Meet the Fund Managers: Humphrey Gathungu and Thabo Ncalo

The Stanlib Africa Equity Fund, headed by Humphrey Gathungu and Thabo Ncalo, looks for long-term capital growth opportunities throughout Africa, excluding SA.

One-third of the fund is in Nigerian equities and 20% in Egypt. Kenya comes in at 12%, followed by Zimbabwe at 10%, with the rest of the continent making up the balance.

Nigerian banks dominate the holdings of the fund. Guaranty Trust Bank and Access Bank are the largest and second- largest equity holdings in the fund. "We believe in the Nigerian growth story and the opportunities present in Nigeria," said Ncalo. "The banking sector gives exposure to the economy. In addition the sector has undergone severe reforms and we expect consolidation.

"Nigerian banks are some of the cheapest (by price-to-book value) in emerging and frontier markets, so we think the valuations are compelling enough for us."

The Stanlib managers believe that a good diversification strategy is key to reducing the risk that rising inflation poses.

"We try to deal with rising inflation by diversifying our holdings across various markets," said Gathungu. "We find that countries are affected by rising costs differently, so diversifying helps inreducing this risk."

The managers hold to a basic investment philosophy of value investment. Their fund's fact sheet explains it thus: "Research-driven active portfolio management aimed at seeking out companies with the highest upside to fair value and/or undervalued relative to peers and the market."