Managed Account Guidelines

Herewith our basic trading philosophy for managed accounts:


We mainly trade in locally listed shares and derivatives such as CFD’s, through the major market makers. We focus on the most liquid shares, in order to get in and out of positions without hassle. We may enter into selected options transactions to capitalise on market volatility. For smaller accounts we tend to trade the STX40 over ALSI contracts. CFD’s are also preferred over SSF’s because of lower costs and easier position sizing due to trading in so-called eaches, ie 1:1, iso futures contracts which trade in bundles of 100 shares to 1 contract.


We trade the market both up and down, long and short. This is to protect ourselves against potential downturns in the market, and to potentially outright profit from these moves. We also enter into pairs trades, where we go long one share and short another, from a similar sector, in order to profit from the relative performance of these shares against each other.


We take both short and medium term position. Short term trades might be open only for a few days to weeks at a time, and in some instances they might be opened and closed within the same day. Whereas medium to longer term trades in our book will reflect positions that we take with a 6 to twelve month view. Short term trades will be done mostly with CFD’s, whereas the longer trades might be done via equities.


We trade the market action. We use a combination of both technical and fundamental analysis to determine the trades we take. Typically, fundamentals will determine the stocks and positions we take, whereas technical analysis will trigger our entries/exists of the positions. Fundamentally, we are in frequent contact with a host of traders, portfolio managers, researches and analysts and we look at daily news flow and economic data. Technically, we look at market strength, supply and demand, chart formations, volumes, support and resistance levels, patterns, trends and more.


Performance of these strategies are not dependent on the direction of the bond or equity markets, unlike conventional equity or mutual funds and unit trusts, which are generally 100% exposed to market risk. These strategies can return non-market-correlated returns, ie positive or increasing returns in a bear or downwards market. We manage funds conservatively in trading terms, and aim to outperform interest earned on money markets.


Profit targets and stop loss levels are determined upon entering a trade. We are strict on our stop loss levels and wrong positions are cut immediately in order to protect capital amounts. We only enter into trades with the correct reward to risk profiles, in order to better manage trading risk.


R100k invested. Split into equal parts. R50k into equities that we think will outperform over the next 12 months. These might include property shares, on which you can get a higher return than cash in the bank or money markets, excluding potential capital gains/losses from the move in the share price itself. R50k set aside for short term CFD trading. These may include a few overnight positions, both long and short. A possible hedge of the overall market with a short position. And a pairs trade or two. Unused cash on BDA or margins accounts will attract an interest rate until utilised elsewhere.


The points above are just guidelines, to show you how we think and how we trade. These can be tailor-made to your requirements and your own risk/reward profile. Some people would require a monthly cash flow from their investments. Other would be include to take on more risk in order to aim for a higher return. Speak to your portfolio manager to decide exactly what you want to do.

Risk disclaimer

Please ensure that you are familiar with the risks involved in trading. They can be further explained by your portfolio manager, and also found on our disclaimer page, as well as in all the mandates. In short: All investments involve risk. Investors should consider their objectives, risk tolerance and time horizon before investing. Diversification does not ensure a profit or protect against market loss. You might also find the following Hedge Fund Disclosures worth reading.




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