Reaction to Steinhoff – a message to investors

By Rob Johnson

Investors are understandably concerned about the consequences of the significant fall in the price of Steinhoff securities in the past few days. The fall in the Steinhoff securities, which includes JSE listed equity, Frankfurt listed equity and European listed bonds has had a negative impact on the entire investment industry including some of our funds which hold the securities. We have communicated with clients who are invested in the affected funds and we will continue to do so.

Nedgroup Investments funds with exposure to Steinhoff ZAR and EUR bonds and SA listed Preference Shares:

  • Nedgroup Investments Flexible Income Fund
  • Nedgroup Investments Opportunity Fund

Nedgroup Investments Funds with exposure to Steinhoff International (SNH) JSE listed equity:

  • Nedgroup Investments Rainmaker Fund
  • Nedgroup Investments Growth Fund
  • Nedgroup Investments Value Fund
  • Nedgroup Investments Private Wealth Fund
  • Nedgroup Investments Balanced Fund
  • Nedgroup Investments Managed Fund
  • Nedgroup investments Core Accelerated Fund
  • Nedgroup Investments Core Guarded Fund
  • Nedgroup Investments Core Diversified Fund
  • Nedgroup Investments Opportunity Fund
  • Nedgroup Investments Stable Fund

The Steinhoff positions are in place following significant fundamental research into the company over many years. The investment team at Nedgroup Investments have dedicated their time to analysing all of the information available in the market and engaging with each of the asset managers responsible for the funds affected by the decline in the Steinhoff securities. This additional review is a part of the governance applied through the Best of Breed™ range to ensure that every effort is made to protect investors’ interests.

We urge investors to retain the patience required when following a long term investment objective whilst investing in risky assets. We believe that the change in the prices of the affected funds predominantly reflects a change in share price for a single holding and does not necessarily correspond to the underlying value of the earnings, cash flow and/or assets within Steinhoff International. It is argued in a few comments from our asset managers that this plunge in share price is an overreaction to disturbing corporate news and perhaps not fully justified. We will be monitoring the situation very closely in the coming days and weeks and will keep investors informed.

Following events such as the past week, we are eager to draw attention to four of our core principles when it comes to investment. 

  • Always invest with appropriate investment horizons and stay the course. This leads to a higher probability that markets reflect your expectations in the long-term.
  • Manage risk by aptly spreading your exposure across independent holdings, utilising the benefit of prudent diversification.
  • We are keenly aware that we are managing Other People’s Money. Hence, sound stewardship principles and transparent communication, help us to actively positioning investors’ interests first to help clients meet their goals.
  • Portfolio management matters. Excellence in portfolio management is not limited to the ability to find good investments. Reaction to such extreme events must maintain the focus on a strategy’s objective and timeframe.

Thank you for trusting us to manage your investments and please contact us if you have further questions and would like to discuss recent events or our positioning further.