Robert Cowen Investments was started in 1982 by Robert Cowen in order to manage private client assets, and is now positioned as a niche investment house, specialising in family wealth management. Robert Cowen Investments prides itself on being able to provide a comprehensive investment, administration and accounting service with a great deal of emphasis on personal service.
Our Investment Strategy
Sound, reliable companies with solid dividend growth
Our investment strategy takes into account the long term prospects for quoted shares, and focuses on shares which have reliable management, a sound profit history, positive cash flows. In addition, we include local shares which provide a rand hedge component with significant offshore earnings.
Diversified portfolios reduce risk, timing essential
Studies have shown that the ideal number of shares in a portfolio is around fifteen to twenty in order to eliminate share specific risk. Although one can never eliminate market specific risk, by diversifying across a number of shares in different sectors, one can limit sector risk. Our portfolios are constructed over a period of time depending on the current state of the markets both globally and internationally.
Our own unit trust enables more flexibility
In 2003 we established a unit trust, RCI Flexible Managed Fund, in order to take advantage of changes to legislation. Within the unit trust structure any purchases or sales are not subject to capital gains tax so the fund is able to trade more than is possible if the shares were held in the client’s own name. In addition unit trusts can trade in derivative instruments without being classified as a trader for income tax purposes.
We can help you get control of your retirement products
In addition to the management of discretionary funds we offer investment management and administration services for non-discretionary monies such as living annuities, preservation funds and retirement annuities. This is particularly relevant for those close to retirement.
For the construction of global bespoke portfolios, the investment manager seeks out companies that are world leaders in their particular industries. We tend focus on top companies with excellent worldwide reputations that have a stable dividend history and excellent cash flow generation. Due to the fact that the outlook for world growth for the next five to ten years is uncertain – the majority of our portfolio construction is based on shares with the following characteristics:
- International branding
- Strong balance sheets
- Large market cap stocks
- Primarily listed on developed market stock exchanges
- Defensive in nature
- High dividend yield (or rather, be capable of paying a high dividend)
- High Return on Capital Employed
- Taking advantage of growth in emerging markets
- BUY-AND-HOLD and not a trading strategy (minimize fees and capital gains tax)
Shares on our watchlist are pharmaceuticals, personal goods, retailers, food, beverages, tobacco and alcohol. These shares tend to have defensive characteristics as people need to use their products on a day to day basis. Over time, they should show good capital appreciation but what is essential is that they should pay a growing dividend well in excess of the interest rates that can be earned on cash deposits.
Thus, if the initial dividend is say 3.0%, then after DWT of 20%, one will be earning a 2.4% after-tax yield which should grow each year, compared with a minimal interest rate in USD bank accounts of say 0.25% which is taxable.
In addition to the above our portfolios also have about a 20% exposure to tech and high growth rate shares that are also world leaders like Google, Amazon or Facebook. That way our portfolios have a balance between defensive dividend payers and high capital growth rate companies to take advantage of both styles of investing.
RCI BCI Flexible Fund
RCI BCI Flexible Fund closed December at 372.81c, up 3.7% for the month and up 7.2% for the last 12 months.
RCI BCI Worldwide Flex Fund
RCI BCI Worldwide Flex closed December at 157.27c, down 2.97% for the month and up 21.50% for the last 12 months. It is ranked 7th out of 79 funds in the same category for the last year, and 4th over a rolling three-year period.
Specialised Investment Services
At RCI, we specialize in tailoring bespoke share portfolios for our clients’ needs. In addition to this we manage a variety of different unit trusts that are managed with similar investment strategies (albeit some with a local focus and others with an offshore focus).
The local bespoke share portfolios are well diversified, covering a variety of different industries. A particular focus is placed on companies that produce products that people have to use regardless of the economic cycle and therefore are able to exhibit reliable earnings streams with which they can pay you an income from. We avoid cyclical and capital intensive businesses. Most of the chosen companies offer, either, good capital growth prospects, or rand hedge characteristics, good income yields, or a combination of all three traits. Typically, we focus the bulk of the portfolio on listed companies with a high ROCE (return on capital employed) and high free cash flow so they can produce you good income growth over time that is reliable regardless of what happens to your capital. A fundamental part of our clients future returns is depenedent on the a growing dividend stream that is paid to them. Over time, this can be used to draw down on, or, if not drawn out, compound.
Our view of the markets and the shares chosen for the portfolio is constantly changing albeit we do have a long term strategy in place. Our investment decisions remain flexible and are adjusted when appropriate.
In general, we aim to construct portfolios that exhibit the following characteristics:
- Companies generating large amounts of free cash flow and high returns on capital employed
- Both growth shares and dividend paying shares that achieve your income requirements.
