From Gary Booysen on the top floor...

Dear Money Morning Reader,

Adrian Clayton of Alphen Asset Management says his “investment team were bullish last year believing that markets were cheap but they never imagined that the rebound would be as steep and as quick as it has been.” The problem is, with the All Share Index hovering around 27,000 after a 46.48% bull market in 2009, even if it runs to its all-time high of 33,233, you’re only going to make another 20%.

That’s why you’re going to need a professional on your side.

In the current climate, achieving what fund managers call “Alpha” is going to be more important than ever. Alpha measures the statistical risk associated with a portfolio and helps in determining the quality of the fund’s management. If a portfolio earns 10% based on the risk analysis, but actually delivers 15%, the portfolio’s alpha would be 5%. This 5% is attributed purely to the fund manager skill. Investec Opportunity Fund’s Clyde Rossouw has shown his skill at finding Alpha. His fund has returned 97% for investors over the last five years and has increased more than 1 000% against the sector average slightly above 500%.

He believes that the way to achieve Alpha comes from being able to identify pockets of value in less bullish markets. He says, “for example, we’ve found a brewery operation in Mexico that we believe offers good value.” Retail investors just don’t have the skills or knowledge to identify
investments of this nature.

And as Finweek’s Marc Ashton points out: “With many market commentators calling the market as overcooked and ripe for consolidation, it may be an idea to put your money with an asset manager who has consistently delivered the goods.”

Double your money and then some in just five years…

If you’re looking for a quality fund manager you need look no further than Gavin Woods. He’s currently managing the Kagiso Equity Alpha Fund, which gets an Equinox rating of 14 out of 456.

This fund is growing steadily and currently has R35m under management, up from R17m at the end of 2009.

The fund aims to be consistently invested in equity with only 1.38% invested in domestic cash. The fund’s main aim is to deliver Alpha and unlock value, by identifying mispricing in South African
JSE listed companies.

As Chief Investment Officer and cofounder of Kagiso Asset Management, Wood has the full spectrum of Kagiso’s investment research process behind him. The fund benefits from the best ideas that generated from extensive fundamental research into company valuations, as well as leading-edge
quantitative research.

The portfolio’s major holding over the last year has been MTN, which has consistently laid claim to the largest slice of the pie. At the end of December it made up 10.20% of the portfolio. Woods
also likes media giant Naspers and South African petro play Sasol.

The fund’s performance speaks for itself – it’s up 64.9% over the last year.

For more information call 0800 22 11 77 or visit: www.coronation.com.

Turning the market...

The JSE all share index advanced 0.99% yesterday. The gold mining index gained 0.5%. Resources added 1.08%. Banks and financials grew 2% and 1.25% respectively. Industrials bounced 0.75% and the platinum mining index jumped 1.43%.

London's FTSE100 climbed 0.43%. The Dow Jones collected 0.45% and the Nasdaq closed up 0.47%.

Tokyo's Nikkei closed down 0.95%. Hong Kong's Hang Seng traded flat, down 0.08%.

Brent crude is currently trading at $81.34 per barrel.

Spot gold's trading at $1,123.61 and platinum was last quoted at $1,631.50.

And here's how the rand is performing against the major currencies:
R/$7.32
R/₤11.20
R/€10.02