Why the SaltLight Fund Might Not Be Right For Everyone

We’d like to caution that the SaltLight SNN Worldwide Flexible Fund may not be right for every investor.

Our investment process is targeted to compounding returns over the long term and short-term returns may differ to market indices or peer returns. This is because we construct our portfolios from the ground up assessing the risk and reward of the portfolio investment relative to the long-term opportunity.

Our sole goal is per unit NAV growth that generates at least SA inflation + 5% over the long term rather than large assets under management.

  • Long-term investment process: our investment process is focused on long-term outcomes that play out over 5-7 years. We don’t make an investment unless we believe that we can double our capital over a five year period (this equates to a 15% compounded return). What we can’t control is the path of how the thesis plays out. Often, the market only recognises the thesis in the fourth or fifth year of investment and then sometimes, the market quickly catches up. This part is unpredictable.
  • High portfolio concentration: At times, our portfolio may have a concentration in our best long term ideas. With higher concentration, we may have higher volatility in short-term returns than market volatility. It is likely that our top 10 positions could be 60%-70% of the portfolio.
  • Low turnover: We have a boring researched-based investment process that relies on a meticulous understanding of what can go wrong, what are the potential outcomes and intellectual honesty about what we don’t know. Really attractive long-term opportunities that meet our criteria are extremely rare. When we do find a great business, we tend to hold on and keep our trading activity low.
  • High cash levels: our mandate allows us to hold high levels of cash or cash equivalents should there be a dearth of attractive investable opportunities. We see cash as an option on future returns that should never be underestimated.
  • Investment capacity: to preserve returns for long-term investors in our fund, we may close our fund for new investment from time to time when we feel investment opportunities are limited.

Putting this all together, our caution is that this fund is best suited for investors who are willing and able to keep their capital invested for at least 7-10 years.