Analysis on the Coronation Global Managed Fund

Coronation Global Managed Fund, launched in 2010, has been making waves in the investment world under the guidance of Louis Stassen, the Chief Investment Officer at Coronation Fund Managers. The fund, primarily focused on developed economies such as the US, Europe, and Japan, also has exposure to emerging markets. Stassen, who has been actively involved with the fund for the past three years, sheds light on the fund's mandate, asset allocation, and market outlook in a recent interview with CNBC Africa's Lindsay Williams. Stassen describes the fund's mandate as similar to a balanced plus mandate in the South African context, emphasizing medium risk with a benchmark of 60% equity and 40% global bonds. However, he mentions that they are not solely benchmark-conscious and aim to optimize returns while managing risks effectively. The fund's equity exposure, currently around 60%, reflects their confidence in the market's strength and earnings growth. Stassen highlights their dynamic approach to equity allocation, ranging from 58% to 70% based on underlying stock value and market conditions. Notably, the fund tactically increased their equity allocation during a significant market sell-off earlier this year. When it comes to equity investments, Coronation shows a bias towards North America, particularly favoring American companies for their strong management teams and focused approach. Stassen compares the styles in American, European, South African, and Chinese boardrooms, noting American companies' shareholder-friendly practices. Discussing top holdings, Stassen mentions Google and Amazon as standout companies in the fund's portfolio. He acknowledges Google's remarkable growth story, attributing its success to the search business's network effect. On the other hand, Amazon's valuation poses a challenge due to its stretched metrics, but Stassen believes in their long-term growth potential driven by market dominance and expansion into new businesses. Shifting focus to property investments, Stassen reveals the fund's significant exposure to the UK market and long-term investments in the German residential sector. Despite the market fluctuations, Coronation remains positive on property investments as a risk diversification strategy. In a time of unprecedented negative interest rates and bond market uncertainty, Coronation has limited exposure to bonds, preferring credit positions over interest rate-sensitive securities. Stassen acknowledges the unconventional market conditions and emphasizes the fund's cautious approach to avoid potential risks associated with negative yields. With cash holdings currently at a historically high level of 18.5%, Coronation remains prudent in managing liquidity and explores low-risk short-term instruments for capital preservation. Stassen's bottom-up investment approach aligns with the fund's strategy to identify quality management teams and navigate through market uncertainties. In conclusion, Stassen recommends the Coronation Global Managed Fund to investors with a long-term horizon and medium to high risk tolerance. The fund's balanced approach and focus on quality investments position it as a suitable choice for those seeking stable returns in volatile market conditions.