Terebinth Capital is a 100% manager-owned and privately-held company and is a B-BBEE Level 1 contributor. With an AUM of R36.7-billion, Terebinth Capital deals with a blend of retail and institutional clients on a national scale. The investment team includes Erik Nel (CIO), Kanyane Matlou (Dep-CIO), Nomathibana Okello, Oyena Mtuzula, Dumisani Ngwenza, Ann Sebastian, Athenkosi Mjebeza and Carmen Nel.
Investment philosophy
Terebinth Capital subscribes to the theory of cycles. Using scenario analysis, we construct diversified portfolios that always reflect our best investment view. Our active approach incorporates disciplined risk management. Markets are inherently cyclical, prone to periods of over-optimism and extreme pessimism.
We apply a two-fold approach to determine asset and security allocation, combining macro analysis and quantitative precision. A macro philosophy leads to low correlation with broader markets and reduces volatility of returns. We value scenario analysis, as it is impossible and imprudent to position for a single outcome.
The Terebinth range of funds (Fixed Income, Multi Asset, Bond, SA Property, Equity and Hedge Funds) are carefully curated and meticulously managed to meet the investment goals of advisors and clients. We partner with advisors to ensure we treat clients fairly, focus on education and provide transparent information.
The clients can rest assured that the focus is on capital protection with managed upside. Advisors can with confidence consider the focussed range of funds for clients that value liquidity, capital preservation and steady returns – with hedge fund capabilities that do not compromise on transparency or risk discipline.
Following the process
We believe that there is no substitute for high-conviction investment strategies rooted in painstaking research and knowledge of the fundamentals if you want to deliver solid returns for your clients consistently. We favour a relentless focus on the fundamental and underlying themes that we believe will drive society, the economy and markets over months and years rather than the market fads that have a shelf life of hours or days.
We don’t pretend that we have all the answers. However, we are convinced that through constant introspection, learning from our mistakes, reviewing our process and performance, and developing our talent, we can be better. We combine qualitative and quantitative disciplines – structural, technical, tactical – to identify opportunities, especially within fixed income and macroeconomic themes.
What’s on offer?
Terebinth Capital currently manages 10 diversified strategies (Money Market, Enhanced Income, Aggressive Income, Multi-Asset Income, Active Bond, Inflation Tracker, Multi-Asset Flexible, Multi-Asset Low Equity, Active Equity, FI Macro Hedge and Total Return). Our equity unit was launched in 2021, with a focus on active strategies, adding to the beta equity strategies managed previously. Hedge funds are a cornerstone in the investment products range, not only as an investment offering but also integral to the investment philosophy and risk management strategies.
All in the performance
The sustainability of our business lies in our ability to produce consistent superior long-term investment performance, provide client service excellence and ensure client retention and the integrity of our business. We are the custodians of some of the largest retirement funds in the country and we see our investment activities and investment performance as having a tremendous impact on the quality of life of retirement fund members once they retire. Our focused product range is a strategic advantage. It ensures concentration of ideas and attention, which leads to better investment performance.
Contact information:
- Mario Schoeman
- Telephone: 032 698 999
- Email: Mario.schoeman@terebinthcapital.com
- Website: www.terebinthcapital.com
Terebinth Capital Proprietary Limited is a licensed Financial Services Provider (License Number 47909).
The investments described in this article are generally regarded as medium to long-term investments. Past performance is not necessarily indicative of future performance. The value of investments may rise as well as fall and you may not get back the full amount you invested. The funds or portfolios mentioned are market-linked and there are risks associated with investments in market-linked financial products. Fluctuations or movements in exchange rates may cause the value of underlying investments to go up or down.
Disciplined, dynamic investing
Terebinth Capital is a research-focused, client-centric money manager that believes in a consistent investment process and team approach.
How would you describe your investment philosophy as it pertains to managing a hedge fund(s)?
Terebinth Capital is a research-focused, client-centric money manager. We subscribe to the theory of cycles. Using scenario analysis, we construct diversified portfolios that always reflect our best-investment view. Our active approach incorporates disciplined risk management.
We deem it impossible and imprudent to manage assets for a single specific outcome, based on a point forecast. Rather, we believe in the value of scenario analysis, not only as part of portfolio optimisation, but also as part of our risk management process. We maintain that sustained long-term outperformance is about managing and limiting the downside risk in a portfolio.
What process do you follow to decide what instruments you will invest in?
Our strategy selection approach involves diversifying across instruments and across the interest rate curves. Over time, this is a very well-diversified fund, using the broad spectrum of the South African income universe to generate positive alpha.
Our range of interest rate products include bonds, swaps, FRAs, futures, options, forex and index-linked products.
There is no natural bias in this fund with regards to instruments or assets other than the keen focus to always attempt to be exposed to the deepest and most liquid pools in the income space. This can only be achieved through active portfolio management and a strong focus on market and economic conditions.
How would you describe the culture in your business?
Our culture is defined by our diverse, progressive and highly committed team of experts. We’re all different and we’re all respected for our differences. We collaborate in a respectful, inclusive way and allow each other to be who we need to be to do the best job. We believe we benefit from our unique culture of partnership, service, nimbleness, drive and humility. We must focus on our people, their safety, their physical and mental wellbeing, their personal development and their commitments to each other, to justice and equity, and to society at large.
What do you see as your competitive advantage?
Our focused product range is a strategic advantage. It ensures concentration of ideas and attention, which leads to better investment performance.
- Consistent investment process and team approach;
- A truly transformed, employee-owned business with a pay-it-forward philosophy;
- Rigorous risk management with mandated stop-losses and third party independent risk reporting;
- We apply a two-fold approach to determine asset allocation, combining macro analysis and quantitative precision; and
- Team uncovers and synthesises new information quickly and acts with agility to ensure a best investment view at all times.
How do you manage risk in your hedge fund(s)?
We construct portfolios with key consideration given to maximise the expected return of the portfolio while minimising the risk – with a strong focus on liquidity. We run mandated stop losses on our hedge strategy.
How do you see the future of the hedge fund industry?
We see how hedge funds can remain a key component of building robust portfolios in the future. However, the legislative environment is required to play its part by not hindering the ability of asset owners to utilise hedge funds in their portfolios. Allowing CIS products to invest in hedge funds would be a step in the direction of easing the use of hedge funds by asset owners.
What are your strategies for hedging against market downturns?
Despite the mandated VaR of 20%, monthly, 99% confidence level of this fund, many strategies are hedged/relative value in some form or another. This is not a pure arbitrage fund, nor a pure relative value one. There are no bucket-specific restrictions and therefore the manager will use their skill across the income product range to ensure that the fund is optimally positioned for market conditions at the time, using hedges where appropriate.
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