Thursday, May 26, 2022
  • About
  • Advertise
  • Privacy Policy
  • Cookie Policy
  • Contact
  • Login
  • Home
  • News
  • Economy
  • Columns
  • Companies & Markets
  • In Business With
  • Lifestyle
    • Motoring
  • Sports
    The Mares need P7.2m for Africa Cup of Nations – Letshwiti

    Debswana boosts Mares’ preparations for AWCON

    Two local softball players move to Canada

    Two local softball players move to Canada

    Record breaker Tebogo was advised against the 400m race

    Record breaker Tebogo was advised against the 400m race

    BONA unveils P234K Tournament Sponsorship

    BONA unveils P234K Tournament Sponsorship

    The Mares need P7.2m for Africa Cup of Nations – Letshwiti

    The Mares need P7.2m for Africa Cup of Nations – Letshwiti

    Botswana’s cricket team tours SA

    Botswana’s cricket team tours SA

    Trending Tags

    No Result
    View All Result
    • Home
    • News
    • Economy
    • Columns
    • Companies & Markets
    • In Business With
    • Lifestyle
      • Motoring
    • Sports
      The Mares need P7.2m for Africa Cup of Nations – Letshwiti

      Debswana boosts Mares’ preparations for AWCON

      Two local softball players move to Canada

      Two local softball players move to Canada

      Record breaker Tebogo was advised against the 400m race

      Record breaker Tebogo was advised against the 400m race

      BONA unveils P234K Tournament Sponsorship

      BONA unveils P234K Tournament Sponsorship

      The Mares need P7.2m for Africa Cup of Nations – Letshwiti

      The Mares need P7.2m for Africa Cup of Nations – Letshwiti

      Botswana’s cricket team tours SA

      Botswana’s cricket team tours SA

      Trending Tags

      No Result
      View All Result
      The Business Weekly & Review
      No Result
      View All Result
      Home Companies & Markets

      Bifm seeks high quality securities amidst a mixed performance of funds

      • Efforts to reduce exposure to ‘weaker’ companies continues • Liquidity limits efforts to increase and decrease exposures • Bifm wants a well diversified portfolio that reflects the best opportunity set

      mm by Kitso Dickson
      November 23, 2021
      in Companies & Markets
      Reading Time: 4 mins read
      0
      Bifm seeks high quality securities amidst a mixed performance of funds
      0
      SHARES
      53
      VIEWS
      Share on FacebookShare on Twitter

      According to leading asset manager, Botswana Insurance Fund Management (Bifm), the Local Equity Unit Trust Fund’s performance remained positive for the third quarter of the year. The Fund’s return of 6.07 percent lagged the benchmark performance of 6.73 percent by 0.65 percent. The Fund’s performance over the 12-month period is positive, reported at 9.79 percent and marginally lagging the benchmark performance of 9.80 percent.

      Local and offshore allocations registered positive performance, but both lagged their respective benchmarks. Global equities rose within the first two months of the quarter, supported by improving economic data and strong earnings releases. However, Bifm says this was negated by fears about rising COVID-19 cases, supply chain challenges and inflationary pressures.

      This resulted in a general decline in market performance for the MSCI World Index (which represents developed economies) of 0.35 percent. For the developed markets, Bifm notes that the decline was led by economically sensitive stocks, which shed value, with the likes of the materials sector shedding 6.24 percent. Overall, seven of the 11 MSCI World sectors, representing 47.97 percent of the index, shed value. The MSCI Emerging Market Index recorded a negative performance of 8.84 percent.

      Some of the disparity in performance between the developed and emerging markets reflects the disparity in vaccination rates, Bifm says, noting that the developed nations’ vaccination remains above the world average, with the Unites States, for example, indicating that 58 percent of its population has been vaccinated. These economies have been able to open much earlier, with normal activity open to the vaccinated populations.

      Emerging markets, on the other hand, have reported vaccination rates below the world average. The complete opening up of these economies was largely challenged, with most of the frontier markets vaccination rates below 20 percent.

      Locally, the financial sector heavyweights led the DCI’s positive performance of 4.20 percent. Overall, the quarter was flush with new information as companies with a June full or half year-end released updated results, which showed marked improvements. “Throughout the challenges we have experienced in 2020 and the recovery in 2021, our focus has been to identify high quality securities and attain such at the most reasonable price points relative to our intrinsic valuations,” Bifm says, adding that this has been and will continue to be executed in such a way that the portfolio remains well-diversified and reflects the best opportunity set.

      “We continue with our efforts to reduce exposure to companies which we deem to be weaker and therefore pose a threat to the portfolio over the long term.” Bifm notes, saying liquidity remains a challenge, limiting efforts to increase and decrease exposures in several companies.

