Weekly Thoughts 19 June 2015

I had talks with consultants from two asset managers over the past two weeks. Allan Gray and Coronation. I will write about the conversation with the Allan Gray consultant this week.

The topic I wanted to raise was to talk about how and when they are going to move some of their local equity fund into owning offshore assets. A while ago they asked investors for approval to do this and got their majority ‘yes’ vote they were looking for. I agreed with the move. I was told by my consultant that to date they have only moved just under 3% of the fund. With a very large fund, as is theirs, these sort of moves take time. The selling and buying actions are large movements.

Interestingly, another asset manager I use recently asked me if I knew if Allan Gray had started these moves yet as they also wanted to make some offshore purchases for their own local equity fund and were hoping to get in before Allan Gray had made any big moves. This is because they knew that if Allan Gray moved 5%, for example, in a short space of time, that it would affect the SA stock market as a whole due to the size of it. By this I mean that a fund this size selling 5 or 6% of the assets it owns, could create some sell-off momentum for the wrong reasons.

Just sharing with you the thoughts and conversations I look to have. Coronation next week.