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Satrix Momentum Index Fund

Those who support the momentum style of investing believe that rising shares tend to continue rising, and falling shares tend to continue falling. They seek to take advantage of these trends by quickly moving from one rising star to the next.

Fund Summary*

Satrix Momentum Index Fund

Launch Date: October 2013
Fund Size: R312 million
Benchmark: Proprietary Satrix Momentum Index
Time Horizon: 5 years +
*As at 30 April 2018
Risk Profile: Aggressive
Fund Classification: SA - Equity - General
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 0.64%
Launch Date: October 2013
Fund Size: R312 million
Benchmark: Proprietary Satrix Momentum Index
Time Horizon: 5 years +
Risk Profile: Aggressive
Fund Classification: SA - Equity - General
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 0.64%
*As at 30 April 2018

Fund Strategy

Momentum is defined for the index in terms of a composite of price momentum and earnings momentum as measured by analyst revisions. The index is reviewed monthly with cognizance given to the liquidity of individual counters and the turnover of the benchmark as a whole. The benchmark is also moderated in terms of sector and stock specific risks. The universe for selection of stocks to be included in the Satrix Momentum Index is all stocks on the JSE that meet the applicable liquidity screening requirements referred to in the calculation methodology, excluding listed property stocks.


Illustrative Cumulative Growth of an investment of R100

Performance

Annualised Total Return on a rolling monthly basis
(as at 30 April 2018)
Retail Class Fund (%) Benchmark (%)
1 year 14.64 16.01
3 year 5.2 6.39
5 year N/A N/A
Since inception 11.61 13.08

Annualised return is the weighted average compound growth rate over the period measured
Highest and Lowest Annual Returns since inception
Highest Annual % 31.53
Lowest Annual % -0.57

Minimum Disclosure Document (Fund Fact Sheet)

Cumulative Growth Over Time

Satrix Momentum Index Fund
Proprietary Satrix Momentum Index

Source of graph : Morningstar Direct

This graph illustrates how an investment of R100 would have grown had you invested for the time period displayed. 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 by this graph happened in the past and is not guaranteed. The performance is calculated by taking into account initial and ongoing fund manager fees and assumes that you reinvested all the income earned by the fund over this period.

The other line on the graph is for the performance of the designated benchmark of the fund – normally either an index or other funds in the industry that are comparable to the fund you’ve chosen.

The Manager has the right to close the portfolio to new investors in order to manage it more efficiently in accordance with its mandate. The actual fund performance can be viewed on the Minimum Disclosure Document. Annualised return is the weighted average compound growth rate over the period measured.

1. Naspers -N-23.12%
2. FirstRand / RMBH7.65%
3. Stanbank7.32%
4. Compagnie Fin Richemont4.74%
5. Mr Price Group Limited4.09%
6. Clicks Group Ltd3.86%
7. AVI3.51%
8. Barloworld3.42%
9. JSE3.33%
10. Capitec2.98%
Cash and Money Market Assets
Equity Financials
Equity Telecommunications
Equity Consumer Services
Equity Consumer Goods
Equity Industrials
Equity Basic Materials
Equity Health Care
1. Naspers -N-23.12%
2. FirstRand / RMBH7.65%
3. Stanbank7.32%
4. Compagnie Fin Richemont4.74%
5. Mr Price Group Limited4.09%
6. Clicks Group Ltd3.86%
7. AVI3.51%
8. Barloworld3.42%
9. JSE3.33%
10. Capitec2.98%
Application form: Satrix Individual Investors (new investors only) ENG
Application form: Satrix Tax-Free Unit Trusts (new investors only) ENG

View more Satrix forms

All portfolios are managed and monitored by the Satrix investment team, a group of individuals highly skilled in portfolio management, quantitative research, risk management and portfolio solutions. The Satrix team offers unparalleled experience in efficiently managing index-tracking portfolios. Under leadership of CIO Kingsley Williams and its head of Portfolio Management, Johann Hugo, the team manages index tracking assets in excess of R70 billion.

