Sanlam Enterprise

Sanlam Enterprise is a long/short equity fund (it makes money from falling, as well as rising share prices), which invests primarily in the UK. The fund has been designed with the intention to deliver 8-10% per annum but with half the volatility of the UK equity index, therefore providing equity-like performance, but with fewer ups and downs. The managers use a wide range of trusted sources to identify investment themes and stock ideas, and it is these that drive performance. This fund has a performance fee.

This fund was formerly known as Smith & Williamson Enterprise

Our opinion

Unlike many other equity long/short funds, the managers of Sanlam Enterprise generally don't use ‘futures’ (contracts for shares bought at an agreed price, but delivered and paid for later) to provide their short exposure (when they are hoping to make money from falling share prices), as they feel these are a bit of a blunt instrument. Also, their shorts aren't just used to dampen volatility but are genuine sources of added value for investors. This strategy has seen the short side of the fund perform well, even in rising markets. This is reasonably rare and obviously a huge plus for this type of portfolio. While it has been slightly more volatile than some of its peers, we feel this added risk is more than justified by the returns.

Company description

Headquartered in South Africa, Sanlam Group dates back to 1918 as a life insurance company and now offers a range of financial services. Under the Sanlam Investment division, the company purchased FOUR Capital Partners in 2014 to form an investment boutique managing UK, European, US and global equities, as well as multi-asset. It subsequently purchased a series of funds and personnel from Smith & Williamson, the transfer of which completed in 2021.

Fund manager

Lead manager Mark Boucher has been running Sanlam Enterprise since January 2013, alongside co-manager Mark Swain. Mark previously worked at Leopold Joseph/Bank of Butterfield, and originally ran the Enterprise fund from 2006, before he left in 2009 for four years to work for an American company running very similar strategies. He re-joined the fund in 2013 alongside Mark. Both managers moved with the fund as part of the change of ownership to Sanlam though former manager Rupert Fleming has not.

Investment process

Over their years in the investment industry the managers have built up a network of trusted brokers and analysts from whom they source ideas. These analysts - often sector specialists - can provide useful insight to help the managers generate ideas and identify investment themes, both long and short, that can be exploited before the wider market. Put into practice, this has seen the managers get some big calls right, including shorting the banks in 2008 and profiting from the supermarkets' fall from grace in 2014.

Risk

Self-imposed risk controls include maintaining a diverse portfolio of around 70 stock positions, with large-cap positions restricted to a maximum of 5%. Small and mid-cap positions are capped at 2% and only 10% of the portfolio will be in small caps for liquidity reasons. While the fund should have lower risk than an equivalent long-only equity fund, it is more volatile than most other absolute return funds.

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