The Fund aims to achieve positive returns on a rolling 12 months basis, with lower risk and low volatility expected, primarily through the use of equities and CFDs.
 

The fund

  • Invests primarily in the United Kingdom.

  • Is a UK-focused long/short Fund

  • References SONIA+4% per annum, irrespective of market conditions, although this is not guaranteed.

 

Meet the Sanlam UK Equities Team

Chris Rodgers
Chris Rodgers
Head of UK Equities
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Andrew Evans, CFA
Andrew Evans, CFA
Fund Manager
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Mark Boucher
Mark Boucher
Fund Manager
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Mark Swain
Mark Swain
Fund Manager
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Why invest in the fund?

  • Gain exposure to interesting stocks & themes within the UK without taking too much market risk
  • Pragmatic investment approach with the flexibility to scale net and gross exposure quickly to suit market conditions
  • Provides portfolio diversification with low correlation, low volatility focussing on capital protection 
  • Co-managers have over 50 years’ combined experience of managing long/short strategies
  • Demonstrable track record of attractive risk adjusted returns

Past performance is not an indicator of future performance
Source: Bloomberg as at 31/08/2021.

See below for full and discrete performance. 


 

The Sanlam Enterprise Fund aims to produce positive returns on a rolling 12 month basis regardless of market conditions and with lower volatility than ‘risk assets’ such as equities. We believe the fund should hold a place in all balanced portfolios as it aims to enhance risk/return characteristics whilst focussing on capital protection.

Having been UK long/short equity managers for over 20 years our approach has been stress tested through several market cycles including the bursting of the dot-com bubble, Global Financial Crisis and more recently the COVID pandemic.

Our knowledge and expertise of UK, companies, management teams, analyst community and investor base lies at the heart of our ability to generate alpha. Analysing these constituents to best identify those companies that are most likely to produce positive or negative earnings surprises and drive a re-rating of share prices is key to our investment process.

Monetising idiosyncratic risk (stock-specific risk) whilst hedging out market risk has been fundamental to our success especially on the short side which we regard as a key differentiator.

We are seasoned long/short investors and have been managing UK equity together since 2001

Mark Swain, Fund Manager

Fund Commentary

September 2021

Market/macro backdrop
September saw UK equity markets struggle to make any meaningful headway with the MSCI UK index producing a sterling total return of 0.0% (Source: MSCI and Bloomberg).


Performance 
The Fund produced a performance of -1.1% in September, taking the Fund’s 2021 year-to-date performance to 4.6% (source: A Inc, Bloomberg). September was shaping up to be another good month with the Fund in positive territory for most of the period against a negative market but profit taking in a number of our structural winners towards month end (and quarter end) reversed those gains.


Past performance is not a guide to future performance. Total return, NAV to NAV basis, net of charges.



Positive and negative contributors
Highlights included cyber security stock Darktrace as it beat fiscal year forecasts and raised guidance for next year to growth between 35%-37% (previously 29%-32%) and adjusted EBITDA margins between 2%-5% (previously 1%-4%). It was a similar story at JD Sports which beat analyst H1 PBT forecasts by c.50% and raised fiscal year guidance to “at least £750m” from “no less than £550m” previously. JD’s shares rallied 10% on its results before giving back the gains by month end but we expect the Capital Markets Day to remind investors what an exceptionally managed retailer this is and the size of the US opportunity. AstraZeneca also deserves a mention as it released impressive trial results from its breast cancer drug, Enhertu.

A short in an online retailer worked well as growth in Q2 slowed from elevated levels and confirmation it is to list its separate entities in 2022 shone a light on what we perceive to be an overly expensive sum-of-the-parts valuation. A short in a maker of auto catalysts declined in the face of auto production issues and falling PGM prices whilst a short in a brick manufacturer worked well as a hedge against some of our longs in repair, maintenance and improvement.

Negative contributors included short positions in an oil major and maker of aero engines, which have now been closed. Otherwise, it was profit taking in a number of our structural winners that had performed well this year that acted as a drag on performance.


Significant portfolio changes - buy/sells 
We added a new long in Smurfit Kappa as the shares pulled back to an attractive valuation. We also started a pair trade in the housebuilding sector, taking a long in Bellway and a short in one of its peers as we see 10-15% upgrade potential in the former and a similar level of downgrade potential in the latter.
We also started a short in a doorstep lender as costs increased inexplicably as it attempts to kickstart stalling growth in its credit card business.

  
Fund/corporate/team highlights
See above.

Outlook
As we discussed last month, the benefits of further economic recovery and global growth are more finely balanced against the risks of higher valuations, tightening liquidity, rising inflation and outright product shortages in some sectors as wholesale energy prices soar. All this leaves our approach well positioned to provide attractive returns and capital protection in an environment where many other asset classes – particularly government bonds – may continue to struggle.
 

Coming soon
Explore the details
A UK long/short equity strategy. Run by experienced managers with a 20 year track record of alpha generation.

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Fund Risks

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. A table with five years’ performance is available in the fund factsheets.

Part of the Fund will invest in derivatives such as CFDs, futures and options for investment and efficient portfolio management only. There is a risk that losses could be made on derivative positions or that the counterparties could fail to complete on transactions. CFDs are used to obtain short exposures to certain underlying securities. Selling securities short runs the risk of losing an amount greater than the amount invested. The Fund may invest in companies based in emerging markets, which may involve additional risks due to greater political, economic, regulatory risks, among other factors.

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