The importance of staying patient

Jarrod Cahn, Director at Credo, was featured in the latest Investment Week's Bull & Bear. He explains we should stay patient and true to our investment style, screening and buying stocks that look intrinsically cheap, either against historic valuation or the overall market.

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Credo Dynamic Fund First Anniversary

This month marks the first anniversary of the launch of the Credo Dynamic Fund. We are taking this opportunity to provide investors with a detailed update to accompany the monthly factsheet.

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The magic of storytelling

In a world where everything becomes increasingly transparent, perfectly replicable, and transaction costs plummet… the magic of storytelling becomes key. Waves of creative destruction have visited many industries as they adjust to new technologies touching old barriers to entry. It becomes increasingly difficult to just do what a business did before and feel secure if the only secret to your success is your walls. What is more difficult to replace is...

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July in review

July saw global equity markets make positive ground in a month where Trump made diplomatic efforts around Europe, meeting with the UK’s Theresa May, Russia’s Vladimir Putin and the EU’s Jean-Claude Junker. Strong corporate earnings results saw the S&P 500, the Euro STOXX 50 and the FTSE 100 all up 3.7%, 4.0% and 1.5% respectively. July also saw a reshuffle of the UK Cabinet with both Boris Johnson and David Davies resigning following the Chequers Agreement, which was met with widespread criticism for being too “soft” in terms of EU relations post-Brexit. Against this backdrop, pound sterling was down 0.6% against the US dollar and down 0.7% against the euro. Strong US economic data pushed up 10-year yields. US treasuries ended the period on 3.0%, while UK gilts and German bunds ended on 1.3% and 0.4% respectively. As the US-China trade war heated up, commodity markets took a hit, with copper prices down 4.4% and Brent crude oil down 5.7%.

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Developing developed

Hans Rosling was a Swedish academic and passionate public speaker. He passed away last year, but during his illness, he completed his final book ‘Factfulness’. In it he describes his life’s work of updating perceptions to meet the realities on the ground. He describes our ‘gap instinct’ which explains our tendency to separate things into distinct categories like developing and developed markets. Rich and poor. The reality is that over the last few decades, there has been a dramatic increase in the number of middle income earners. According to ‘Our World in Data’, in 1975 the median income of the developed world was 10 times that of the developing world. The ‘gap’ between developing and developed has been...

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How safe are your assets?

Have you properly assessed your custodian risk?

Many investors take for granted that their investments are safe and secure. This is something Credo takes very seriously and we have consistently, over the past 20 years, focused on providing our clients with a safe, robust and secure environment in which to hold their assets.

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June in review

June saw global developed equites remain relatively flat, with continued geopolitical tension surrounding US trade war rhetoric. The S&P 500 rose 0.6% whilst the Euro STOXX 50 and FTSE 100 both fell 0.2%. This was against the backdrop of a continued rise in the US dollar, with pound sterling and euro finishing the month at 1.32 and 1.17 against the greenback respectively. In fixed income, the 10-year yields for US treasuries, UK gilts and German bunds ended the period on 2.9%, 1.3% and 0.3% respectively. Brent Crude rose to $78 despite OPEC agreeing to increase production, with the commodity resuming its upward trend that began in mid-2017.

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Sporting chance

During the early 2000s, we saw substantial growth of online gambling across the globe. In 2006, it all came crashing down in the US when congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA). The UIGEA “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the internet and that is unlawful under any federal or state law”. US based operators were forced to close down virtually overnight and illegal offshore operators struggled with shrinking liquidity imposed by the banking system. This shifted the attention of online gaming operators back to Europe, Australia and the UK, where both gaming and sports betting are...

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20 Years International Conference

20 Years International Conference

On 4 June, we kicked off our sixth annual international roadshow in South Africa. This year’s conference was particularly special in that we are celebrating our 20 year anniversary. Over 400 guests across the five cities we visited heard presentations by Roy Ettlinger (CEO), Alan Noik (Managing Director), Ainsley To (Research Analyst), Jarrod Cahn (Director), SJ du Preez (Managing Director - SA) and Deon Gouws (CIO). Topics included “The Illusion of Knowledge: History, Data & Overconfidence”, “A Fistful of Dollars” and “Much ado about Nothing”. The Roadshow was a massive success and we look forward to holding the event once again next year.

