Recent market conditions have been tricky, reflecting in a further slight decline in the fund's value during September (-0.96%). Relative to peers and the broader market, the fund continued to benefit from having no holdings of resource companies. However, not owning any SABMiller prior to the announcement of a potential bid from AB-Inbev (ABI) cost us significantly given its subsequent 20% rally on the day of the announcement. Having examined the potential for a bid, we conclude that SAB's portfolio is a good fit for ABI. Furthermore, ABI's balance sheet is substantially deleveraged and we think the group could raise at least $50bn of debt, likely at a very low cost (it has existing bonds costing 3% in USD).

We expect a bid of more than £40/share (>R840), and accordingly have added SABMiller to the fund at ~R750/share (3.5% weighting) following this announcement. Elsewhere, we took profits on Pick n Pay to part-fund a new holding in Tiger Brands. We have previously, avoided Tiger on concerns of market share losses from a high base in RSA and poor capital allocation decisions in Africa, but the recently announced resignation of CEO Peter Matlare is a positive step and we expect a new chief executive to be a catalyst for a trend of improving returns on capital. In addition, at a mid-teen trailing P/E, the share offers relative value.