- Large and medium cap shares that are in the top 100 on the JSE but mostly the top 40.
- Companies with attractive balance sheets and well established management teams.
- Rand hedge shares to protect against the weakening rand over the long term.
- Exposure to multiple industries and demographics.
- Limited exposure to resources and commodities.
- Exposure the growing middle class.
RCI currently offer two different unit trust products:
RCI BCI Flexible Worldwide Fund
Our locally registered offshore fund. This fund is registered in SA but is invested 100% outside of SA with a focus on developed markets. This fund is used by clients who wish, or have to use, asset swap to invest abroad.
RCI BCI Flexible Fund
This is our oldest registered fund. The fund was launched in November 2003 and has easily exceeded SA inflation since inception on an annualized basis. The fund is registered in SA and is restricted to having a maximum of 25% invested directly in offshore equities. The fund’s focus is on businesses that generate a large portion of their profits outside SA, so as to benefit from rand weakness. In addition to this, we focus on businesses that generate a high return on capital employed (at least twice what their cost of capital is).
Both of the funds allow, smaller (and larger investors), adequate diversification across a variety of different industries and asset classes with minimal admin effort, brokerage costs and capital gains tax.
The above funds offer the benefits of the no capital gains incurred by the client as a result of sales inside the fund. The client will only have to pay capital gains when they eventually sell units in the fund. This allows the fund manager increased flexibility with regards to timing the market – selling stock when they are substantially overvalued and then buying them back once they drop below fair value.
All decisions made on the funds follow a rigorous weekly top down analysis during our investment meetings. Part of the process involves fundamental analysis of opportunities, while also allowing for technical analysis that improves our entry and exit points.
One of the diverse wealth services Robert Cowen Investments offer is looking after client’s retirement funding. We are licensed through the FSCA (Financial Services Sector Authority) as both a Category 1 and Category II service providers in long term insurance products.
Retirement funds provide the following options:
Retirement annuities – which offer individuals a vehicle through which to make provision for retirement and provides tax relief on contributions
Living annuities – which provides members retiring from provident, pension or retirement annuities to receive regular income
Preservation Funds – Individuals, who are participants of a registered pension or provident fund and are in the process of leaving their employment, have the opportunity to preserve their retirement benefits via preservation funds until they retire. If funds are being transferred from a pension fund they will go into a pension preservation fund. Likewise a provident fund can be transferred into a provident preservation fund
Benefits of Robert Cowen Investments looking after your retirement funding include:
- Dependant on value of funds available, a share portfolio can be managed within the retirement funding
- Funds can be invested offshore through our service providers
- Our portfolio managers regularly check clients’ portfolios to ensure that growth is in line with client mandates and preferences
- Clients receive monthly statements of their investments and portfolio managers do regular reviews with clients
- Annually we check with all clients from a tax perspective to assess whether it would be prudent for clients to add to their current retirement annuities or to start a new retirement annuity to utilise the current tax reduction benefits in terms of taxation
We are able to assume responsibility as Trustees of Trusts that are or have been established for our clients, through our independent Trust company, Apollo Trustees (Pty) Ltd, which Di Haiden and Alan McConnochie represent. This covers the fiduciary and administrative responsibility assumed by Trustees as well as advising on the setting up of Trust Deeds and approval of Trusts by the Master. We run investment portfolios for the Trusts, provide accounting (which includes preparing the Financial Statements of the Trust) and administrative work, which involves the drawing up of resolutions and loan agreements etc., minute taking and distributions. We also keep up to date with current tax and trust legislation and liaise with clients regularly regarding distributions from Trusts, loans to and from Trusts etc.
Wills and Estate Planning
Over the years, we have gained experience in all aspects of our clients’ affairs, including estate planning. Typically, this covers whether there is a need for Trusts in the client’s overall structure, what the assets are which are included in their estates, what effect estate duty will have on the asset base upon a death and how to structure their investments going forward. We also review clients’ existing wills and organize for wills to be drawn up or re-drafted.
RCI BCI Flexible Managed Fund
RCI BCI Flexible Fund closed February at 358.46c, down 9.54% for the month and down 6.15% for the last 12 months.
RCI BCI Worldwide Flexible Fund
RCI BCI Worldwide Flex closed February at 136.75c, down 1.50% for the month and up 19.55% for the last 12 months. It is ranked 3rd out of 75 funds in its category for the last year, and 5th over a rolling two-year period.
Robert Cowen Investments offers full administration and accounting services where trusts are involved. This includes trustee services and the administration involved therein. This covers the routine maintenance for trusts including minute books, organizing of trustees meetings, amendments to trust deeds etc.
