The Company has outsourced
the management of its assets
to Foord Asset Management (Pty)
Ltd (for more information see
www.foord.co.za). The investment
objective of the Company is
to produce absolute total returns
for debenture holders in excess
of 20% per annum. To this end,
the board set Foord Asset Management
a performance benchmark of CPI
+ 10% per annum.
Foord Asset Management believes
it can enhance the debenture
holders’ absolute returns
by:
Utilising the high yield
of the property holdings to
anchor the portfolio
Taking advantage of concentrated
portfolios and dynamic asset
allocation decisions
Gearing the portfolio on
an opportunistic basis (either
by third party funding or
short bond or equity sales)
INVESTMENT
PARAMETERS
The Foord Compass board has
established the following broad
investment parameters:
Long-term investments should
comprise 50% to 75% of the
net assets of the company
with the balance being invested
opportunistically in special
situations
A balance of high income
assets will be held to underpin
the Company’s requirement
of a high distribution yield
Gearing will not be a permanent
feature and should be used
judiciously
Short sales may be used
from time to time
The manager should seek
opportunities to arbitrage
mispricing of assets and derivatives
The “value”
style investment approach
should be emphasised
The manager should consider
significant investments (i.e.
large percentage of equity)
in individual companies and
if deemed advantageous, may
be acquired and Board representation
sought.
RISK
CONTROL
The Board has implemented stringent
risk parameters to ensure capital
preservation and income generation
for the Company. Amongst some
of these controls are a stop loss
mechanism and the maintenance
of a significant weighting in
high-income securities. It is
the ultimate aim of the Company
to diversify the investment portfolio
to have no one investment absorbing
more than 25% of the capital of
the Company
FEES
The basic investment management
fee amounts to 1% per annum of
the market value of the portfolio.
In addition, there is a performance
fee amounting to 10% of the Rand
value of returns exceeding the
set benchmark of the South African
CPI plus 10%. A high watermark
arrangement, whereby underperformance
in any year must be recouped before
a future performance fee can be
considered, applies.
