium Capital as portfolio managers are employed by PPS to do on your behalf, is to protect investors against weaknesses, to find a well-balanced and diversified blend of assets that will protect investor capital during periods of stress over shorter time periods of up to a year, and yet also have healthy enough returns that protect investors savings against inflation over longer time periods. The fund invests right across the asset spectrum, in shares, bonds, property and cash within SA and abroad. While the fund has a specific mandate to perform ahead of local medium risk Collective Investment Scheme peers, the PPS Stable Growth fund is managed by Laurium Capital with an overarching mindset of protecting capital. This is achieved by weighing up expected return versus the risk of loss in each and every investment decision and holding a diverse portfolio of assets that mitigate against “known unknowns” in the market. It is the all-round strength of all parts of the investment team and the portfolio that contributes to exceptional and peer-beating long term performance. 

The recent volatile swings in markets early in August are a great illustration of the multi-asset portfolio in action. A rapid change in the outlook for US growth led investors across the globe to alter their view on the pace and quantum of interest rate cuts likely to be made in the US. This was due to weaker-than-expected jobs data in the US, indicating a faster slowdown in that economy. While falling interest rates are not necessarily a bad thing for asset prices in the medium term, the shift in view highlighted low growth and also prompted currency volatility in Japan. The upshot was a rapid and sizeable fall in share prices in almost every stock market. Conversely, the forecast reduction in interest rates boosted the value of bonds, whose prices rise when yields/interest rates decline. This rally in bonds largely offset the decline in the share portfolio. In addition, holding a basket of foreign assets helps to cushion local SA investors further when measured in Rand.

Many retirement funds are managed by picking different specialists for each asset class and then blending these together into a single fund. While intuitively appealing, there is an alternative. Using a single, multi-asset fund manager, with skills in each and every asset class such as Laurium Capital, gives the manager the mandate to analyse and sum-up the evolving outlook, and re-allocate capital within and between assets very rapidly (when and where appropriate). Having the all-round capability in a single manager and a well-balanced portfolio has helped to mitigate risk during volatile shorter time periods, while over the long term the Laurium Capital investment team strives to produce exceptional, peer-beating performance.

Disclaimer

PPS Multi Managers (Pty) Ltd has appointed Laurium Capital, as the asset manager of the PPS Stable Growth Fund. Laurium Capital is an authorised financial services provider (FSP 34142)

The information, opinions and any communication from PPS Investments Group, whether written, oral or implied are expressed in good faith and not intended as investment advice, neither does it constitute an offer or solicitation in any manner. 

PPS Investments Group is a subsidiary of Professional Provident Society Insurance Company Limited, a Licensed Insurer and Financial Services Provider. PPS Investments Group consists of the following authorised Financial Services Providers: PPS Investments (Pty) Ltd(“PPSI”), PPS Multi-Managers (Pty) Ltd(“PPSMM”) and PPS Investment Administrators (Pty) Ltd(“PPSIA”); and includes the following approved Management Company under the Collective Investment Schemes Control Act: PPS Management Company (RF) (Pty) Ltd (“PPS Manco”). Financial services may be provided by representative(s) rendering financial services under supervision. www.pps.co.za/invest

Collective Investment Schemes in Securities (CIS) are generally medium-to long-term investments.  The value of participatory interests (units) may go down as well as up, and past performance is not necessarily a guide to future performance. CIS are traded at ruling prices and can engage in borrowing and scrip lending up to 10% of the market value of the portfolio to bridge insufficient liquidity. A schedule of fees and charges and maximum commissions is available on request from the manager. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. The manager does not provide any guarantee either in respect of the capital or the return of a portfolio. Certain funds may be exposed to foreign securities and as such, may be subject to additional risks brought about by this exposure.