Who has been swimming naked?

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“It’s only when the tide goes out that you learn who’s been swimming naked.”Warren Buffet


A time of market turmoil is always a great opportunity to assess a fund’s true performance. What investors want to know is how much return was generated per unit of risk. The essence of the wisdom contained in the above quote is that in a rising market all things ride with the tide, it is only when the market turns negative that you really see the degree of efficiency in the generation of that return.

The adverse market conditions this year have again highlighted the excellent risk reward characteristics of the Rezco Value Trend Fund. The graph below shows how the fund has participated on the upside and how it has fallen less when the market has declined. It also shows how the Rezco fund has continued with its characteristic low volatility performance through the turmoil of this year.

The fund has outperformed the JSE by 9.8% for the year to date. Over 12 months the fund has yielded 11.2% or about 6.5% more than the JSE. The table below shows how consistent this outperformance has been.

 

Long Term Graph

The long term graph clearly shows the consistency of this outperformance.

How is this achieved?

The fund aims to choose equities that:

  • Are better growth to value propositions than the market as a whole
  • Combined as a portfolio exhibit lower volatility characteristics than the market

The fund is prepared to be different and at times to be underinvested to reduce risk. The stocks selected therefore need to be significantly better than the average listed share.

Indexing to the JSE or competitors is avoided and plays no part in decision making.

The Rezco portfolios contain significantly fewer stocks than most comparable funds.

Research has clearly shown that boutique managers have a distinct advantage over larger investment houses because our universe of investible stocks is much larger.