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May in review

May saw Continental European equites fall, led by political uncertainty in Italy. Initial fears of a prolonged political stalemate and fresh elections eventually subsided with Giuseppe Conte being approved as prime minister. Despite this, Italy’s stock market index, the FTSE MIB, fell 8.0% over the course of the month while the Euro STOXX 50 fell 2.3%. Elsewhere, the FTSE 100 rose 2.8% as the pound sterling weakened 3.4% against the US dollar, finishing the month at 1.33 USD/GBP. In the US, Trump’s trade war moved west providing respite for China, with allies including the EU, Canada and Mexico targeted for steel and aluminium tariffs instead. The S&P 500 finished 2.4% higher, the Shenzhen CSI 100 rose 1.5%, the Mexican Bolsa fell 7.3% and Canada’s stock exchange benchmark, the S&P/TSX Composite index, rose 3.1%. In fixed income, the 10-year yields for US treasuries, UK gilts and German bunds ended the period on 2.9%, 1.2% and 0.3% respectively.

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Credo Funds registration case study

Kathryn Linde, Relationship Manager at Credo, explains why it made sense to use Financial Express (FE) Global Funds Registration (GFR) for the registration in South Africa of three new UCITS funds under Credo ICAV (Irish Collective Asset Management Vehicle).

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Step in, and out

Never be a forced buyer. Never be a forced seller. Patience, the ability to walk away, and the behavioural intelligence of learning to pick your battles, is rewarded over the long term. Commodities are the simplest, and clearest, example of the dance of supply and demand. Commodities like oil don’t change. The businesses around them do, as they respond to the needs of people and other businesses. Price is not an indication of permanent intrinsic value. Price is a clearing mechanism. The more supply there is of something, without more demand, the lower the price will be. The more demand there is, without more supply, the higher the price will be. If you are able to...

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April in review

April was a positive month for major developed market indices, with some recovering significantly from losses captured during the first quarter. The UK’s first-quarter GDP estimate came in lower than expected at 0.1%, and subsequent moves in interest rate futures implied lower expectations for rates. The country’s currency fell to 1.38 sterling per US dollar and the FTSE 100 finished the period up 6.8%. Across the pond, President Trump’s focus on denuclearisation has thrown uncertainty on the future of the Iran nuclear deal, with his approach conflicting with those of his European counterparts. The S&P 500 made a muted gain of 0.4%, while the Euro STOXX 50 rose 6.0%. In fixed income, the 10-year yields for US treasuries, UK gilts and German bunds ended the period on 3.0%, 1.4% and 0.6% respectively, against a backdrop of continued tightening by the Federal Reserve.

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Bigger is not always better

At university we learn that stock markets are efficient pricing mechanisms. That being the case, investors should appropriately value sprawling conglomerates on the basis of the sum of their individual businesses (often disparate). There should be little upside from splitting up or merging businesses. In the real world, there are measurable benefits to merging businesses i.e. in pounds and pence on projected financial statements. These benefits, called “synergies”, typically...

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The FSCA has approved the Credo Funds

Credo Wealth is pleased to announce that the Financial Sector Conduct Authority (formerly the Financial Services Board) of South Africa has approved our three unit trusts in terms of Section 65 of CISCA, 2002. In addition to the FSCA approval, the Credo funds are also UCITS compliant.

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March in review

March saw equities extend February’s decline, resulting in most indices posting negative returns for the quarter. In the US, the planned introduction of tariffs targeted at Chinese trade provoked a retaliation, with China suggesting it will implement similar tariffs on primarily US imported goods. The S&P 500 finished the month 2.5% lower, while the Shenzhen CSI 300 fell 3.1%. Elsewhere, the UK made a number of concessions in coming to a 21-month transition deal with the EU. This included an agreement requiring Northern Ireland to comply with EU regulations in absence of a better alternative. Despite this, the FTSE 100 declined 2.0% while the EURO STOXX 50 fell 2.1%. In fixed income, the 10-year yields for US treasuries, UK gilts and German bunds ended the period on 2.7%, 1.4% and 0.5% respectively.

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Version 6 of MyCredo is released

This new version includes functional enhancements for users, implementation of a data warehouse that will make future technology changes faster and more.

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A value-based approach


In this special edition of the Credo Equity Spotlight, Deon Gouws, CIO at Credo, discusses Credo's Investment Philosophy, focusing on our value-based approach. He further discusses why Value works over the longer term, whilst highlighting the challenges value investors have had over the last few years, particularly against competing investment styles, like Momentum and Growth. In the second half of the Spotlight, Jarrod Cahn, Director at Credo, drills down on two stocks Credo presently owns in its portfolios, highlighting some of the characteristics we look for in value stocks, and commenting on them.

