Mark Preston, COO, Laurium Capital.The investment industry has no shortage of products.
We spend so much of our time debating active versus passive, local versus offshore, income versus growth, and which new strategy might capture our attention next. But some of the more meaningful changes in investing aren't happening inside investment portfolios at all. They're happening in the way we access them.
In almost every other part of our lives, access and interaction have changed dramatically. Banking, payments, retail and entertainment have become increasingly digital, direct and on-demand. Should we not expect the same in investments, or at the very least, more choice in how we access investment products?
This is what makes the emergence of actively managed exchange-traded funds, or AMETFs, interesting. An AMETF is not necessarily an investment innovation. In many instances, the underlying investment philosophy and portfolio management process are already well established. What changes is the route through which an investor accesses them.
While ETFs have historically been associated primarily with passive investing, AMETFs bring active management into the same listed structure. The investment decisions remain active, while investors gain another way to access the strategy through the JSE.
I don’t think this means investors will suddenly abandon traditional routes to unit trusts. Nor should we assume that the floodgates are about to open for every new AMETF that comes to market. Adoption in South Africa is still evolving, and there are practical considerations around platform availability, trading costs, spreads and investor understanding. Different investment strategies may also lend themselves to listed access at different speeds.
But that is perhaps missing the bigger point. The case for AMETFs doesn’t depend on one investment structure replacing another. It is about optionality.
Some investors will continue to prefer traditional investment platforms, often together with the advice and infrastructure that surrounds them. Others may value being able to access actively managed strategies through a stockbroking account alongside their shares and other ETFs.
Neither approach is inherently better. They are simply different ways of reaching the same destination.
Why we started with Flexible
That thinking informed our own approach to AMETFs.
Rather than design a new investment strategy specifically for a listed wrapper, we chose to create an AMETF feeder into our existing Laurium Flexible Prescient Fund.
There was some significance to that choice. The Laurium Flexible Prescient Fund is our first and longest-running long-only unit trust, since February 2013, with a proud track record to show for it. And while flexible is obviously in the name, it is also quite fundamental to how we think about investing at Laurium. The fund can invest across local and foreign equities, bonds, cash and property, and the allocation can change as the opportunity set changes.
That track record is worth putting into numbers. From its launch on 1 February 2013 to 30 September 2026, the fund has delivered a net annualised return of 12.1%, ahead of its CPI+5% benchmark (10.2%), the FTSE/JSE Capped All Share Index (10.1%) and the ASISA South African Multi-Asset Flexible category average (8.4%). That places it second out of 24 funds in its category since inception. Put another way, R100 invested at launch would have grown to around R475 after fees. Past performance is, of course, no guide to the future, but it shows what the strategy was built to do.
And that's also where some of our heritage as a hedge fund manager comes through. The Laurium Flexible Prescient Fund is not a hedge fund, but there is a hedge DNA that we bring to everything else we do in investments, not least this.
In other words, we haven’t invented a new investment philosophy for an AMETF. We have taken an established Laurium strategy and provided investors with another way to interact with it.
For an investor who prefers the traditional unit trust route, no change is needed. For an investor who prefers to manage investments through a stockbroking account and access them on the JSE, there is now another option.
Same strategy, more access.
We don’t know how quickly investors will embrace AMETFs, and I don’t think we need to pretend that we do. We simply believe that making good investment strategies easier to access and giving investors more choice makes sense.
Sometimes innovation isn’t about changing what you do it’s about making what you already do easier to reach. DM
Author: Mark Preston, COO, Laurium Capital
Annualised performance shows longer-term performance rescaled to a one-year period and represents the average return per year over the period. Actual annual figures are available to investors on request. Performance has been calculated on the A1 class using net NAV-to-NAV figures, with income reinvested. Laurium Flexible Prescient Fund: Highest rolling one-year return since inception: 45.3%. Lowest rolling one-year return since inception: -15.1%. There is no guarantee in respect of performance within the Fund’s mandate. Prescient Management Company (RF) (Pty) Ltd is registered and approved under the Collective Schemes Control Act, No. 45 of 2002. Laurium Capital (Pty) Limited, registration number 2007/026029/07, is an Authorised Financial Services Provider (FSP 34142) under the Financial Advisory and Intermediary Services Act, No. 37 of 2002.
For additional information, including fund prices, fees, brochures, minimum disclosure documents and application forms, please visit www.lauriumcapital.com.