He is arguably the greatest cricketing all-rounder of the modern era. Much like Jacques Kallis was two cricketers in one, so the RWM Growth Portfolio fulfils two important roles in a client portfolio – the portfolio participates in positive market performance and shows resilience when markets turn negative.
Additionally, with the RWM Growth Portfolio following a building block strategy, it makes the overall portfolio stronger in much the same way that Jacques Kallis made the South African cricket team stronger.
Participation in positive markets
In strongly positive markets, the RWM Growth Portfolio is not likely to score the most runs, but is likely to accumulate runs at a steady, consistent rate. The fund’s ability to do so, thereby delivering long-term outperformance, is illustrated in Figure 1.
Figure 1: Cumulative Performance – over the past 8 years
Resilience in down markets
Importantly, in difficult market conditions, the RWM Growth Portfolio is not going to give its wicket away. In fact, the fund is going to defend its hard-won gains and protect investors from much of any market downturn. This is evident in Figure 2 which shows that the portfolio has only delivered one negative rolling 24-month return – only during the depth of the Covid-19 March sell-off. The portfolio has met its objective of no negative returns over rolling 24 months 99% of the time.
Figure 2: Rolling 24-month returns
The importance of this dual objective – participating in market upside and protecting from market downside – was once again brought home by how the RWM Growth Portfolio weathered the challenges of 2020.
The following chart, which divides 2020 into three distinct phases – the COVID-19 crash, the “Stay-at-home” recovery, and the broad-based cyclical recovery, illustrates that the portfolio was able to protect investors more materially than its peers. This also meant that the fund was able to recover all its losses in a far shorter period than its peers, or the market. As a result, even while lagging the market during the cyclical rotation towards the end of 2020, the portfolio ended the year well ahead of both.
Figure 3: RWM Growth Portfolio once again proved resilient in 2020
Strengthening through the building block approach
As a great all-rounder is an essential cog in any test cricket team, so quality funds remain a critical component of any client portfolio. The RWM Growth Portfolio has recently adopted a building block approach – meaning that we (along with Morningstar) determine the asset allocation and select the fund managers who are specialists in each asset class. As opposed to second guessing what managers are doing based on their balanced mandate. This strategy greatly reduces fees and enhances performance.
Jacques’ resoluteness while batting, his patience while drawing a mistake from a batsman while bowling, and his alertness to opportunities while fielding in the slips made him ideally suited to the long format of the game. Just as every great test team needs a great all-rounder – the West Indies teams of the 70s and 80s had Gary Sobers and Viv Richards; Pakistan had Imran Kahn; and England had Ian Botham, so every investor should consider the benefits of holding the RWM Growth Portfolio over the long term.
Lastly, the inclusion of a Kallis or a RWM Growth Portfolio then allows you the luxury of an aggressive, differentiated stroke-player or fund within your team or overall investment portfolio.
*Certain pieces was taken from Ninety One, Paul Hutchinson. We believe it has interesting perspectives for our clients.