This fund aims to outperform the FTSE/JSE All Share Index through active stock selection across all sectors and market capitalisation on the JSE. The fund may at any time hold a maximum of 25% in offshore assets. This fund may also invest in derivatives for efficient portfolio management.
Illustrative Annualised Investment Performance
Minimum Disclosure Document (Fund Fact Sheet)
Source of graph : Morningstar
This graph illustrates how an investment of R100 would have grown had you invested in 2010 until 2016. Like everything in life, all investments can change and come with some degree of risk. That’s why we need this disclaimer, to tell you that past performances are not necessarily a guide to future performances, and that the value of investments/units/unit trusts may go down as well as up. The performance shown in the table above is a graphical representation of your selection (of the benchmark’s past performance of the fund you selected) – including your investment objective, risk profile and fund choice – and is based on the past performance of the fund in relation to your investment. This performance is indicative and not guaranteed. The graph is for illustrative purposes only and investment performance is calculated by taking into account initial fees and all ongoing fees that you have to pay and the income reinvested on the reinvestment date. The actual fund performance can be viewed on the Minimum Disclosure Document. The Manager has the right to close the portfolio to new investors in order to manage it more efficiently in accordance with its mandate
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Email or fax the completed form to UTinstructions@sanlaminvestmentssupport.com or 0860 724 467
*Total expense Ratio - September 2016 Download PDF
Head of Equity – Sanlam Investment Management
Chartered Accountant, Patrice has a BSc (Econ) in Monetary Economics with first class honours and an MSc (Econ), both from the London School of Economics. He also has an MBA with distinction from Manchester Business School, which he completed in 2003. Initially, he worked at PricewaterhouseCoopers in London and Johannesburg, then moved to Old Mutual Asset Managers where he won the Raging Bull and S&P award for top performance in 2004. Now, he is treasurer of the Association of Black Securities Professionals (ABSP) in the Western Cape and Head of Equity at Sanlam Investment Management. He managed the SIM Top Choice unit trust from the end of 2006 and in 2007 was promoted to voting member of the Model Portfolio Group, where he has a direct impact on the core house view equity portfolio.
The portfolio manager may borrow up to 10% of the market value of the portfolio to bridge
insufficient liquidity. This fund is also available via certain LISPS (Linked Investment Service
Providers), which levy their own fees.
Advice fee | Any advice fee is negotiable between the client and their financial advisor. An annual
advice fee negotiated is paid via a repurchase of units from the investor.
Sanlam Reality members may qualify for a discount on the Manager annual fee.
Total Expense Ratio (TER) | PERIOD: 1 April 2013 to 31 March 2016
Total Expense Ratio (TER) | 1.59% of the value of the Financial Product was incurred as
expenses relating to the administration of the Financial Product. A higher TER does not
necessarily imply a poor return, nor does a low TER imply a good return. The current TER may not
necessarily be an accurate indication of future TER’s. Inclusive of the TER of 1.59%, a
performance fee of 0.54% of the net asset value of the class of participatory interest of the
portfolio was recovered.
Transaction Cost (TC) | 0.49% of the value of the Financial Product was incurred as costs relating to the buying and selling of the assets underlying the Financial Product.
Transaction Costs are a necessary cost in administering the Financial Product and impacts Financial Product returns. It
should not be considered in isolation as returns may be impacted by many other factors over time
including market returns, the type of Financial Product, the investment decisions of the investment
manager and the TER.
Total Investment Charges (TER + TC) | 2.08% of the value of the Financial Product was incurred
as costs relating to the investment of the Financial Product.
Manager annual fee | Performance fees: Minimum fee: 1.02% p.a. (incl. VAT), maximum fee:
2.28% (incl. VAT) and sharing rate: 15%. Performance fees will only be charged once the
performance benchmark is outperformed, and only if the fund performance is positive. If the fund
performs in line with the benchmark, then the fee is 1.02% p.a. (incl. VAT). Only the minimum fee
is charged if the fund experiences negative performance. The performance fee is accrued daily, based on daily performance and paid to the manager monthly.
Traditionally, investment advice come with a fee of up to 1%. But our smart online system is working to make investing cheaper and more profitable for you. The management fee you do pay is based on the fund selected and calculated on your total contributions, and then applied to the overall value of your portfolio.
YOUR INVESTMENT WILL NOT CHARGE THE FOLLOWING FEES
SO YOU’RE ONLY CHARGED THE RELEVANT FUND-MANAGEMENT FEE
Sanlam Investment Management (SIM) is the local active asset management house within Sanlam Investments. When choosing a fund managed by us, you have on your side one of SA’s largest and most reputable, risk conscious investment teams, consistently meeting or exceeding our benchmarks. Sanlam Collective Investments has appointed SIM as the asset manager for its unit trust funds, catering for the full spectrum of risk profiles.
The markets fixated on two key events this quarter. One was the S&P sovereign
rating decision for South Africa and the other was the EU referendum in the UK. In a
perverse twist of fate the UK lost its triple A rating while a stay of execution was
provided by S&P to South Africa! Brexit took the markets by surprise with $3 trillion
being wiped off the value of equities globally in two days, reminiscent of panic
selling during the Global Financial Crisis. The pound sterling to dollar exchange rate,
which had climbed to one-year highs, plunged some 10% to 30-year lows as the
prognosis for the UK economy going solo after over four decades in the EU spooked
With a changing of the guard in Downing Street came heightened
political risk and the prospect of slower growth in the UK. The UK 10-year gilt fell
below 1% for the first time on record as investors fled into safe haven assets. The
only clue from history for this unexpected turn of events is the campaign by Henry
VIII in the 1530s to distance Britain from Rome after struggling to get his marriage
annulled by the Pope with similar Brexit undertones! Back then, Britain benefited
from the confiscation of Church assets by the king and an influx of Protestants. Now,
the saving on EU contributions the UK can expect will be small and ramifications for
trade with the EU grim!
