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RYK VAN NIEKERK: Welcome to this week’s edition of the Be a Better Investor podcast. My name is Ryk van Niekerk and in this podcast series I speak to leading professional investors and business leaders about their investment journeys. We also take a peek into their personal investment portfolios. We try to understand how they analyse investment opportunities, what companies and assets they invest in and whether they have more hits than misses. The idea is to identify a few golden nuggets of wisdom to help amateur retail investors to become better investors.
My guest today is Claire Rentzke. She’s the chief investment officer at Sukha & Associates. Before joining Sukha in 2020, she held the same position at 27four Investment Managers. Claire, thank you so much for your time today.
First of all, tell us about your background. Where did you grow up and what career did you dream of when you were young?
CLAIRE RENTZKE: Hi, good morning. I am Cape Town born and bred. I grew up in Cape Town, went to university at UCT. I was never really exposed to investments. I never thought of it as a career when I was growing up.
I came from a household of engineers, so there was more of an engineering focus at home; I could wire a plug and ‘MacGyver’ [fix] anything with some electrical tape. But we didn’t really talk about money – and I don’t really think there was any to invest.
Investing and finance never really occurred to me as a career until I got towards the end of schooling.
And when I decided what to do, it was off to UCT to do Business Science. That was really the first time that I was exposed to investments, that I learned about the stock market, that I learned about investing and compound interest – which was terribly exciting – and about finance in general.
RYK VAN NIEKERK: So you were exposed to the investment world at university? When did you actually make your very first investment?
CLAIRE RENTZKE: Well, I was probably much older when I got around to investing. After I graduated, I went overseas. I worked overseas for a while.
And so my very first investment was really taking out the equivalent of an RA [retirement annuity] offshore in order to start saving for retirement.
It wasn’t into single stocks that I started, but more into retirement savings which kind of dictated the path that my career has followed.
So when I first bought my own shares, as opposed to unit trusts or any other fund, I think the first one I bought was actually African Bank – because it just got cheaper and cheaper. It was like they were never going to let a bank fail.
But yes, I learned my lesson from that.
RYK VAN NIEKERK: Did you hold it until the implosion happened?
CLAIRE RENTZKE: I did, I did. I thought the implosion was never going to happen – that somebody would bail them out. But yes, lesson learned.
RYK VAN NIEKERK: Let’s talk about lessons learned because everybody thinks a professional investor does not make mistakes. How often do you make a mistake and how do you react to it?
CLAIRE RENTZKE: Everybody makes mistakes. I think part of what we do is try to sift through and determine what’s just noise, what are the facts? Especially dealing with retirement funds you’ve got quite a long-term view that you’re trying to take, but there are a lot of moving parts in the short term and we all get things wrong.
Who would have ever thought that Trump would become president in the US, and what that would do to markets?
Whoever would’ve thought we’d see the extent of QE [quantitative easing] and then of QT [quantitative tightening]. So we all get things wrong, but I think you definitely need to learn from your lessons.
I think a big lesson is to always remain humble, always to acknowledge that there’s a lot that you don’t know – but to continue to have a long-term time horizon. So understand that what happens in the short term is not necessarily indicative of where things could go in the future.
RYK VAN NIEKERK: Yes, absolutely. I once had a business which failed, and I think that was the best thing that ever happened to me, because you just change your perspective on success. As long as you learn from mistakes I think it can be very, very valuable.
Tell us about your investment approach. How do you approach your personal savings for retirement and other discretionary investments?
CLAIRE RENTZKE: I think I’m probably a sucker for a sale and a bargain, so probably have too much of a value bias; but it is something I’m aware of.
As for my own savings and my own retirement, I think the way I approach it is to not think about it too much; take away the month-to-month decision-making on how much I should put here, how much I should put there …
And to just make sure that every month you are putting something away, you are making the most of the opportunities you are presented with, and that you are willing and committed to making it a long-term investment horizon – so you’re not tempted to dip in there in the short term.
So I try to make sure I’m consistently saving for retirement and that I don’t dip into it, and that I’m not tempted to dip into it when times are tough.
RYK VAN NIEKERK: I assume you have an RA or you contribute towards a pension fund. Is it an RA?
