This document provides an overview of the Absolute Plus Fund managed by Marius Oberholzer and his team at STANLIB. It discusses the people and philosophy behind the fund, the aims and high-level process, performance comparisons, the current market environment, and concludes with a summary. The fund uses an absolute return strategy with a focus on capital preservation, diversification across lowly correlated asset classes, and disciplined risk management to aim for returns above inflation over the medium term while keeping volatility low.
Osisko Development - Investor Presentation - May 2024
Stanlib
1. Marius Oberholzer : Head Absolute Return Strategies
March 2017
Absolute Plus Fund
2. Contents
1. People and Philosophy
2. Absolute Plus Fund Aims
3. High Level Process
4. Performance and Peer Group Comparisons
5. Market Environment
6. Conclusion
4. 4
Absolute Return Franchise
Consistent performance through all business cycles
Degrees
MSc (Global Finance)
BSc (Hons) (Pure Mathematics)
BSc (Engineering)
BCom (Economics and
Commercial Law)
BBusSc
CFA
MSc (Operational Research)
Qualifications
Consistently growing
capital in absolute
terms (in excess of
inflation)
Wealth creation
R9.5bn
Franchise AUM
60+Years of collective investment
experience in the Absolute
Return team
Experience
Team
TACTICAL
ASSET
ALLOCATION
OVERLAY
Capital preservation using asset class diversification,
security selection and disciplined risk management
Focus
31 December 2016
Portfolio
Managers:
Bhekinkosi
Khuzwayo
Peter van der
Ross
Vaughan
Henkel
GLOBALand
DOMESTIC
asset classes with
LOW
or NEGATIVE
correlations
REGULATION
28/30
COMPLIANT
Pooled or segregated
mandates
Diversification
Marius Oberholzer
Head&PortfolioManager
Capabilities
5. 5
Benefit from wide range of insights, but not obliged to follow them
Dealing Desk
Fixed Income
Head : Henk Viljoen
Team: 9 inv. professionals
Listed Property
Head : Keillen Ndlovu
Team: 5 inv. professionals
Equities
Head : Herman van Velze
Team: 8 inv. professionals
Multi-Asset
Head : Robin Eagar
Team: 6 inv. professionals
Economics
Chief Economist: Kevin Lings
Team: 3 inv. professionals
Pan-Africa
Head : John Mackie
Team: 4 inv. professionals
Beta Quant and Passive
Head : Brian Kipps
Team: 5 inv. professionals
Portfolio Analytics
Risk and Implementations (PARI)
Head : Dr Gareth Witten
Team: 15 inv. support
ABSOLUTE RETURNS GROUP
Marius Oberholzer: Head of Absolute Return & Portfolio Manager
Peter van der Ross
Portfolio Manager
Bheki Khuzwayo
Portfolio Manager
• Average Investment Experience 15 Years
• Experienced in Absolute Return investing
• Specialists - only manage Absolute Return Mandates
• Draw on expertise across Stanlib Asset Management
• Boutique mentality - high degree of client alignment
Head : Alphonso Raats
Team: 3 inv. professionals
Vaughan Henkel
Portfolio Manager
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Absolute Return Investing: The Case and Philosophy
“Rule No.1: never lose money; Rule No. 2: don’t forget Rule No. 1”
Warren Buffett
“What if I am wrong? Any rationale investment plan has to start with that question”.
Peter L. Bernstein
11. What does Absolute Return investing mean to us?
Harness the power of compounding:
o Preserve capital : Risk = short term loss of capital (nominal)
o Expose clients’ capital to risk premia that are priced to deliver
long term rewards : beat inflation over time horizons > 3 years =
Sustainable Growth
Grow our clients’ real purchasing power
Diversify in many ways. We respect the markets.
Path dependency matters….
Deliver steady, consistent returns over time
“You can’t
eat relative returns.”
so
Narrow the range of
potential outcomes to
deliver a predictable
return profile
12. 25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25%
Limited downside, with
upside participation
Asset Market STANLIB Absolute Return
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What can you expect over the medium term?
Market Returns
Portfolioreturns
13. Absolute Plus Fund
Aims and Outcomes
“Significant long-term performance does not appear magically and
suddenly. Long-term profitability is a process, involving trial-and-
error”.
Peter Brandt.
Victory is built on small steps and good decisions
14. Absolute Plus Fund
• Primarily this is an Asset Allocation Strategy
• Reg 28 Unit Trust
• Broadened asset mix available, relative to its history
• Do use derivatives to protect against adverse outcomes, all on-exchange traded to ensure
transparent pricing.
• Risk Managed and governance
• Liquid and scalable
• Very flexible around Asset Allocation
• Mandated to protect capital over rolling 12 months
• Seek CPI+4% over medium term.
• Lower volatility of returns.
