Manager Research

We have recently reviewed a number of Camissa’s funds and have retained our current ratings. In addition, we have rated the Camissa Islamic High Yield Fund Tier 2 and the Camissa SA Equity Fund Tier 1, this is the first time we have rated these two funds.

Camissa is an independent asset manager with a strong investment-centric business. Through time, they have demonstrated autonomy in their investment decision-making process driven by a deep understanding of long-term investing.

Gavin Wood, the CIO, is core to the business and we do rate his skills as an investment manager. On the equity side, the investment team has continued to exhibit strong stock-picking abilities and this is underpinned by detailed fundamental research which allows for high-conviction calls to be made. The SA Equity Fund follows the same investment process as the Equity Alpha Fund, however, it is only invested in JSE-listed stocks. As a result, we are comfortable retaining the Tier 1 ratings on all 3 equity-focused funds.

Regarding the multi-asset funds, we have maintained the Tier 2 ratings. Although the multi-asset fund offering features strong fundamental equity processes that we consider highly rated, we have less conviction in their fixed income and global processes, where we would like to see more evidence of value add from the process. This is improving, with additional hires being made in the investment team, which is freeing up capacity for stock research, while their derivative strategies are evolving and improving through time. These risks are mitigated to a degree in the multi-asset portfolios through competent portfolio construction and risk awareness within the security selection of global equities held in the portfolio.

We have maintained our Tier 1 and Tier 2 ratings for the Islamic Equity and Islamic Balanced funds. These funds are managed using the same processes as the Equity Alpha and Balanced funds, and we are comfortable with their ability to add value over an appropriate period of time.

The Islamic High Yield Fund is a new fund in their Sharia-compliant range and we have assigned a Tier 2 rating. The Fund has been established to cater to investors who seek a lower-risk investment option that is Shariah compliant, where there are limited options.

The Camissa Islamic High Yield Fund has been designed to address this need. However, the inherent nature of the product creates potential weaknesses in the strategy, mainly due to the illiquidity of its defensive assets, Sukuks.

As a result, the fund has to rely on assets like property and equity for liquidity needs, which necessitates a higher risk weighting in the fund. This means that the fund may be vulnerable to drawdown risk during weaker market environments and potential liquidity risk in extreme conditions.

These characteristics are not typical of a traditional low-risk multi-asset income fund. Nonetheless, this is not due to any fault of Camissa’s portfolio management skills. We have observed competent portfolio construction and risk management of the Fund since its inception, which gives us comfort over the manager's ability to deliver on its mandate for investors. However, it's important to note that there is a potential tail-risk in the strategy. In addition, there is also a level of asset allocation decision-making in this fund which we think has not been entirely tested at this stage.

A summary of our ratings is provided below.