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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Aug 18, 2026
The Merchant West SCI Value Fund delivered a 3.0% net return in Q2 2026, outperforming the JSE All Share Index by 5.4% as the benchmark fell 2.4%. The quarter was dominated by the Middle East oil shock, which drove inflation to 4.5% and prompted a 25bp SARB rate hike to 7.00%, even as oil prices ultimately retreated 38% by quarter-end. The fund's underweight to gold stocks, which fell 14%, and overweight to tin miner Alphamin (+26.7%), Oceana Group (+30.5%), and Argent Industrial (+16.3%) drove outperformance. The largest detractor was Sasol, down 28.3%. New positions were initiated in Bid Corporation and Reinet Investments to increase hard currency exposure, and in Kumba Iron Ore as an attractively valued iron ore play, while a special situation position in PPC was added on takeover speculation by Heidelberg Materials. The portfolio trades at 7.3x forward earnings versus 11.4x for the index, with superior 14.7% ROIC and lower leverage, reflecting the fund's focus on quality businesses at discounted valuations. South Africa's improving fiscal credibility and reform progress support a constructive medium-term outlook, though growth remains constrained by structural challenges.
The Merchant West SCI Value Fund employs a disciplined value-based investment philosophy focused on quality South African businesses with genuine growth prospects, shareholder-friendly capital allocation, and shares trading at a discount to intrinsic value, providing both downside protection and upside potential.
South Africa's economic outlook remains one of gradual but modest improvement, supported by easing structural constraints, improving fiscal credibility, and stronger investor confidence following recent sovereign credit rating upgrades. However, growth is expected to remain below potential, constrained by persistent unemployment, weak private investment, infrastructure bottlenecks, and global uncertainty. The outlook will depend on continued implementation of economic reforms, the outcome of local government elections in November and their implications for GNU stability, the SARB's ability to manage inflation amid external shocks such as higher oil prices, and the resilience of global demand for South African exports. While the medium-term trajectory has improved, risks remain tilted to the downside if global growth weakens further or domestic reform momentum slows.
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