Credo publishes the "20th Anniversary" edition of CREDONEWS

CREDONEWS #27

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Credo expands wealth platform to include offshore custody

The offshore custody solution allows clients access to global multi-asset class investments and multi-currency trading to a segregated custody service, all available via Credo’s single integrated platform.

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February in review

February saw global equity indices tumble, as investor fear (as measured by the VIX index) hit its highest level since China’s stock market crash in August 2015. In the US, the S&P 500 fell 3.7%. This during a month where new Federal Reserve chair Jerome Powell attended his first congressional hearings. In Europe, the UK’s FTSE 100 finished 3.4% down, while the Euro STOXX 50 fell 4.6%. In Asia, the Shenzhen CSI 300 was down 5.9% as President Xi moved to scrap term limits, opening up the possibility he may rule indefinitely. In fixed income, the major 10-year sovereign yields remained relatively unchanged as US treasuries, UK gilts and German bunds finished 2.9%, 1.5% and 0.7% respectively.

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Great unknowns: what worries our clients

Benjamin Newton

In an article in Citywire Wealth Manager this month, Ben Newton an Investment Manager at Credo, notes the political and valuation risks that are currently forefront of our clients concerns.

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CNBC Africa interviews Credo CIO Deon Gouws

CNBC Africa interviews Credo CIO Deon Gouws

The much awaited announcement of incoming South African President Cyril Ramaphosa’s first cabinet was made on Monday night. CNBC Africa interviewed Credo CIO Deon Gouws in this regard.

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@DeonGouws_Credo

Pirates Half Marathon

One of the oldest and toughest road running events on the South African race calendar took place on Sunday the 18th of February 2018: the 41st running of the Pirates Half Marathon, proudly sponsored for the third consecutive year by Credo Wealth. The event attracted a record field of some 4,200 runners and was a tremendous success all round.


Pirates 21K 2017 A brief selection of photographs taken on the day.

@DeonGouws_Credo

Margin and opportunity

As long-term investors looking at the fundamentals of a company, we analyse what the intrinsic value of a business is. This is not a single number, but a range of scenarios. Any models created are questions rather than answers. A key focus is getting an idea of what ‘normal’ earnings are. Two competing issues in working out ‘normal’, are the dynamism of the market and mean-reversion. History is full of examples of companies that were doing very well, and then they weren’t. Before cars, makers of...

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January in review

January saw mixed returns across global equity markets. In the US, the S&P 500 had a strong month as it rose 5.7%. This was during a month where Federal Reserve chair Janet Yellen held her final meeting before she hands over to successor Jerome Powell in early February. In contrast, the broad index for UK stocks - the FTSE All Share - fell 1.9% as pound sterling strengthened against all major trading partners, rising 5.0% relative to the US dollar and 1.5% relative to the euro. Elsewhere in Europe, the Euro STOXX 50 rose 3.1%. In fixed income, following a year that saw a significant flattening of the US yield curve, 2018 began with a slight steepening and increase in level as rates across the maturity spectrum rose. Focusing on 10-year rates, US Treasuries finished the month at 2.7%, while UK Gilts and German Bunds rose to 1.5% and 0.7% respectively.

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Understanding the Trade Blotter - Part 1

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Flexing to grow

As Equity Investors, we are a step away from where decisions are made and implemented. Shareholders own a slice of the business, but the business is run on our behalf. Ideally, we get a great management team, who build up a track record of reacting well to whatever complexity, uncertainty, and ambiguity gets thrown their way. In that way, when evaluating a business, we are able to look at what ‘normal earnings’ are. Then when there are challenging periods, and short-term investors make their decisions based on the next few quarters, buying opportunities present themselves. Merlin Entertainments is the second largest...

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December in review

2017 drew to a close with mixed returns across equity regions. December saw a 1.1% rise in the S&P 500, in a month where President Trump signed US tax reforms into law. In contrast, markets across continental Europe were down over the period, with the CAC 40 and DAX falling -0.9% and -0.8% respectively. UK equities saw the largest rise, with the FTSE 100 increasing 5.0%, despite the government losing a vote that required any Brexit deal to be approved through a full parliamentary vote. Having flirted with the 2% level earlier in the late summer, US 10 year bond yields ended the year where they began, at 2.4%. This masked a continued flattening of the US yield curve, as 2 year interest rates reached 1.9%, a significant rise from their 1.2% level in January.

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