A full accounting system is in place to record all transactions and produce the necessary annual financial accounts for trusts and individual clients. Statements are sent to the client monthly and include a transactions schedule and portfolio valuation
|Robert Cowen Investments||Fee percentage p.a.||RCI portion/rebate|
|RCI Advisory Fee||1.25%||1.25%|
|Local Brokerage Fee (& of the trade) PSG||0.50%||0.20%|
|Offshore Brokerage Fee (% of the trade) - SAXO||0.50%||0.20%|
|Trades above R2 million||0.35%||0.10%/0.20% (as per above)|
|Offshore Quarterly Custody Fee - SAXO||US$ 25||US$ 12.5|
|PSG Monthly Admin Fee||R40||0|
|PSG turn on Call interest earned||0.50%||0|
|Unit Trust Fees|
|RCI BCI Flexible Managed Fund performance **||1.00%||1.00%|
|RCI BCI Worldwide Flexible Fund performance **||1.00%||1.00%|
|**RCI BCI Flexible Funds performance fee becomes applicable if the unit price is 10% above the portfolio benchmark (CPI + 4% over a 2-year rolling period) capped @ 2% per annum)|
|Platform Administration Fees|
|Amount above R5m||0.15%||0.00%|
|Additional access fee will apply on:||0.15%||0.00%|
|• Personal share portfolio|
|• International administration|
|• Momentum offshore capacity|
|• Traded Endowment Option|
|Immediate payment fee||R250 per switch||0|
*The investment manager of Astoria, Anchor Capital Mauritius, earns a 1% asset management fee for direct investments and 0.5% fee for investments into funds by third parties. In turn Anchor Capital South Africa provides investment advisory services to Anchor Capital Mauritius and earns an advisory fee. Anchor Capital South Africa is the holding company of RCI, but RCI receives none of these fees.
All figures are exclusive of VAT.
RCI offer a full suite of cash services needs for private clients. These services include:
- Setting up and paying of any monthly drawing requirements as well as processing any ad-hoc cash requirements or third party payments (can take up to 4 working days)
- Paying of any monthly debit orders (DSTV, tracker services, medical aid, levies etc)
- Sending funds offshore – we utilise the services of Nedbank and Exchange 4 Free
- Transfers of cash between RCI managed accounts (Nedbank, PSG and Momentum)
All accounts are opened in the name of the client and any bank charges incurred for any of the above are for the client’s account.
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From 1992 until 1996
The primary areas for investment were equities, bonds and cash in the South African markets. Our focus was to invest in shares listed on the Johannesburg Stock Exchange unless clients had a need for income. Equities have been the only asset class to outperform inflation on a long-term basis.
Sending Funds Offshore
Individuals have been allowed to send ever increasing capital sums offshore in the form of exchange control allowances, and portfolio managers have been able to send 30% of assets under management offshore in the form of asset swaps. This has enabled the South African investing public to participate not only in South African investments but also in investments of a global nature.
Depending on the individual’s circumstances, we recommend that an appropriate amount be transferred offshore and that the client keeps what is required locally to fund the individual’s chosen lifestyle, subject to exchange control regulations in force.
JSE Investment Advice exams
Registered key individual with the Financial Services Conduct Authority
Joined Robert Cowen Investments in 1990
26 years accounting and investment experience
Previous employment: Member of Syringa Systems cc
Chartered Financial Analyst (CFA)
Joined Robert Cowen Investments in 2018
20 years investment experience
Previous employment: Telcos and Naspers analyst at Citibank
Prior to that, he was at Deutsche Bank where he was the top-rated banking analyst in South Africa
Mr. Armitage has achieved a record number of No. 1 positions (21) in the annual Financial Mail investment analyst survey of institutional investors. In 1999 Mr Armitage was rated the Top Analyst in SA by Finance Week. He has worked at Merrill Lynch, Deutsche Bank, Nedbank and Investec Wealth & Investment. Mr. Armitage is the CEO of JSE-listed Anchor Group, which he founded in 2011. He was named by the Financial Mail as one of the 10 top businessmen in South Africa for 2015.
Andrew joined Anchor Capital when Anchor bought a majority stake in RCI and took responsibility for corporate finance activities within the group. As part of Anchor’s investment into Capricorn Fund Managers (CFM), Andrew took responsibility for the due diligence process. Post the transaction he was made a non-executive director and shortly thereafter he was made responsible for the finances of CFM. His qualifications, experience and depth of knowledge of CFM led to him taking responsibility for the operations of the South African business.
ROBERT COWEN INVESTMENTS
25 Culross Road
P.O. Box 784
Office: 011 591 0585