EXTRAORDINARY PROFITS FROM ORDINARY SHARES, WINNING STOCK MARKET STRATEGIES

In today’s investment climate, capital and asset allocation are mission critical.

However, most asset management companies don’t actually do share selections, choosing instead to focus on fund selections.

If you allocate your available capital into five tranches of 20% each – each tranche into a different fund – the reality is that you are actually invested in thousands of different companies. And each fund will come with its own layer of fees.

Institutional investor portfolios are typically over–diversified with their one-size-fits-all approach. They tend to focus on in-house unit trusts, bonds, cash, exchange traded funds and some stocks, to the extent that the worth of their top 10 holdings is diluted to less than 2%, while the portfolio manager’s top picks ultimately represent less than 0.2% each. Sadly, the reality is that even if the top picks perform brilliantly, they’re not going to positively impact the portfolio.

Over diversified portfolios will never outperform the benchmark because, to all intents and purposes, they are the entire market, impersonating managed portfolios, but accompanied by high fees that erode performance and returns.

Fenestra is different!

We are a fiercely independent boutique investment company founded in 1992.

We select stocks from a universe of local and international businesses. Each company is carefully researched. Top equity picks for a portfolio are weighted at 5% at the least.

This strategy allows Fenestra to avoid investing in companies that don’t have a compelling investment case or reliable and trustworthy management teams. This is how we managed to avoid stocks such as Steinhoff, Tongaat Hulett, Brait, African Bank and EOH. We also avoid perennial under-performers such as Woolworths, Aspen, BAT and Sasol.

What sets Fenestra apart is the ability to have an objective local and global view, and an intimate knowledge of different markets.

To protect themselves against market risks, investors need to be diversified, but not too diversified or they won’t see any significant return. Diversification has pros and cons. It is possible to enjoy the benefits of diversification without diluting performance.

The trick is to be invested in different currencies and countries in a focused way: a wide spread is not advisable.

More than 90% of a portfolio’s return stems from the capital allocation decision. Asset classes to consider include the US dollar, gold, other dollars, and different currencies, countries and industries. Exposure to offshore equities is essential because of the limited opportunities offered by the JSE, and to track global growth themes not available on the local bourse. In recent years the number of listed companies on the JSE has shrunk significantly, providing investors with a limited pool of businesses in which to invest. Making the situation even worse is that few new companies are being listed.

A balanced portfolio should have an allocation to safe-haven assets such as the Swiss Franc and gold, because capital preservation is critically important. The equity components need to perform well because from a return point of view they carry the entire portfolio.

Sadly, South Africa is not an important investment destination. Rising public debt, lack of decisive plans to grow the economy, electricity supply problems and rolling blackouts and sluggish legal processes to address corruption in state-owned enterprises are some of the reasons why capital does not flow into the country. And without investment South Africa will battle to stage an economic recovery and its unemployment figures will continue to soar.

High growth companies are typically found in Silicon Valley rather than Sandton.

Call Fenestra and we will get you started!

If you are not happy with your portfolio performance or would like a second opinion, please do not hesitate to contact Fenestra for a free, independent, objective and confidential review of your portfolio.

Protect your wealth. Optimise your returns.

Contact Fenestra now!

William Meyer – 0796244031