CLAIRE RENTZKE: Yes, that’s correct. I have an RA, so I try and make or take advantage of the different options available.
I do have a personal stock portfolio that I tinker with from time to time, but most of my savings are into an RA.
And then I also make use of tax-free savings accounts.
RYK VAN NIEKERK: Now the big question is do you manage your own RA, or the selection of funds to invest in – or do you leave that to a financial advisor?
CLAIRE RENTZKE: I do manage what I’ve chosen to invest, but it is through a fund. So I’ve chosen which fund to invest in and I leave it at that.
RYK VAN NIEKERK: Let’s talk about that discretionary portfolio, because I think many young people entering the job market would like to start building wealth, long-term wealth. It is not easy to do, especially because your biggest asset is time but your biggest enemy is a lack of knowledge. So how did you, when you were young, approach savings and investments – and what were your goals?
CLAIRE RENTZKE: Yes, I think setting goals is very important and for me – not coming from a background or trust fund where we had lots of money – it’s always been the goal of financial independence and security, not having to worry about putting food on the table day in and day out, which I know is a concern for many people.
But the biggest thing is to just get started. And so the one benefit of RAs and pension funds is that you get the tax credit there, so it’s always great to be able to maximise that first.
But then, take whatever money you have that you can afford to put aside, and don’t be afraid to buy something and to hold on to it. I think the temptation is always that young people, when they start portfolios, want to be traders, they want to be day traders – in and out of stuff in a day.
But my personal portfolio is built up things that I thought looked to be good opportunities at the time, and that I would be happy to hold.
Sometimes it’s blue-chip shares that are good, solid, quality businesses that are going to continue to grow and compound. Sometimes it’s even an ETF [exchange-traded fund] in a particular region or area or sector that’s attractive at the time.
So don’t be afraid to put a whole lot of things together to get broad exposure combined with some blue-chip long-term positions, and don’t look at it on a daily basis.
RYK VAN NIEKERK: Yes, I can relate to that, especially if the markets are down. Don’t open your statement because it will ruin your day. But if you have a long-term strategy, obviously stock markets have over many, many decades shown that if there’s a dip, there’s always a spike on the horizon.
Tell us about your personal discretionary portfolio – what is in there?
CLAIRE RENTZKE: It’s quite a combination of things. I have exposure to some of the banks because I bought [them] into Covid when they really looked attractive and were likely to be sustainable.
I’ve got some Naspers and Prosus in there because that’s great exposure to the tech sector.
And I have a few ETFs. I have a European equity ETF in there, and I’ve also got some industrial holdings. I have [other] ETFs as well, particularly I think European equities and some other offshore equity.
I have some retail savings bonds as well which provide a great yield.
It really is a mishmash – some industrial stocks, even some retail exposure, I think the likes of Woolworths.
RYK VAN NIEKERK: It sounds like you focus on blue-chip stocks and then also some more defensive investments into ETFs and retail savings bonds. Is that your approach?
CLAIRE RENTZKE: That’s a great way of putting it.
The long-term blue chips that you’re going to just put under your pillow and forget about; let them compound through time, knowing that they’ll be safe.
And then some more defensive broad-sector exposures, combined with the yield on the bonds.
So yes, I’m probably much more conservative than the average person.
RYK VAN NIEKERK: And any small caps?
CLAIRE RENTZKE: I do have Metrofile in there.
RYK VAN NIEKERK: Metrofile? Well, that’s a midcap probably, isn’t it?
CLAIRE RENTZKE: Oh, probably. Maybe it was a small cap when it went in there.
RYK VAN NIEKERK: If you could go back in time and speak to the Claire when she just started earning money, what investment advice would you have for her?
CLAIRE RENTZKE: I would tell her to maximise her savings as young as possible, and to keep going. When you first start out working, it always seems like there’s something else you want to spend your money on. You want to be independent; you want to save and buy a property. Then you have kids and it’s babies and buying nappies for them.
And so there are always things competing for your money.
But if you can maximise your savings, those expenses just grow and grow and grow through time as you get older, so it actually never feels like you [get] there to be able to maximise.
