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As half of the world’s population goes to the elections polls this year, war in the Middle East and Ukraine continues and inflation in most developed markets appears to be cooling, active managers are taking advantage of the volatility this creates to apply disciplined investment strategies.
Amplify Investment Partners expects persistently high interest rates to be a headwind for global equity markets, especially the US where market valuations remain high relative to history and to emerging markets.
“We have however seen that some companies in the tech industry (which has driven the total US market higher) have bucked the trend and continue to perform above market expectations as future earnings remain attractive,” Amplify’s head of positioning, Nico Janse van Rensburg says, adding that as bottom-up fundamental managers, Amplify’s fund managers look at share level to find opportunities.

Investor sentiment towards Naspers and Prosus appears to be warming in early 2024 after uncertainty over Chinese tech company Tencent weighed heavily on these shares in 2023. Naspers and Prosus trade at significant discounts to Tencent, in which they have a significant shareholding, and to their own net asset value. Their inability to unlock this value, and uncertainty over Tencent and the Chinese economy, has resulted in nervousness among investors, especially given their dominance in terms of value and trade on the JSE. In December 2023, the introduction of proposed draft gaming regulations by the Chinese regulator saw Naspers lose 9.7% and Prosus lose 10.6%, while Tencent was down 13% in rand terms. But there has been some recovery in January, after fund managers bought into the dip. Managers of Amplify Investment Partners funds consider Naspers and Prosus good value at current levels, and some used the opportunity to buy.

Amplify’s managers say the trajectory or outcome of various events that are already known in 2024 hold high risks and uncertainties. These include local national elections, the power crisis, Transnet’s rail and ports crisis, war in Ukraine and the Middle East, US GDP growth and the Fed’s response and Chinese economic recovery.
There is generally consensus among Amplify’s managers that the key lies in a balanced and adaptable approach with a diversified portfolio. Geopolitical risk globally, elections (notably in the US, Russia and the EU), local elections and continued local economic pressures point to continued uncertainty and volatility, and a relatively defensive portfolio positioning. Amplify’s managers, who have proven their ability to perform well during volatility, remain active and true to their philosophy and practice and remain cautiously optimistic for 2024.

Low risk instruments provide attractive returns with limited risk, and a more conservative position in the current environment is suitable. SA equities are extremely cheap compared to history, global markets, and emerging markets. There has been a structural change in terms of capital flow as Regulation 28 changes saw a lot of local managers increase offshore exposure at the expense of local, while foreign investors are not convinced on SA’s prospects. This leaves lots of opportunities on the local market, with companies on 6 or 7 PEs and decent dividend yields, and with some growth and prospects determined by themselves rather than macro conditions. This is positive for local equities, relative to especially the US which expensive, and the fund has increased its allocation.

By taking inspiration from the natural world, we can navigate unpredictable waters with greater clarity and purpose. A predatory compass helps guide us to resilience, growth, success and more.

Our story isn’t just about managing assets; it’s about blazing a trail through market dynamics with purpose and deep commitment. Intelligence meets impact, made meaningful. That’s the Amplify story.

Our story isn’t just about managing assets; it’s about blazing a trail through market dynamics with purpose and deep commitment. Intelligence meets impact, made meaningful. That’s the Amplify story.

Our story isn’t just about managing assets; it’s about blazing a trail through market dynamics with purpose and deep commitment. Intelligence meets impact, made meaningful. That’s the Amplify story.

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Amplify Investment Partners’ global equity funds are new to the market, but infused with the DNA of a fund with a 27 year history of outperformance.

Nico Janse van Rensburg, head of positioning at Amplify, said in a recent webcast on Amplify’s offshore developments that the Amplify Global Equity Fund (USD) and Amplify SCI* Global Equity Feeder Fund (ZAR) aim to invest in dominant companies in structurally-attractive industries which will grow their earnings at sustainable above average rates.

While benchmarked against the MSCI World index, the fund is run as benchmark agnostic, as the index is not used as a starting point to portfolio construction. The portfolio holds between 35 to 55 companies, of which the top 10 make up 40% to 50%. The focus is on industry-leading multinationals with large market caps and high daily trading volumes with sustainable, above average growth in earnings, cashflow and dividends

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