Kanaan Asset Managers have been managing shares, funds, fund of funds and wrap funds, in South Africa, as well as in USD and GBP offshore, as DFAs (Discretionary Financial Advisor) in terms of our Cat II (for unit trusts) and IIA (for Hedge Funds), since 1995. Asset manager FSP license number: 528.
Our funds are available to IFAs and DFAs who are in search of a managing edge, making use of funds with a far above average rate of return, of which you can see the performance records under funds, and for more details go to professional financial advice par 7 and 8 below.
We are also acting as Cat I IFAs for members of the public that want to make use of our services. We are exposing them, according to their risk profiles in terms of their circumstances proportionally, to three asset classes, (for South Africans via our three wrap funds) namely 1 Stable SA, 2 Equities SA, and 3 Global SA, and for our offshore clients and bigger South African clients with voluntary contribution funds, offshore via Mauritius in our: 1 Stable Offshore, 2 Equity Offshore, 3 Moriah Global, and 4 Currency Offshore. (see Investment Approach par 9 for more info on our contrarian approach).
Professional Financial Advice
We are independent DFAs (Discretionary Financial Advisor). These are graduate financial advisors with category II or IIA fund management licenses, the same as the fund management licenses of the fund managers of big institutions like Old Mutual, Liberty Life, Allan Gray, etc. There is however a vast difference between them and us. We do not manage funds in the true sense of the word in the same way they manage funds and we do not see ourselves in the first instance as fund managers, although we are referred to as DFAs, and we do manage two funds in Mauritius via our administrator International Assurance (IAL) LTD, called Currencies Offshore, and Equities Offshore. The other funds as mentioned are either fund of funds or wrap funds which we manage in terms of the selection of funds according to the mandate of the applicable wrap fund or fund of fund. In the case of our two hedge fund of funds we also do the appropriate 3 months and sometimes even longer than 3 months due diligence before we buy them, and we continually check whether the underlying funds of our funds are complying with local/ international regulations.
We believe that good financial advice cannot be given properly without professional investment management. Professional financial advice for clients consists of advice regarding their immediate, intermediate and retirement capital requirements. Immediate capital requirements cannot be calculated if you do not have a reasonable idea of what the average return on the clients’ savings or investments will be up until retirement. There are many funds with lengthy performance track records, which can give you an indication of what the future return of the fund will be, but in the case of all these funds, we do have a problem with the well-known brand names – their fund management styles satisfy only the needs of certain clients where a management style of ‘buy-and-hold’ is followed.
The big brand fund managers are well-known for their notion with regards to investments namely, “You cannot time the markets”. That means that when share markets crash (which happens every ±10 years in a free market), you should not cash in your investments in growth funds, just to switch back to growth funds when you see the market is doing well again. They argue that since nobody knows the day and the date of the crash in advance, the risk is too great that you will switch to cash too late when the market has dropped already by 20% or 40% and since nobody knows where the lowest point of a crash will be, there is a strong possibility that you will only switch back with your cash to growth funds once the market has grown already with 20% or 40% and in the process, you are farming backwards.
The “buy-and-hold” approach is also known as a passive fund management style or the bottom top up approach, according to which you do not sell during market crashes. The big fund managers see a crash rather as an opportunity to buy additional good quality shares, which are busy losing value. Investors who are investing in these types of funds usually find a few years after a crash, once markets have come back, that they are much better off than previously.
Especially not for risk averse people and people close to retirement or already at retirement who have not saved enough to source the income from stable funds like a savings account or money market accounts with low rates of return, usually after tax less inflation. Most people at retirement world-wide need to have most of their capital in growth funds with only their emergency fund in stable funds or one year’s salary in stable funds, which renders a problem because when growth funds go down during a severe market correction or a crash, sometimes with more than 60%, for many months even years, they will start to dig into their capital.