So maximise what you can put away from day one, and just leave it and let it work.
RYK VAN NIEKERK: Yes, I think that is a sound strategy, which not many young people fully understand when they set out on their investment journeys.
CLAIRE RENTZKE: It’s very hard. There is so much that’s competing for every single rand that you earn, and to put it away is a tough decision.
But if often if you can automate it so that you don’t have to think every month – what am I going to put here, what am I going to put there? – it does make it easier. Take the decision out of your hands so that you know all those other competing expenses don’t stand a chance.
RYK VAN NIEKERK: How long do you typically hold on to a share?
CLAIRE RENTZKE: Given the structure of my portfolio, it really is buy-and-hold.
There have been very few things that I have sold. Typically it’s been for other reasons.
I remember owning Sasol and just got to the point where they weren’t improving, they weren’t cleaning up their act, and I felt it was something that I couldn’t hold anymore.
And so I sold that out.
Similarly with something like BTI [British American Tobacco] – I think I sold that, but I sold that more from a perspective of not wanting to support a tobacco company.
Otherwise a lot of what is in my portfolio has been there since I bought it.
I guess it really would be a case of looking at each thing, determining that the investment case wasn’t there [anymore]; that it was under too much risk, [and] to sell it off. But that is not really something I’ve been very active in – trading. It really is more buy-and-hold.
RYK VAN NIEKERK: The biggest challenge for young investors is to be patient, but it’s not always that easy if a share loses value. So what do you do after you’ve made an investment and it turns out to be an absolute dog?
CLAIRE RENTZKE: Sometimes it’s in the eye of the beholder.
Evaluate the investment case. Is the investment the thesis still sound? Is the business going bankrupt today – like African Bank, – or will it continue to make money into the future? Is it a company that has a sound investment proposition?
The share price is just reflective of sentiment – it’s not always reflective of the value of the underlying business.
So, even for an investor who maybe can’t put together a model and understand the value of the underlying company, look as a consumer: is this something that you’re going to continue to buy into the future and, if you are, does the business case for this company still stand?
RYK VAN NIEKERK: But it is difficult, even for professional investors, to take the loss and not to hope that it will increase in value in the future. I think if you can get your mindset and your strategy to accommodate those poor investments, that will stand you in good stead.
CLAIRE RENTZKE: Absolutely.
And I think there are often two ways that people react to falling share prices.
The one is to just sell and react to what’s happening in the share price, and the other is to just hold on to your investment thesis and really believe that you are right – because you’ve done the work, you bought the share, you’re in love with it, you want to hold on to it. And so, taking a step back and looking at it objectively can be very hard.
But also, what is your investment horizon? Are you happy to hold on for the next five years, or do you want to take your losses and go?
RYK VAN NIEKERK: Now for the big question, what do you regard as your best investment ever?
CLAIRE RENTZKE: It would have to be putting money away into my RA, because I haven’t tinkered with it.
I haven’t looked at it except to see my statement on a quarterly basis.
It has compounded and compounded and compounded. I could not have done that myself without the discipline of putting away that money, having that debit order come – and not dipping into it when I change jobs – and just really being able to let it compound.
RYK VAN NIEKERK: Compounding, I think, if you have time on your side, it can be your absolute best friend and asset.
And what was your worst investment ever, one you don’t really want to talk about?
CLAIRE RENTZKE: African Bank [chuckling].
RYK VAN NIEKERK: So your first investment was your worst one, and the trajectory was up from there?
CLAIRE RENTZKE: Yes. Make mistakes early in life.
RYK VAN NIEKERK: And don’t make life-changing mistakes. Don’t put all your money into one basket. Was it a substantial investment into African Bank in your financial position at the time?
CLAIRE RENTZKE: No, it wasn’t. It’s a discretionary portfolio.
It’s very much money that if it went to zero tomorrow I’d be upset, but it wouldn’t impact my financial security.
RYK VAN NIEKERK: Claire, thank you so much for your time today and for sharing your insights and telling us your story.
CLAIRE RENTZKE: You are most welcome.
RYK VAN NIEKERK: That was Claire Rentzke. She’s the chief investment officer of Sukha & Associates.