16. SAA in Risk Seeking mode: 1. Highest probability of meeting the return target,
2. lowest probability of incurring a shorter term drawdown along the way
“It is a mistake to try to look too far ahead. The chain of destiny can only be grasped one
link at a time”
Winston Churchill
17. Buying and holding an SAA designed to meet CPI hurdles will breach our
drawdown limits, even on conservative mandates.
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18. What do we Actually do?
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Focus on getting the
asset allocation right:
Identify mispricing's
Use hedging and
liquidity
Protect against adverse
outcomes at asset and
portfolio level
Spread exposure
across asset classes,
geographies and
strategies
We embrace active,
passive and hybrid
strategies
Add some asset selection alpha
• Duration and curve strategies
• Credit
• Stock or sector selection in Equity & Property
• Quant factors in Equity
• Instrument selection around expression of view.
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Identify mispricing across Asset Classes
• Exposed to risk-premia which deliver returns over time
• Seek to make sense of economic and macro environment and blend with our valuation framework
• We apply a Hurdle Rate to each investment
• Our liquidity profile allows us to adapt quickly to change
Deliberate about how we exploit opportunities:
• Where (asset class & geography)
• When (business cycle and valuations)
• Why (explicit rationale and reasoning)
• How (best way to express the investment view: beta, capital structure or derivative)
• Could we be wrong?
• What makes us wrong
Disciplined Risk Management:
• Constant, as well as formal, regular evaluation of positions and portfolio
• Position sizing and hedging
• Stress testing and scenario analysis
STANLIB Absolute Returns Process
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Risk Management in Absolute Returns Business
“Everyone has a plan until they get punched in the face” Mike Tyson
Risk Management Objectives:
• Proactive rather than reactive risk management to prepare for adverse outcomes
• Culture of risk management. Risk management is seen as part of the Absolute Return process
• Quantify, isolate and manage portfolio risks
• Truncate against losses and tail-risk
General Methodologies:
• Position level and asset class level risks aggregated for portfolio?
• Overlay hedges to bring systemic risks and portfolio volatility with desired limits
• Exposure and drawdown limits to manage more idiosyncratic exposures
• Liquid portfolio
Independent Insights:
• Independent Risk Team report to CEO and COO
• Scenario analysis and Stress testing
• Investment Governance functions
Tools:
• Franchises uses in-house tools, Bloomberg and 3rd party system “Risk 101”
• PARI* uses APT® and FactSet®.
* Portfolio Analytics Risk and Implementations.
54. Keep Calm – Equity Risk Premium
Earnings yield using TREND earnings, less 10 year Treasury yield
Source: Capital
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55. Growth and Inflation
Risks to growth are symmetrical - inflation risks “might” be skewed to the upside
55
Growth
Inflation
“Fatter” Tails “Fatter” Tails
Base Case of Higher
Inflation
Left Tail Clipped
Meaningful Risks
to the Upside
56. Flatter Frontier
Risk return trade off – Four asset class portfolio
Source: Morgan Stanley
Expected Returns1990-2009 2010-2016 Best Return/Vol: 5.8%/3.1%
Best Return/Vol: 5.3%/4.3%
Best Return/Vol: 2.2%/3.5%
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• We believe that market inefficiencies can be exploited through active asset allocation, creating attractive risk-
adjusted and Absolute returns.
• We adjust asset allocation dynamically, based on a bottom up valuation-based process, top-down research and a
pragmatic view of what drives markets. We do not buy-and-hope
• We prepare for adverse outcomes and protect portfolios accordingly. Nimble, tactical and dynamic should
win the day
• We manage against downside volatility of returns. Patience to wait for risk-reward to be in our favour
• Core team members have a boutique mentality with combined investment experience of in excess of 60 years
with diverse, complementary and specialist skillsets.
• Proven True Absolute Return funds with strong track record of downside protection
• We love volatility.
“It is not the strongest of the species that survives.
It is the one that is most adaptable to change”
Why STANLIB Absolute Returns?
60. Collective Investment Schemes (CIS) in Securities are generally medium to long-term investments. An investment in the participations of
a collective investment scheme in securities is not the same as a deposit with a banking institution. The value of participatory interests
may go down as well as up and past performance is not necessarily a guide to the future. CIS are traded at ruling prices and can engage
in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from STANLIB
Collective Investments (“the Manager”). Commission and incentives may be paid and if so, would be included in the overall costs.
Forward pricing is used. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go
up or down. Liberty is a full member of the Association for Savings & Investment SA (ASISA). The Manager is a member of the Liberty
group of companies.
The information and content of this document are intended to be for information purposes only and STANLIB does not guarantee the
suitability or potential value of any information contained herein. STANLIB Wealth Management Limited does not expressly or by
implication propose that the products or services offered in this document are appropriate to the particular investment objectives or needs
of any existing or prospective client. Potential investors are advised to seek independent advice from an authorised financial adviser in
this regard. STANLIB Wealth Management Limited is an authorised Financial Services Provider in terms of the Financial Advisory and
Intermediary Services Act 37 of 2002 (Licence No. 26/10/590)
Disclaimer
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