We are proud to announce the release of our Machabeng portfolio. Machabeng, which means “international” in isiSotho, invests in good companies that “do good”. It offers a diversified portfolio of attractively priced companies listed on the New York Stock Exchange that have excellent growth prospects and are supported by strong business brands with high social impact.
Why Offshore?
South Africa makes up just 0.44% of the world’s $80 trillion economy. Taking part of your portfolio offshore allows you to:
- Hedge against rand weakness,
- Diversify your portfolio, and
- Get exposure to industries and sectors not available locally.
The Machabeng portfolio aims to outperform the market over the medium-to-long term through investing in quality businesses with great growth potential in hard currency. Machabeng holds well-known global brands including Apple, eBay and PepsiCo, and is diversified across industries, ranging from data storage (Micron and Seagate) to biotech (Biogen). The investments are also exposed to emerging global themes such as 5g wireless networks and nanoelectronics.
Stocks are selected based on quality and growth factors, with a view to return on shareholder funds and valuation. In other words, we look for sound capital allocating equities focussed on delivering value to shareholders, as well as society at large.
Good Companies That do Good
Machabeng’s investment process also considers the social and economic impact of firms, which in part is measured by ESG scores. Environmental, social and governance (ESG) filters ensure the portfolio invests in good companies that do good as much for shareholders as for society at large. This approach enhances traditional financial analysis, opens new investment opportunities, helps manage multi-faceted risk, including social impact and environmental sustainability, and enhances the nature and extent of investment returns over the long term.
Morgan Stanley Capital International’s (MSCI) 10-year ESG research study shows high-ESG-rated companies are more profitable, pay higher dividends and show slightly higher valuation levels. In addition, companies with higher ESG ratings, on average, exhibit a lower frequency of stock-specific risks, avoid large drawdowns, and therefore represent a “risk-mitigation premium.”
Why Indirect?
The Machabeng portfolio is an indirect offshore investment, or a rand-denominated fund. This means:
- There’s no need to purchase foreign currency;
- No need to get a tax clearance certificate; and
- No limit on how much you can invest to get the offshore exposure.
While returns are generated in US$ they are reported in rands. The effective annual cost (EAC) is 1.48% per annum.
For more information, check out the Machabeng fact sheet, or contact us on info@cannonassets.co.za