All portfolios are managed and monitored by the Satrix investment team, a group of individuals highly skilled in portfolio management, quantitative research, risk management and portfolio solutions. The Satrix team offers unparalleled experience in efficiently managing index-tracking portfolios. Under leadership of CIO Kingsley Williams and its head of Portfolio Management, Johann Hugo, the team manages index tracking assets in excess of R70 billion.

Traditional Investing (when you invest via a Financial Adviser or other)

A1-Class (%)

Advice initial fee (max.) N/A
Manager initial fee N/A
Advice annual fee (max.) 1.14%
Manager annual fee 0.52%
Total Expense Ratio (TER) 0.64%
Transaction Cost (TC) 0.64%

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.

Total Expense Ratio (TER) | The Total Expense Ratio (TER) is the charges incurred by the portfolio, for the payment of services rendered in the administration of the CIS. The TER is expressed as a percentage of the daily NAV of the CIS and calculated over a period of 1 year. The TER is calculated from 01 April 2017 to 30 March 2018. A higher TER does not imply a poor return nor does a low TER imply a good return.

The Transaction Cost (TC) is the cost incurred by the portfolio in the buying and selling of underlying assets. This is expressed as a percentage of the daily NAV of the CIS and calculated over a period of 1 year. Obtain the costs of an investment prior to investing by using the EAC calculator provided at www.satrix.co.za.

Satrix is a South African ETF pioneer and caused a shake-up in the SA investment space when it introduced the country to ETFs in 2000 by launching the first ETF listed on the JSE. The Satrix TOP 40 ETF needs no introduction and serves as the go-to broad market exposure investment option for professional and amateur investors alike. So transformative have the Satrix product set and access options been to South Africans that people often (erroneously) refer to all index trackers as Satrix.

Since 2000 Satrix has listed 12 more ETFs. In fact, in 2017 alone it added a property ETF, an inflation-linked bond ETF, a Quality factor ETF and three offshore ETFs to its range. You can now build a completely diversified portfolio of local asset classes using only low-cost Satrix ETFs.

To make investing ever easier and cheaper (and online) we started working with the ground-breaking team at EasyEquities. The low-cost, no-minimum, online platform they had developed, which allowed fractional share trading, is perfect for our clients too. In no time at all we had our very own www.SatrixNOW.co.za platform up and running, which allows you to do everything online with no annual fees and extremely low trading costs. With SatrixNOW there really are no excuses as you can invest as little as R10.

Macro review

In the US, equities began 2018 strongly, buoyed by ongoing strength in economic data, robust earnings and the confirmation of a major tax reform package. US business confidence reached an unexpected, multi-decade high in March, while GDP for Q4 2017 was revised upwards to show growth of 2.9%. The latter part of the quarter, however, saw a marked increase in volatility as investors first digested the destabilising potential of an elevated US inflation reading and the possibility that the Fed may need to become more proactive in raising interest rates, as well as escalating US-China trade sanctions, which precipitated a renewed bout of turbulence in March.

In the Eurozone, the economic backdrop remained encouraging over the three months. GDP growth for Q4 2017 was confirmed at 0.6% quarter-on-quarter. Unemployment was stable at 8.6% in January 2018. However, forward-looking surveys painted a picture of slower future growth. The composite PMI hit a 14-month low in March, albeit the reading of 55.3 still implies solid growth. European Central Bank chairman Mario Draghi reiterated that interest rates would not rise until well past the end of the quantitative easing programme. On the political front, the key event of the quarter was Italy’s election, which yielded no overall winner. Germany formed a new government after its inconclusive elections in September 2017. Angela Merkel remains as chancellor after her centre-right CDU/CSU agreed another grand coalition with the centre-left SPD.