Andre Delport, the founder of Kanaan Asset Managers, discovered that he has a good gut feel to time the big share market crashes, which he timed accurately during the 1987 share market crash, the Far East Pacific Crash of 1998, the IT Bubble Crash as well as the Credit Crunch Crash of 2008, to such an extent that a group of four brokers from Durban approached him during 2003 suggesting a company called Xhilirator Asset Managers Pty Ltd, via which they would have marketed Kanaan Trusts fund of funds for voluntary contribution money as well as the fund of funds for compulsory contribution money to other IFAs.
The success of Kanaan Asset Managers called Xhilarator asset managers Pty Ltd after 2003, to time the big crashes correctly became known even to other brand name professional fund managers, so that one of the well-known fund management companies in South Africa invested during 2006 R15 million of their cash flow in the one fund of fund of Kanaan Asset Managers, and by the end of 2007 just before the 2008 Credit Crunch Crash, the fund manager of Ovation Pty Ltd phoned Kanaan to hear from them what their view is on the market, and we had told him that we have switched to cash, which was just before the 2008 Credit Crunch Crash. Because Kanaan managed to time the big crashes their two fund of funds had been doing very well, for instance during the Far East Pacific Crash of 1998 when world markets crashed with more than 60% the Kanaan fund of fund for voluntary contribution funds grew with 56% nett of fees and the Kanaan compulsory contribution fund of fund grew with 52% nett of fees and both funds until the 2008 crash had given average rate of returns usually of more than 15% per annum, which can be confirmed on request.
We became aware of the possibility of the Credit Crunch Crash of 2008 already during 2002 when various economists started to warn that the first world countries are allowing credit to become too easily available to the man in the street, where a plumber could for instance buy a house with his credit card as well as a second and even a third house, which started to cause a property bubble, to such an extent that these economists said that first world countries of the so-called free market would, if they do not start to control credit, be forced to intervene in the share markets, trying to protect many big companies from going bankrupt, like their political opponents, the socialists and the communists, for the first time in the history of the free markets.
7.1 An alternative method of risk management
They predicted the so called Quantitative Easing, where first world governments would start to make debt so as to protect their markets from huge crashes, which would disturb the 10 year interest rate cycle and which would make it thereafter impossible for fund managers like ourselves to time these big crashes, because of which we had started to investigate an alternative method of risk management making use of hedge funds.
7.2 Fine tuning the alternative method has taken more than 10 years
However, we have noticed that during the 2008 Credit Crunch crash, even hedge funds crashed world-wide except for a few which had been doing well even during the previous crash of 1998 and the IT Bubble crash, but one could not buy them because the good hedge funds tend to become clumsy when they become too big and the good ones therefore close for business and we had to wait for windows of opportunities when a big pension fund would make a withdrawal from one of these hedge funds, and it is only since the 1st of Aug 2021, over the previous 10 years that we had eventually managed to get a full range of good hedge funds for our Moriah Global fund of fund, with a collective CAR (Cummulative Average rate of Return) nett of fees since the 1st of January 2018, of 26.29%, with a relative low down STD (Down Standard Deviation) of only 3.33% as you can see in the spreadsheet below, with the ZAR performance record just next to it, in par 8.1 below. However, as we could only get rid of the underperformer hedge funds during August 2021, the CAR of Moriah Global has been up to the 31 March 2022 since 1 December 2012, only 8.72% nett of fees per annum in USD, and in ZAR 15.08% nett of fees per annum, which is also above average. See Moriah Global FoF performance record below.
For more up to date information see the fact sheet.
The growth of Moriah Global above since 1 Aug 2021 which is a short period, is nevertheless impressive taking into account the very good growth, month after month in the face of Covid 19, and even worse the war that started in Ukraine during Feb 2022, which growth figures can be confirmed by the administrator of Moriah Global, IAL (International Assurance Ltd, email@example.com, +230 269 4400, https://www.international-assurance.com/contact-us), but the very good growth rates, as shown in par 8.1 below, prior to 1 Aug 2021 cannot be confirmed as the names and the particulars of the underlying funds are obviously privileged, a business secret.
The same applies to our other offshore fund under par 8.2 below, namely Stable Offshore.
