Looking back at the past year at Denker
It’s been a year since we moved into our own premises in the Tyger Waterfront in Bellville. We thought we would share some of the things we have been up to over this period. One of the highlights is the consistent outperformance of two of our global funds in comparison with their peers. These achievements would not have been possible without the collective effort of all the Denker team members – and we believe it is exactly this level of teamwork and long-term commitment that will enable us to continue exceeding our clients’ expectations going forward.
The idea to form Denker Capital originated in May 2014
A few of us were walking back along Park Avenue in New York after attending an all-day conference. Even though we didn’t have a name for the company back then, there were so many compelling reasons to combine the investment experience, skills and passion of the people who made up SIM Unconstrained Capital Partners and SIM Global. This was the beginning of a pilgrimage that would take over a year to complete and in August 2015, the Sanlam Board approved the merger between these two businesses.
Exceeding our clients’ expectations has always been and remains our focus
Our first and foremost focus at Denker since the beginning was to ensure that investment performance across our range of portfolios exceeds our clients’ expectations.
In this sense, we have good reason to be very proud: two of our global funds are currently ranked first (since inception) in their respective categories (as shown in Figure 1). The Sanlam Global Financial Fund, managed by Kokkie Kooyman and his team, is the best-performing fund out of 30 global financial funds since 2004. The SIM Global Emerging Markets Fund, which was launched two years ago and is managed by Neal Smith and Richard Shepherd, is ranked first out of the 538 funds in its category. For the 12 months ending June 2017, the Sanlam Global Financial Fund was also the top performer out of all funds in South Africa that are available to the public for investment, across all categories. (Read more about this stellar performance and the global financial bull run in Kokkie Kooyman’s article.)
Figure 1: Performance of the Sanlam Global Financial Fund and the SIM Global Emerging Markets Fund (as at 30 June 2017)
Source: Denker Capital, Morningstar
On the local front, the Nedgroup Investments Financials Fund, also managed by Kokkie Kooyman, is currently ranked first out of the six funds in its category since its inception in 2003. While the SIM Value Fund has faced a tougher period more recently, it is still ranked fifth out of the 29 funds in its category since its inception in 1998.
Our people are key in enabling us to consistently exceed expectations
Investment performance is the result of several factors, starting with a sound investment philosophy and a disciplined process. However, over the long term the difference between skill and luck comes down to the quality and experience of the people – those who apply this philosophy and process to make investment decisions, and those who offer the support and service to ensure clients benefit from these investment decisions.
There are 24 Denkers who arrive skipping to work each day, of which 15 are involved in research and portfolio management, and 9 are hard at work in the operations team to ensure our clients receive the best possible service experience, led by our very capable COO Jacques du Plessis. The operations team’s daily duties include, among others:
- helping clients invest with us successfully,
- arranging management meetings for our investment team with companies in multiple countries,
- completing due diligence documents and marketing material, and
- managing about 30 meetings per month, including report backs with existing clients as well as doing presentations to prospective clients.
Some of the big tasks that the operations team has successfully tackled over the past year include obtaining our FSB licence towards the end of last year, registering three new unit trust funds, setting up distribution agreements with our partners, and revamping our website.
We have been expanding our fund range to meet more client needs
From day one, we’ve had ambitions to provide clients with a broader choice of funds in the multi-asset class space. We are therefore very excited about two new funds that we launched in this space last quarter, under the lead of Madalet Sessions and Jan Meintjes: the Denker Sanlam Collective Investments (SCI) Stable Fund and the Denker Sanlam Collective Investments Balanced Fund. Both funds are compliant with Regulation 28. The funds leverage off the combined expertise across our local and global equity teams (the senior team members have on average 19 years’ industry experience) as well as Madalet’s ten years of experience in asset allocation and managing bond and property funds. The Denker SCI Stable Fund has a particularly unique objective. It aims to provided inflation-beating returns over the long term, but in addition, it ensures these returns are tax-efficient for retired individuals who need a regular and stable income. More details on these funds will be shared in the near future. Please email Cathy Fleming if you would like more information on any of our existing funds.
Attending the Berkshire Hathaway annual shareholders meeting is naturally a highlight for any investment manager
One of the major highlights of the past year was the Berkshire Hathaway annual shareholders meeting in May. Over 18 of Denker’s clients and business partners attended the meeting. Kokkie has been hosting South Africans at this seminal event for the past 18 years. He writes about his insights and learnings in a separate article in this newsletter.
What our business success and the Tour de France winning team have in common
The world’s greatest bike race, the Tour de France, is taking place now. It is watched by over 3.5 billion viewers around the globe and is one of the highlights of my year. The interesting thing about this race is that the overall winner of the Maillot Jaune (yellow jersey) never wins every stage and seldom wins the most number of stages either. The winner is the person with the fastest total time over all 21 stages and, while only one person can win, it takes the whole team to get that cyclist across the finish line. It takes months of preparation (and perhaps years of planning) to ensure the team has the best mix of skills, a well-considered plan and a team that works together. Months before the actual race, the riders will spend many hours scouting the course and riding the final kilometres of each day, planning every detail of how and when they will break away from the main riders for those few seconds of glory. At the end of three weeks, it’s not those few seconds that separate the overall leader but rather the months and years of planning that came before it. The same principles apply to achieving success in business – and we intend to keep using our collective skills, positive team dynamic, and long-term commitment to the benefit of our clients.