Emerging markets saw positive returns in the first quarter despite a rise in market volatility stemming from tensions over global trade. Brazil’s former president Luiz Inácio Lula da Silva saw his criminal conviction upheld, while in Russia the central bank cut interest rates and the country’s debt was upgraded to investment grade by ratings agency S&P. In China, macroeconomic data remained broadly stable, albeit there were ongoing signs of a gradual slowing in momentum, with official PMI easing to 50.3. By contrast, there was concern in India over reported fraud at a state -owned bank.

Global and local market review

Global equity markets declined in Q1 2018 with investors unnerved first by concerns about the path of US interest rate rises and then worries over trade. US equities began the year strongly, boosted by tax reforms, but ended the quarter lower amid concerns over inflation and the impact of US-China trade sanctions. Following a 10% correction from its January highs and rallying back 8% by early March, the S&P 500 Index suffered another 5% pullback in the last few weeks, ending the month of March down 2.5% and losing 0.8% over the last three months, which was the first negative quarter since the third quarter of 2015. Eurozone equities posted negative returns as worries over US rates and trade affected other markets. Italy’s election was inconclusive but had limited impact on the equity market.

Emerging market (EM) equities outperformed, delivering a positive return in US dollars. The MSCI EM Index was up +1.5% (total returns) in Q1 2018, ahead of the MSCI World (Developed Market) Index, which was down 1.2%, the first quarterly loss in two years. Over the last three months the FTSE/JSE All Share Index (ALSI) posted a total return of -6.0%. This has been its worst quarterly performance in eight years (Q2 2010: -8.2%). SA Industrials were the worst performer, returning -8.0% (Naspers and Tiger Brands were both down 12%). SA Resources lost 3.8% (rising global uncertainty) and SA Financials lost 3.6%.

Of the equity sectors, the top first-quarter performance came from Non-life Insurance (+24.4%), Fixed Line Telecoms (+10.0%) and General Retailers (+9.2%). The worst performance came from Real Estate Development and Services (-31.2%), Software (-30.5%) and Household Goods (-29.0%).

Portfolio performance, attribution and strategy

Globally, cyclical sectors performed more strongly in January and February, when the market was focused on faster rate hikes while in March, the broader decline in risk appetites saw more defensive areas outperform. From a style perspective, this was consistent with the global Momentum and Growth factors’ correction during March, as rotation and perhaps profit-taking have dragged on a generally positive Momentum factor during 2018, primarily driven by perceived increased risk to global growth.

In South Africa, there was large consistency with global outcomes, as back-endloaded cyclical pressure over the quarter dampened an otherwise strong Momentum signal. Earnings Revisions (a sub-component of Headline Momentum), on the other hand, once again has not performed in line with Price Momentum, generating negative returns as poor earnings sentiment failed to deliver in an environment with high levels of corporate uncertainty.

As an overall factor, however, the Momentum strategy struggled during Q1 2018 relative to the FTSE/JSE Shareholder Weighted Index (Swix). The strategy’s performance was attributed on the positive side to exposure to its off-benchmark underweight positions in property stocks, including Resilient (RES), NEPI Rockcastle (NRP) and Fortress (FFB), while overweight positions in Standard Bank (SBK) and Barloworld (BAW) aided the strategy. On the negative side, cyclical exposure to Northam Platinum (NHM), African Rainbow Minerals (ARI), Kumba Iron Ore (KIO), Exxaro (EXX) and Assore (ASR) weighed on the strategy, while speculation around Capitec (CPI) fundamentals also contributed negatively. At the last rebalance date (mid-March), we transitioned the portfolio based on the evaluation of new factor signals and the risk levels in the portfolio. Based on these signals, Exxaro (EXX), Reinet (RNI) and Impala Platinum (IMP) were removed, and Harmony (HAR) and The Foschini Group (TFG) were added. Exposures in British American Tobacco (BTI) and African Rainbow Minerals (ARI) have also been reduced while exposures to Mr Price (MRP) and JSE (JSE) were added in line with the risk objective of the fund.

We remain convinced of the factor’s medium- to long-term significance and the premium it offers in the South African capital market and remain disciplined in our implementation and extraction of the factor.

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