Below you will see the historical growth of the underlying hedge funds of Moriah Global, acquired up to 1 Aug 2021, since 1 Jan 2018. That means that Moriah Global have not had the same growth month after month and year after year before Aug 2021 as shown below, as Moriah Global could only acquire all the above-mentioned underlying funds by 1 Aug 2021, but the previous performances of the present underlying funds, before Aug 2021, starting four years ago, namely 1 Jan 2018, shows what Moriah Global's CAR (Cumulative Average Rate of return) would have been if Moriah Global could have had access to its present existing underlying funds since 1 Jan 2018 namely, 25.52% in USD net of fees per annum, and in ZAR 32.38% p/a.
8.1 Moriah Global FoF
Above you will notice that in ZAR, Moriah Global has a CAR of 32.38% per annum and for 2021, when you look at the YTD (Year To Date) column, it was 30.32% even taking Covid19 into account and when you look at the percentage per month column you will see that for January 2022 it was 8.69% and February 2022, 8.21% and for March 2022 an unbelievable 20.98% in USD nett of fees, even taking the war in Ukraine into account.
However, you do have ups and downs. You will notice above that in the ZAR column the fund did 26.23% for 2020, but by 31 August 2020 it had already grown to 54.02% and went badly negative thereafter, but nevertheless ended the year with 26.23% (20.38% in USD), because of which we need also a more stable hedge fund of fund for purposes of emergency or for clients who need their retirement income, called Stable Offshore FoF.
8.2 Stable Offshore FoF
In South Africa we created a Stable SA wrap fund which tries to compete with local savings accounts, and which have been doing more than 4% per annum up to March 2022 and competing well with local savings accounts that had been battling to give 3% per annum. For a client that needs for instance R50 000 per month we would invest his R60 000 in Stable SA and will then strategically withdraw his R600 000 per annum, not from Moriah Global that can go up and down but from Stable Offshore which consists of hedge funds that do not try to shoot out the lights but try to compete with offshore money markets, but with underlying hedge funds since 1 Aug 2018, which have been giving collectively an amazing +/- 12.55% per annum in USD as you can see in the spreadsheet below.
For more up to date information see the fact sheet.
Above you will see that the CAR is 8.32% with a very low Down STD of only 0.67% and in ZAR the CAR is 12.55%. Above you will notice that Stable Offshore did 6.02% in Dollar for 2021 and 15.19% in ZAR because of the Rand depreciation but for January 0.5% and for February -0.28% which is the second time in the history of this fund that it had a negative month.
Above you will notice as in the case of Moriah Global historical growth with current funds since Aug 2021, we have done the same above, because of the same reasons as mentioned in par 8.1 above. The real CAR of Stable Offshore since the 1 July 2020 up to the end of April 2022 was 4.76% nett of fees in USD and in ZAR 10.91% per annum nett of fees, which is not very reliable because of the short period of less than 2 years since we have started Stable Offshore since 1 Sept 2021, because of which we have shown you the longer-term performance record of the present underlying funds over the period of more than +/- 4 and a half years.
8.3 Equities Offshore FoF
Below you will see the spreadsheet of Equities Offshore with a very high CAR of 19.28% but also a high Down STD of 6.53%.
For more up to date information see the fact sheet.
Our Equities Offshore that consists of fourth revolution shares and unit trusts like Tesla of Elon Musk that sometimes grow exceptionally well like during 2020 with 743% but can also go badly negative like the -11.36% for January and the -7.08% for February, and our Equities Offshore fund is therefore for younger clients for the longer term as it is a buy and hold fund where we do not try to time the markets. We manage quite a range of shares like Amazon, Shopify, Visa, Berkshire of Warren Buffet, but also offshore unit trust funds that invest in these fourth revolution shares, like BNP Paribas and JP Morgan.
We have shown above the historical growth of Equities Offshore with current funds since August 2021 because of the same reasons as mentioned in par 8 above. The real Equities Offshore FoF has a short history which started only the 1 January 2021 with a CAR over that period of -4.81% nett of fees in USD.