This fund may invest in any listed share, but focuses on financially sound companies which offer exceptional value. This portfolio may invest in derivatives for efficient portfolio management. This portfolio may also invest in participatory interests of underlying unit trust portfolios.
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.
Portfolio Manager - B.Com (Hons); CFA
Claude began his career in 1993 when he worked for Karlein Investments (a private client investment company). He first joined Sanlam Asset Management in 1994 as an equity analyst. After five and a half years of service he worked as an analyst and portfolio manager with Gryphon Asset Management, where he was responsible for running unit trusts and pension fund portfolios, as well as retaining research responsibilities. He returned to SIM in 2002, where he became the Head of Equities and also successfully ran the Sanlam Investment Management General Equity unit trust for five years from January 2006, achieving consistent top-quartile performance for each of the five years during which the fund was under his management. Before that, he ran the SIM Industrial Fund, which achieved S&P and a Raging Bull award. Claude co-founded SIM Unconstrained Capital Partners with Ricco Friedrich in 2011.
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.
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. Fluctuations or movements in exchange rates may cause
the value of underlying international investments to go up or own.
Total Expense Ratio (TER) | PERIOD: 1 July 2013 to 30 June 2016
Total Expense Ratio (TER) | 1.64% 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 1.64%, a
performance fee of 0.06% of the net asset value of the class of participatory interest of the
portfolio was recovered.
Transaction Cost (TC) | 0.31% 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) | 1.95% 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: 1.53% p.a. (incl. VAT), maximum fee:
3.42% (incl. VAT) and sharing rate: 20%. Performance fees will only be charged once the
performance benchmark is outperformed, irrespective of whether the fund performance is positive
or negative. If the fund performs in line with or below the benchmark, then the minimum fee of
1.53% p.a. (incl. VAT) is charged. 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 quarter was dominated by the British referendum, which will likely result in the end of Britain’s 43-year membership of the EU. In spite of the knee-jerk sell off of equities, the FTSE 100 is up 4.4% in June and over 6% in Q2 2016. Even if one had perfect foresight of the referendum results (the bookies indicated Brexit had a 10% chance), not many forecasters would have predicted that equity markets would be higher just one week later. The impact on the South African economy will be fairly muted as the UK accounts for just over 3% of our exports. There are, however, several listed companies in South Africa with significant operations in the UK that were hit by the shock result. The worst of these were the property stocks (like Capco and Intu, which were down 17% and 12% respectively in the 2nd quarter) followed by financial stocks such as Investec (-17%). Which factors affected the South Africa market? South Africa managed to fight off a credit downgrade for now, despite a significant downgrade in growth projections following the 1Q GDP growth numbers, which at negative 1.2% came in well below expectations, mainly due to a slowdown in mining and agriculture. This helped bonds rally (+4.4% for the quarter), which outperformed the Alsi index, which was pretty flat.
Overall bond yields fell to 8.8% - in line with falling yields across the globe. Currently a record value of bonds is now in negative territory - $11.7trillion in total. This disconnect between equity markets and bond markets is interesting. Despite the recovery in equities, bond yields remain at record lows. Low bond yields are signalling that the depressed growth outlook will probably last longer. The significant increase in uncertainty regarding the potential knock-on effects of Brexit resulted in strong outperformance of already expensive stocks like gold shares, telecoms and healthcare, pharma, food producers and tobacco all out performing the market. Those sectors which lagged included financials, real estate, luxury goods and construction - mostly cyclical sectors. The rand remains the best performing EM currency in 2016 (up 6%). After falling in May, the gold price rallied again in June. We believe that through the cycle gold companies do not create value for shareholders. They tend to rally in times of uncertainty and surprise shocks, which by their nature are not possible to predict. Oil prices have recovered strongly - up 26% in the quarter. Despite this, the Sasol share price was down almost 18% for the month and 8% for the quarter. Base metals also recovered, which supported the continued rally in the mining sector. Our holding in Anglo American was up 35% for the quarter. Factors impacting performance Factors that have contributed to our outperformance for the 1st half of 2016 are the continued outperformance of the value investment style and, as we are generally benchmark-agnostic we enjoy environments in which mid-caps and small-caps do well.
Year-to-date mid-caps are up 21% and small-caps 14% - against the Top 40, which is up 1.6%. While we continue to outperform on a year-to-date basis, performance this quarter lagged our benchmarks. The main contributors include stocks which were negatively impacted by European uncertainty such as Steinhoff, Old Mutual and Investec. In addition, we do not own Naspers, which also detracted from relative performance. Stocks which contributed positively to performance were Anglo American, Altron, Sun International and Adcorp. In terms of our international holdings, Samsung, which is our biggest position offshore, was up 11% in rand and it significantly outperformed the FTSE/JSE All Share Index. We have limited exposure to the UK with our only direct investment being Vodafone Plc, which was up 3% in GBP, but after the significant devaluation of the GBP, it was down 5%. We sold out of Barclays Group plc during the quarter. Outlook Equity markets have recovered following the Brexit vote but we certainly don’t believe the dust has settled and there will likely be a protracted period of uncertainty. In the recovery defensive stocks continue to outperform. Many stocks and sectors remain well down on pre-Brexit levels. We believe that this presents an opportunity, but will focus on better quality businesses where risks are better understood. Back at home we have just come out of a reporting season with many companies struggling to show real growth in earnings.
In fact, it’s only companies exposed to consumers (semi and non-durable retailers, fast food) that have been able to grow earnings in real terms. Having said this it does seem like the worst is behind us as mining productivity recovers and effects of the drought dissipate into 2017. The good news is that we are probably close to the end of rising interest rates, in particular as further increases from the Fed this year seem highly unlikely. Inflation will peak in the fourth quarter of 2016. We are not sure what local elections next month may hold but it is concerning to see violent protests, which took place last month in Pretoria regarding the ANC’s candidate for mayor. At Denker Capital, our focus is on investing in good businesses at prices below our assessment of intrinsic value. We enjoy the volatility in share prices that uncertain times create as it gives us the opportunity to capitalise on greater-than-usual gaps between share price and intrinsic value. We continue to see a lot of opportunity among better-quality local industrials and banks rather than the fairly expensive dual listed defensive stocks like SAB, British American Tobacco and Naspers.