Keeping your investments personal is something that Fenestra Asset Management does best. “I know all my clients by name,” says CEO William Meyer.
Fenestra Asset Management is based in Rondebosch, Cape Town, but Meyer says that it is “more like a family office.” With almost 30 years of experience, Fenestra has built a unique investment model that aims to set up investor focused portfolios. Meyer builds a relationship with each investor to better understand their needs and what they want from their portfolio. It is evident this is not a unit trust where the manager doesn’t know the investors. Each client has their own portfolio made up in their own name, in either London or South Africa, or both.
Although it is not necessary to have two portfolios, Fenestra offers the service to investors as an extra option when diversifying their portfolio. “From the London share portfolio you can buy any share or currency in the world,” says Meyer. Overseas investment opportunities remain unaffected by South Africa’s current bond status, which makes portfolios with off-shore shares better hedged against the domestic economic uncertainty. There are safe custodians that handle the portfolios, but all the accounts are in the name of the portfolio owner. “You have to be an extremely wealthy person to walk into a London bank and have a bespoke tailor-made share portfolio,” says Meyer. “People are buying into the relationships that we have built over the years and you can’t do that as an individual.” The Latin word Fenestra means window. “We like to see ourselves as a window to our clients,” says Meyer. “Looking outward and looking overseas for investment opportunities.”
Fenestra’s strategy is a focused approach. It has between five and 12 companies on its shared portfolios, locally and abroad respectively. The investment company looks for companies that show increasing value as well as potential for stable growth. “It is very difficult to make a year-on year comparison with fast growing companies,” says Meyer with regard to Steinhoff, which has seen many Steinhoff shareholders loose a large part of their investment. This is one of the reasons Fenestra has never had any shares in Steinhoff. “It is very hard to get year-on-year comparisons, because they are always doing a big deal,” Meyer points out. Fast growing companies are frequently acquiring new assets. “Every time there is a new acquisition, the latest balance sheet will be different from how it was 12 months ago.” According to Meyer, the best growth is when a company does it organically with its own inventions and innovations. “However, the best investments are ones that are growing organically, which are making acquisitions, and which are growing their market shares,” he said. If a company grows only by buying assets at a fast pace, the information on the balance sheet can be difficult to interpret. “You can’t get that two-year comparison and that makes it very tricky for analysts,” says Meyer.
He is still the stock picker and researcher at Fenestra, which has seen great returns in giants, such as Naspers Limited and Apple Inc. “I make the final decisions, but I have a lot of input,” Meyer says. He says there is a lot of information available. “In fact, there is currently information overload. The tricky part is to be selective and cut down on your information. “There is a huge database out there and we use lots of stock brokers and lots of research services, but at the end of the day it is confined to a few companies that we follow closely.” Capital allocation is the most important aspect of investing when it comes to returns. Where you put your money will determine your returns.
“The Financial Advisory and Intermediary Services (FAIS) Act states that you must know your client and your client must understand the investments,” Meyer points out. He added that understanding investments proves difficult for many people. “If a client understands their investments and how those investments have done in the past, and how they would likely do in the future, they are less likely to have an unpleasant surprise,” he said. Another important aspect is the life cycle of investing. “Someone who is 19 years old can live with greater market volatility than someone of 90,” Meyer says.” He added that a medical condition or the prospect of paying for a tertiary education could also affect the capital allocation “because then you can’t live with the volatility.” This is why Fenestra sticks to its mission of keeping it simple and build lasting relationships with their clients.
To get scared of stocks is a big mistake. “Once you get that allocation decision right that fits your profile, age and constraints, you can get great returns that suit your needs.” It is clear Meyer would rather keep his business with his clients very personal. “I don’t want to get into a situation where people phone me, and then I have to ask them who they are,” he says.
Franco Havenga / Eikestadnuus