Stanlib Asset Management is bullish on the SA construction sector with the bulk of its funds substantially overweight in this area.

The fund manager has taken a strong view on companies such as Aveng, Murray & Roberts and Barloworld due to substantial investment in SA infrastructure.

The Stanlib quarterly market overview blamed the underperformance of its flagship Liberty Wealthbuilder fund on the funds mandate. Wealthbuilder has higher exposure to international companies than its peers and less exposure to medium and small cap companies, a sector which outperformed the market by 30% over the past year. International equities lost 28% over the same period.

Imtiaz Ahmed, the funds manager and head of multi manager clients at Stanlib asset management, said: 'The fund has underperformed, but has remained true to its benchmark. It does not subscribe to the latest investment fads. Other general equity funds have performed well because of their mid and small cap holdings, but there is greater risk involved with this strategy.' He said there would be 'two or three' interest rate cuts this year, and predicted that SA equities would outperform SA bonds over the year.

Paul Hansen, director of Stanlib retail investments, said it was unrealistic to expect the rand to stay at current levels through the year. 'For 14 consecutive years the rand lost value against the US dollar,' he said. 'The law of averages says this can't be sustained although the rand is an extremely difficult currency to make a call on.'

The Stanlib house forecast is for the rand to be at R10,75/ by the end of the year, which Hansen conceded looked a little unrealistic at present. 'The balance of probability is that the rand will be weaker this year,' he said.

Stanlib also outlined the time scale for the continued integration of Standard and Liberty businesses for this year. The group expected to complete its rationalisation phase this year, a stage which would include the unit trust conversion process and business process alignment, the fund manager announced.