      Pula Money Market Fund

      Over the third quarter of 2021, the Fund returned 1.13 percent significantly outperforming the benchmark return of 0.15 percent. On a 12-month basis, the Fund returned 4.55 percent, an outperformance of 401 basis points over the benchmark which returned 0.54 percent for the same period.

      The Bifm Pula Money Market Fund invests in Call and Fixed deposits and Treasury Bills. Bifm says it actively manages the portfolio, by seeking yield assets without compromising the risk and maturity profile of the Fund.

      The decline in banking sector liquidity observed at the dawn of Q2 persisted over the third quarter of 2021. This follows a substantial amount of liquidity mopped up by the Bank of Botswana through increased bond issuances. The lag in expenditure following the auctions meant that the funds where not reinjected back into the banking sector. As a result, Bifm says the sector found itself with a decreasing liquidity position throughout the quarter.

      “This was positive for money market investors as competition for deposits became stiffer and thus banks started quoting higher rates in a bid to attract funding,” the fund manager says.

      Balanced Prudential Fund

      The Bifm Balanced Prudential Fund returned 2.55 percent over the third quarter of 2021.  The fund underperformed its benchmark return of 2.89 percent by 0.34 percent.

      The Bifm Balanced Prudential Fund is a multi-asset class fund that invests in both local and offshore equities, bonds and money market instruments. Within the quarter, Bifm notes that both asset allocation and stock selection detracted from fund relative performance.

      Over the 12-month period to September 2021, the fund returned 10.32 percent due largely to the strong performance of offshore equities. This performance represented an outperformance of 2.09 percent against the fund’s benchmark’s return of 8.23 percent.

      Under the Prudential Fund, the Bifm local equity allocation returned 7.72 percent over the third quarter of 2021. This performance exceeded the benchmark Domestic Companies Index (DCI) performance of 4.20 percent by 3.52 percent. The financial sector heavyweights led the DCI’s positive quarter.

      Four of the six securities within the sector appreciated whilst the other two remained flat during the period. FNBB and Letshego, which rallied by 13.18 percent and 34.09 percent respectively, led the pack. Other sectors continued to record share price declines, the most notable being a 7.55 percent decline by Chobe and 5.00 percent by Turnstar.

      The Local Bond allocation underperformed the benchmark (Fleming Aggregate Bond Index – FABI) return of -2.09 percent by 2.18 percent over the quarter, returning -4.27 percent, according to Bifm. The asset manager notes that the Fund maintained an overweight allocation to credit vis-à-vis the benchmark (FABI, Fleming Aggregate Bond Index). Exposure to Government bonds increased over the quarter as additional purchases were made at government bond auctions held in the period.

      The Bifm World Equity allocation returned 2.18 percent over the second quarter of 2021. However, this was an underperformance of 1.49 percent against the benchmark return of 3.67 percent. World equities started the quarter strong, with a rally supported by positive corporate earnings.

      However, concerns around slowing economic growth, rising inflation, supply chain disruptions, and rising uncertainty in emerging markets towards the end of the quarter led to increased volatility and losses. Overall, the MSCI World index ended the quarter broadly flat.

      The Bifm Global Fixed Income allocation returned 2.70 percent over the quarter, underperforming the benchmark (BarCap Global Aggregate) by 0.06 percent which returned 2.76 percent over the same period. Bifm warns that data regarding rollout of COVID-19 vaccinations was promising, resulting in less pressure on the global healthcare systems. However, another wave can certainly not be ruled out hence some pessimism persisted over the quarter. On the back of the volatility, the fund manager observed: “We saw a global bond sell-off with rates rising slightly in the US, Germany and the UK.”

       

       

      Tags: Bifm Balanced Prudential FundBotswana Insurance Fund Management (Bifm)COVID-19FNBBLocal Equity Unit Trust FundMSCI World Index

      Navigation

      • Home
      • News
      • Economy
      • Columns
      • Companies & Markets
      • In Business With
      • Lifestyle
        • Motoring
      • Sports

      Recent News

      • BTTA Awards officially launched
      • Manufacturing sector performs well in Q4 2021
      • Report calls on govt to make the right to food a reality
      • Mass resignations hit BDF as case continues
      • BAMB revamps stores to diversify product line

      Site

      • About
      • Advertise
      • Privacy Policy
      • Cookie Policy
      • Contact

      © 2021 The Business Weekly & Review. All Rights Reserved.

      No Result
      View All Result
      • Home
      • News
      • Economy
      • Columns
      • Companies & Markets
      • In Business With
      • Lifestyle
        • Motoring
      • Sports

      © 2021 The Business Weekly & Review. All Rights Reserved.

      Welcome Back!

      Login to your account below

      Forgotten Password?

      Retrieve your password

      Please enter your username or email address to reset your password.

      Log In
      This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
      Are you sure want to unlock this post?
      Unlock left : 0
      Are you sure want to cancel subscription?