In the broader EU context, an existential question remains as the remaining 27
countries start enquiring whether they should also exit, with Italy potentially entering
the eye of the storm next. European politics have become a key driver of volatility
and South Africa is exposed given the fact that we have the highest exposure to
dual-listed UK stocks on our bourse. Beyond the EU, the outcome of US presidential
elections and the local elections in South Africa will provide further high-tension
events for already jittery financial markets. With risk being off, central banks will
once again be on the back foot and the Fed rate hikes effectively on hold for longer
while the South African Reserve Bank is more likely to pause, given negative
economic growth and inflation on the wane locally.
The JSE took a hammering at the end of the quarter as the shock Brexit vote sent
European markets into freefall. The FTSE/JSE Share Weighted Index ended the
quarter up 0.5% with Resources continuing to extend their lead over the rest of the
market. Financials once again got pummelled this quarter (down 4%) with UK dual
listed shares bearing the brunt of the punishment. Industrial stocks were mixed (up
0.5%). One common theme amongst several underperforming stocks has been the
negative impact of Brexit and adverse sentiment as this is most visible on the
following stocks exposed to the UK with Listed Property, Financials, Retail and
Healthcare stocks having the largest exposure:
Amongst the gainers, several stocks which had languished in 2015 are in the
process of restructuring and disposing of non-core assets, with the market being
more positive about their future prospects. The following stocks are notable
In both of the above cases, forecast risk is eminently high. While the outcome of the
EU referendum was a surprise, not all group restructurings will yield the value uplift
that could be anticipated and the final outcome will depend on whether management
enhances returns by running a more efficient operation and drives returns
adequately over the long term.
The equity market had a torrid end of quarter as the unexpected decision of the UK
voters to leave the EU triggered panic across global financial markets with the JSE
gaining marginally this quarter. Year to date the fund has been able to compete in a
fiercely contested category and it has beaten the index over the past year. The fund
has taken some positions in stocks which are leaders in their respective industries
with high quality franchises and solid balance sheets. The two companies which
typify this would be BHP Billiton in the resources sector and FirstRand in the
financial sector. As such we would expect these companies to withstand extended
periods of volatility better than their peers as the strength of their respective
franchises and sound financial management should enable them to absorb any
shocks that the global economy may endure.
The fund benefitted from the announcement that Pick n Pay would collapse its
pyramid control structure, which led to a 4% rally in the Pick n Pay holdings share
price this quarter. This partly led to the 20% holding company discount in the share
being closed. The obvious benefits include the elimination of multiple entry points in
the stock and of duplicated listing and other fees. Pick n Pay has been growing
earnings at 26% per annum with good operating leverage and market share gains.
British American Tobacco plc was up 9% as the company continues to gain share in
its traditional markets with decent volume growth and continued pricing power. Next
generation products are also gaining momentum. In the short term, weakness in
emerging market currencies has been a headwind which has squeezed margins.
However, after closer scrutiny, excluding the foreign currency effects, the underlying
margins continue to expand with the business being fanatical about squeezing out
cost efficiencies. The Rothmans-Lorillard transaction in the US also provides
another growth vector and combined these could contribute to a fifth of earnings
over the long term. At a forward yield of 4% in sterling, the stock continues to remain
a key dividend compounder in the portfolio.
On the downside, Steinhoff International delivered a disappointing -13% return for
the quarter after being caught in the Brexit downdraft. The company is using its
offshore listing and access to cheaper European debt funding to launch acquisitions
for weaker retail rivals over Europe. So far, the market has been disappointed that
they have pulled out of two high profile bidding wars but we believe that this
demonstrates capital allocation discipline and they are, in fact, eyeing further
acquisitions in the UK. Over time the vertical integration model is likely to continue
adding value as more volumes are added and the company’s footprint expands
The fund reflects the best views of SIM’s equity unit trust portfolio managers and
holds approximately 20 stocks. It is not benchmark cognisant and owns no offshore
stocks. We believe that this portfolio provides the best of both worlds in terms of
representing our investment ideas aggressively, while providing adequate
diversification. The fund’s largest holdings are companies that are leaders in their
respective sectors but whose valuations are below our estimate of fair value. The
fund consists of companies trading at a lower forward PE than the market, lower
price-to-book ratios and higher dividend yields.
The sharp, Brexit-induced market sell-off means that there are now pockets of value
in the local equity market. Last quarter, we warned that the market rebound was
perilous but it is clear now that investors should expect an extended period of
volatility where politics rather than economics - especially from abroad - drive
financial markets. Financial markets are often buffeted by emotion - fear and greed -
magnifying events occurring far from our shores. The vote for a Brexit fuelled a
panic attack for financial markets as it was not an outcome that was seen as likely
by the pundits or opinion polls. In this environment, we believe that managing the
portfolio with a long-term value creation mindset will pay dividends to investors.