ah_0129I keep abreast of a number of local and global unit trust funds, particularly those in which my clients are invested, or may invest in the future.

Veritas Asset Management & Nedgroup Investments

This afternoon I attended a presentation by Andy Headley of London-based Veritas Asset Management. Andy is a co-fund manager of the Veritas Global Strategies and their head of global. He also manages, on behalf of Nedbank Investments, the Nedgroup Investments Global Equity Fund. The Nedbank Investments Global Equity Fund is a top-rated (Tier One) fund as assessed by our  independent global fund advice partners Fundhouse.

Our clients have significant exposure to global assets and currently to global equities in particular. With South Africa making up less than 1% of the world’s stock markets we have been long-time proponents of the benefits of South African investors diversifying offshore.

Investment process

Andy started out reminding us of their investment process and how they whittle-down their investable universe of about 4,000 global mid-to large-cap companies to the 25-40 portfolio holdings in the fund. It’s a largely bottom-up process where they are looking for good quality companies which they can buy at the right price. If a company is a great quality company to invest in it will make their shortlist and, if it’s also trading at the right price it will form part of the portfolio.

Their quality companies are those which have anticipated internal rates of return of between 12% and 20% (depending on risk).

Like some other managers, Veritas are also comfortable for the portfolio to have a degree of cash in it (up to about 20%) if they cannot find qualifying companies to buy.

Global markets are not cheap

The fund was sitting on about 13% cash at the end of July this year (up from about 10% the month before) which Andy said was a function of some selling during July and not finding companies which met their investment criteria to buy. He said that they have always been happy to sit on cash until the prices of quality companies that they follow come down and then they will buy. He cautioned investors in market-cap-weighted passive global equity investments where some of the larger companies are trading at very stretched valuations and could lead to investors suffering permanent capital losses going forward.

US Cable Companies

The fund’s two largest holdings at present are Charter Communications and Comcast. Together these companies made up 12.6% of the fund at the end of June. Andy discussed the investment case for both these companies with us (why they are quality companies and why they are currently, in their opinion, being mispriced by the market).  In the same breath he didn’t have many nice things to say about the US Telco’s.

US Healthcare

About a quarter of the fund is invested in a heterogeneous group of healthcare companies, the biggest of which are UnitedHealth Group and Allergan.


After the presentation I asked Andy what the fund’s sensitivity was to movements in the large indices which are tracked by the passive funds. He said that this was a relationship of which they are aware and had taken steps to reduce.

The fund seems to be invested in quality companies which are not overly expensive and, coupled with relatively high cash holdings, should provide investors with attractive returns going forward, whilst being fairly protected from market corrections by the cash.

Disclaimer: The information provided is not intended to address the circumstances of any particular individual or entity and should not be considered to be advice in any way. No person should act upon this information without first obtaining professional advice.

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