Growth and Value

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Growth and Value

• and their role in your portfolio

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Why would Value v.s. Growth be important

• Over the last 5 years the Allshare has delivered
  an average 29
• Association of Collective Investments
• 669 unit trusts
• 313 Fund of Funds
• 188 Equity funds
• General Equity Funds - 5 year average 30.45
• 9 Growth - 5 year average 32.92
• 13 Value - 5 year average 35.62
• Value Growth or a Combination

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Great investors

• Warren Buffett
• 13 Core Investment Principles from the owners
  manual. Rule 11We have no interest in selling
  good companies with good cash-flows regardless of
  price
• Ben Graham
• Value investing with a margin of safety will
  always yield better returns over the longer term.
  

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Berkshire Hathaway
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Value and Growth

• Growth investing and value investing are not
  diametrically opposed. Growth and value
  investing are joined at the hip Warren
  BuffettOR
• Peter Lynch pioneered a hybrid of growth and
  value investing - GARP (growth at a reasonable
  price) strategy.

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Growth v.s. Value investing
? Are value stocks superior long term performers
? In asset allocation what of equities should
be growth or value stocks
Source Roger Ibbotson Mark Riepe Ibbotson
Associates
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Cycles in the Markets

• But be aware of the volatility

Source Roger Ibbotson Mark Riepe
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Growth Funds
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Value Funds
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Large-Cap Style Index
Value
Value
Value
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Survey Done by Glacier

• Between October 8th and November 2nd 2007
• Fund managers
• Cadiz
• Coronation
• Invetsec
• Old Mutual
• RMB
• Sanlam
• Stanlib

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7 SA Fund managers
Source Glacier Research BullBear Q3
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Growth Portfolio
14
Value Portfolio
15
CPIX plus Maxiumum Return Strategy
54.41
Average 16
43.12
38.12
33.11
28.06
25.82
24.49
22.91
23.58
5.92
8.83
8.16
7.25
3.68
-1.37
-6.38
-11.38
-22.67
16
Money Market
Average 9
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Risk v.s. Volatility Your Income

• Risk Profile
• Risk Capacity vs. Risk Appetite Risk Management
  

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Liability Matched Investing

• Match Cashflow to Investment Style
• No client labels
• Cautious
• Aggressive
• Moderate
• Maximum capital working for you

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Outcomes based investing

• Have a good reason to put both Value and Growth
  in your portfolio.
• Accept and Plan for the volatility
• Understand the dangers of underperforming in
  your portfolio

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Money Market
Average 9
Less Tax (30) 6.3 Less Inflation 6
0.3Now Costs
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A Good Investment Strategy
1) Manages Risk 2) Maximum capital at work
Cash / Money Market
Max Return
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Strategy at age 64
CPIX plus 7
CPIX plus 5
CPIX plus 3
Max Return funds
Cash
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How do you choose?

• Most of the time growth managers have out
  performed
• Both Value and Growth do better after a long bear
  market eg. in 1993
• Remember Didata every R10 lower from R75 oto
  R1.83

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Investment advisor knows the client

• Portfolio manager knows the portfolio and
  opportunities in the market.
• The truth is that most investors dont have 10
  years for their investments to perform.
• The margin of safety

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Thank You