The information above belongs to Denker Capital (Pty) Ltd (Denker Capital). This information should only be evaluated for its intended purpose and may not be reproduced, distributed or published without our written consent. While we have undertaken to provide information that is true and not misleading in any way, all information provided by Denker Capital is not guaranteed and is for illustrative purposes only. The information does not take the circumstances of a particular person or entity into account and is not advice in relation to an investment or transaction. Because there are risks involved in buying or selling financial products, please do not rely on any information without appropriate advice from an independent financial adviser. We will not be held responsible for any loss or damages suffered by any person or entity as a result of them relying on, or not acting on, any of the information provided.
For global funds
The Fund is a sub-funds of the Sanlam Universal Funds plc, a company incorporated with limited liability as an open-ended umbrella investment company with variable capital and segregated liability between sub-funds under the laws of Ireland and authorised by the Central Bank. The Fund is managed by Sanlam Asset Management (Ireland) Limited (the Manager), Beech House, Beech Hill Road, Dublin 4, Ireland, Tel + 353 1 205 3510, Fax + 353 1 205 3521 which is authorised by the Central Bank of Ireland, as a UCITS Management Company, and an Alternative Investment Fund Manager, and is licensed as a Financial Service Provider in terms of Section 8 of the South African FAIS Act of 2002. The Sanlam Universal Funds Plc full prospectus, the Fund supplement, the MDD and the KIID is available free of charge from the Manager or at www.sanlam.ie. This is neither an offer to sell, nor a solicitation to buy any securities in any fund managed by us. Any offering is made only pursuant to the relevant offering document, together with the current financial statements of the relevant fund, and the relevant subscription/application forms, all of which must be read in their entirety together with the Sanlam Universal Funds plc prospectus, the Fund supplement the MDD and the KIID. No offer to purchase securities will be made or accepted prior to receipt by the offeree of these documents, and the completion of all appropriate documentation. A schedule of fees and charges and maximum commissions is available on request from the Manager. This information does not constitute financial advice as contemplated in terms of the South African Financial Advisory and Intermediary Services Act. Use or rely on this information at your own risk. Independent professional financial advice should always be sought before making an investment decision, not all investments are suitable for all investors. Trail commission and incentives may be paid and are for the account of the Manager. Performance figures for periods longer than 12 months are annualised. The performance fee is accrued daily, based on performance over a rolling 6 month period with payment to the manager being made bi-annually. Performance fees will only be charged once the performance fee benchmark is outperformed.
For local funds
Although all reasonable steps have been taken to ensure the information on this website is accurate, the Sanlam Collective Investments (RF) (Pty) Ltd (Sanlam Collective Investments) does not accept any responsibility for any claim, damages, loss or expense; however it arises, out of or in connection with the information. No member of Sanlam gives any representation, warranty or undertaking, nor accepts any responsibility or liability as to the accuracy of any of this information. The information to follow does not constitute financial advice as contemplated in terms of the Financial Advisory and Intermediary Services Act. Use or rely on this information at your own risk. Independent professional financial advice should always be sought before making an investment decision. The manager retains full legal responsibility for the third party named portfolio. The Sanlam Group is a full member of the Association for Savings and Investment SA.
Local funds may from time to time invest in foreign instruments which could be accompanied by additional risks as well as potential limitations on the availability of market information. A feeder fund is a portfolio that invests in a single portfolio of a collective investment scheme, which levies its own charges and which could result in a higher fee structure for the feeder fund. A schedule of fees and charges and maximum commissions is available from the Manager, Sanlam Collective Investments, a registered and approved Manager in Collective Investment Schemes in Securities. Standard Bank of South Africa Ltd is the appointed trustee of the Sanlam Collective Investments Scheme. The risk profile of this fund is aggressive: You can afford to take on a higher level of risk (i.e. will have a greater exposure to equities in your portfolio) because of your investment time horizon, or your appetite for risk. You know that in taking the risk, you need to be patient if you want to achieve the results. So you are willing to invest for the long-term and are prepared to tolerate some volatility in the short term, in anticipation of the higher returns you expect to receive in five years or beyond.
The returns and fund information included above should be read with the fund’s minimum disclosure documents. The Sanlam Global Financial Fund A (retail) class has an annual management fee of 1.25%, while the D class is the most expensive class with a fee of 1.5%. The SIM Global Emerging Markets Fund A1 (retail) class has an annual management fee of 1.15%, while the A2 class is the most expensive class with a fee of 1.6%. The fees exclude VAT.
Source of performance figures: Morningstar. Annualised returns are returns for a period that are scaled to one year. Returns are net of fees, unless specified as gross returns. Collective investment schemes are generally medium- to long-term investments. Please note that past performances are not necessarily an accurate determination of future performances, and that the value of investments / units / unit trusts may go down as well as up. Changes in exchange rates may have an adverse effect on the value, price or income of the product. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in the portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of the portfolio and the investor will differ depending on the initial fees applicable, the actual investment date, and the date of reinvestment of income as well as dividend withholding tax. Forward pricing is used. Additional information of the proposed investment, including brochures, application forms and annual or quarterly reports, can be obtained from the Manager, free of charge. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The performance of the portfolio depends on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-div date. The Manager has the right to close any portfolios to new investors to manage them more efficiently in accordance with their mandates. Lump sum investment performances are quoted. The portfolio may invest in other unit trust portfolios which levy their own fees, and may result is a higher fee structure for our portfolio. All the portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No 45 of 2002 (CISCA). The portfolio management of all the portfolios is outsourced to financial services providers authorized in terms of the Financial Advisory and Intermediary Services Act, 2002.