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

Retail Class (%)

• Advice initial fee (max.) N/A
• Manager initial fee N/A
• Advice annual fee (max.) 1.14%
• Manager annual fee .0.45%
• Total expense Ratio (TER) 0.54%
• Transaction Cost (TC) 0.07%

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.

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 October 2015 to 30 September 2016. 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.

When you invest online

Traditionally, investment advice come with a fee of up to 1.14%. But our smart online system is working to make investing cheaper and more profitable for you and hence no initial or annual advice fees will be charged. 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

• No initial account set-up fees – usually charged at 2.28%.
• No switching fees
• No exit fees
• No account changes fees
• No rebalancing fees
• No commissions
• No debit order fees
• No fund manager rebates

SO YOU’RE ONLY CHARGED THE RELEVANT FUND-MANAGEMENT FEE

• Total Annual Fee: 1.14%

Satrix, pioneers in the passive management space are now fully owned by Sanlam. It was the first to market with a passive solution and recently launched SA’s first smart beta multi-asset fund. The Satrix range is Sanlam’s answer to the growing demand for low-cost investments with a predictable index-linked outcome.

Sanlam Collective Investments (RF) (Pty) Ltd and Satrix Managers (RF) (Pty) Ltd, a registered and approved Manager in Collective Investment Schemes in Securities. Collective investment schemes are generally medium- to long-term investments. Past performance is not necessarily a guide to future performance, and that the value of investments / units / unit trusts may go down as well as up.

A schedule of fees and charges and maximum commissions is available from the Manager on request. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio.

Annualised Total Returns

Annualised return is the weighted average compound growth rate over the period measured.

The FTSE/JSE SA Listed Property Index (SAPY) generated a total return of 1.26% in the fourth quarter of 2016 and a very good relative performance of 10.2% for the calendar year of 2016, which made it the second-best performing domestic asset class.

For the calendar year of 2016 it outperformed SA equities (2.6%) and SA cash (7.5%) but underperformed SA bonds (15.5%). As a matter of interest, over the last three to 10 years the SAPY has actually proven to be the best performing of these four asset classes, and by a comfortable margin.

The best performing shares in the SAPY during 2016 included the likes of SA Corporate, Rebosis, Delta, Growthpoint and Redefine, which rebounded off very depressed levels or high dividend yields post the Nenegate sell-off in December 2015. These are shares with predominantly SA and hence rand exposures.

By contrast, some of the worst performing shares included rand hedge stocks or stocks with UK and EU exposure, including Resilient, MAS plc, Nepi and Rockcastle. This was on account of Brexit combined with the rand strengthening sharply off its worst levels towards the end of 2015 - e.g. it was 25% stronger against the British pound year-on-year.

Portfolio performance and actions

Your portfolio performed in line with the index.

During the fourth quarter of 2016 various corporate actions led to changes in the SAPY, of which the most important ones were the Rebosis rights issue and the shares in issue change in Accelerate Properties. During the December 2016 quarterly rebalance Tradehold was replaced by Echo Polska Properties. We also traded for various shares-in-issue changes, which brought the total oneway turnover of the SAPY to about 1.8%.

Outlook

The SAPY is currently on a 7% clean forward yield, with two-year expected growth in dividends of about 7% p.a. This yield is now at a 180 basis points (bps) premium to the long-bond yield. Also, with SA cash rates rising 0.75% this year, listed property yields are exactly in line with SA cash (repo is 7%).

The spread versus bonds has narrowed, however, from as high as 260 bps in the first quarter of 2016 on account of our local bonds rallying and the SAPY derating slightly, from a low of about 6.6%. The implied average yield of just SA-specific counters is higher, at close to 8%.

Given that 36% of the SAPY earnings are derived from offshore sources, the SAPY’s behaviour relative to the SA 10-year bond is unpredictable. We note that a 100 bps increase (decrease) in the SAPY’s yield equates to a 13.2% (17.5%) capital loss/gain.

Our estimate of long-run SAPY performance versus other asset classes also cements a view that listed property undoubtedly does warrant some level of exposure in a balanced portfolio, even if the historic level of outperformance is unlikely to be repeated given the current entry yield of 7% being lower than the double-digit entry yields of many years ago.