CORONATION FUND PROVIDER SUMMARY 29 JAN 2020

Jan 30

Coronation is positive about the future returns of selected SA shares. This is reflected by the fact that today they hold substantially more SA specific stocks in their portfolios than 5 years ago. Global shares are considered to be on the pricey side, especially those in the developed market and US specific.

Having said that, it does not mean that they are positive about SA as a country. According to Karl Leinberger (Coronation Chief Investment Officer) much needs to be fixed starting with Eskom, education, unemployment, SA's fiscal challenge made more difficult by government payroll expenses. There are however some positives as well.

Karl pointed out that as fund managers they often make mistakes and investing in Intu was a mistake. They reversed their position in Intu and through diversification limited the downside losses of Intu substantially. Karl also pointed out that by diversifying properly between asset classes, shares and jurisdictions, one can achieve returns similar to investing only in shares but with substantially less volatility. The following graph is testament to that where the Coronation Balanced Plus fund (which is restricted to a maximum exposure of 75% shares and 30% offshore exposure), provided returns on par with the JSE All Share Index posting a return of 13,2 % per year over the past 20 years.

Karl alluded to the fact that short term forecasting is all but impossible, but over longer periods fund managers are much more successful in projecting their asset class expectations. The following slides shows the annualised returns over the past 10 years from 1 November 1999 to 31 October 2009, then the Coronation forecast for the following 10 years (from 2009 to 2019) and in purple the actual returns provided by the various asset classes. The right hand graph indicates in the purple table Coronations expectations of the various asset classes over the next 10 years from 1 January 2020 onward. Coronation believes in adding alpha which means that their expectation is that their funds will provide returns higher than the predicted returns per asset class.