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Satrix Property Index Fund

Investing in bricks and mortar has been around for as long as people have had access to capital. But investing in one property has disadvantages: all your eggs are in one basket, and your property may stay on the market for longer than you wish before you get your asking price. This listed property fund addresses these concerns by diversifying across liquid property instruments.

This is a specialist index tracking fund tracking the performance of the FTSE/JSE SA Listed Property Index. It is best suited to investors with a long-term investment horizon (more than 5 years). For more information contact your financial adviser or broker.

Quick Facts About The Fund*

Satrix Property Index Fund

Launch Date: August 2012
Fund Size: R1 109.8 million
Benchmark: FTSE/JSE SA Listed Property Index (J253)
Time Horizon: 5 years+
*As at 31 October 2017
Risk Profile: Aggressive
Fund Classification: SA - Real Estate - General
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 0.49%
Launch Date: August 2012
Fund Size: R1 109.8 million
Benchmark: FTSE/JSE SA Listed Property Index (J253)
Time Horizon: 5 years+
Risk Profile: Aggressive
Fund Classification: SA - Real Estate - General
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 0.49%
*As at 31 October 2017

Fund Strategy

We believe that the benchmark choice and resulting returns form the most important elements of an equity strategy - by investing in a passive vehicle the returns to investment strategies are known. By applying a full replication strategy there is no risk of deviation from the chosen benchmark.


Illustrative Cumulative Growth of an investment of R100

Performance

Annualised Total Return on a rolling monthly basis
(as at 31 October 2017)
Retail Class Fund (%) Benchmark (%)
1 year 10.47 11.13
3 year 10.58 10.92
5 year 13.44 14.06
Since inception 12.29 12.91

Annualised return is the weighted average compound growth rate over the period measured
Highest and Lowest Annual Returns since inception
Highest Annual % 19.30
Lowest Annual % 2.60

Minimum Disclosure Document (Fund Fact Sheet)

Cumulative Growth Over Time

Satrix Property Index Fund
FTSE/JSE SA Listed Property Index (J253)

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. GrowthPoint 16.67%
2. NEPI ROCKCASTLE PLC 14.52%
3. Redefine 13.61%
4. Resilient 10.15%
5. Fortress Income Fund 7.26%
6. Hyprop 6.48%
7. Fortressa 4.89%
8. Vukile 3.45%
9. SA Corp Real Estate 3.10%
10. ATTACQ Limited 2.91%
Equity Retail REITs
Real Estate Holding & Development
Equity Industrial & Office REITs
Equity Diversified REITs
Cash and Money Market Assets
1. GrowthPoint 16.67%
2. NEPI ROCKCASTLE PLC 14.52%
3. Redefine 13.61%
4. Resilient 10.15%
5. Fortress Income Fund 7.26%
6. Hyprop 6.48%
7. Fortressa 4.89%
8. Vukile 3.45%
9. SA Corp Real Estate 3.10%
10. ATTACQ Limited 2.91%
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)

Retail Class (%)

Advice initial fee (max.) N/A
Manager initial fee N/A
Advice annual fee (max.) 1.14%
Manager annual fee 0.51%
Total expense Ratio (TER) 0.49%
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 2016 to 30 September 2017. 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.

Market review

With the listed property sector outperforming most asset classes over the last 10 years, 2017 is proving to be a bit more subdued with the FTSE/JSE SA Listed Property Index (SAPY) returning a total of 5.7% in Q3’17 and 8.2% year to date (YTD). From January 2017, the SAPY has outperformed bonds and cash, but it has meaningfully underperformed the FTSE/JSE All Share Index (Alsi) (12.5%).

The best performing shares in the SAPY for the quarter included shares with a high foreign exposure such as MAS Real Estate, NEPI Rockcastle as well as Greenbay Properties, which only recently entered the SAPY Index. This was driven by good fundamental earnings growth, which was partly driven by rand weakness. Conversely, shares with more pure-play SA exposure were some of the underperformers, such as Hyprop Investments, which derated substantially from well under a 6% dividend yield (DY) to over a 6.5% DY in the course of the quarter.

In terms of recent earnings releases, while cautious on the outlook in South Africa, some of the larger, predominantly SA-focused REITS such as Growthpoint Properties and Hyprop still actually delivered healthy growth in dividends of 6.5% and 13% respectively, with guidances of 6% and 8% for the next year respectively.

What Satrix did

During the September 2017 FTSE/JSE quarterly index rebalance there were no constituent deletions or additions to the SAPY Index. Shares with the largest weight changes included Resilient (up-weighted) and Growthpoint (down-weighted). The one-way turnover came to 1.8%, which was the lowest in quite some time.

As has become customary in the sector, there were again numerous capital raisings via bookbuilds, which included Equites Property Fund, MAS Real Estate, NEPI Rockcastle, Greenbay Properties and Resilient Property Fund.

Your fund is a full replication tracker and any performance difference relative to the benchmark could be related to cash flows.

Outlook

The SAPY Index is currently trading on a 7.2% clean forward yield, with two-year expected growth in dividends of about 7% p.a. This yield is now a 140 basis points (bps) premium to (i.e. below) the long-bond yield. This spread versus bonds has narrowed from as high as 260 bps in Q1’16, on account of local bonds outperforming the SAPY, with the SAPY derating over that 18-month period from 6.6%, as capital values haven’t really moved to keep pace with dividend growth. The implied average yield of just SA-specific counters is much higher, at 8.5%.

We consider these levels to be marginally cheap on average, in absolute terms, and rather attractive on a relative basis, especially for the long-term investor, when compared to bonds and SA cash

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