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Skip Navigation LinksCore Funds

Sanlam Investment Management Active
Income Fund

When you rely on your investment to provide you with a regular, stable income you cannot afford to take on too much risk, but you need some share exposure for your income to keep up with inflation over time.

Fund Summary*

Sanlam Investment Management (SIM) Active Income Fund

Launch Date: 03 November 2006
Fund Size: R7 305.8 million
Benchmark: STeFI+1% p.a.
Time Horizon: 0 - 2 years
*As at 31 July 2018
 
Risk Profile: Conservative
Fund Classification: SA - Multi Asset - Income
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 0.92%
Fees: View Fees
Launch Date: 03 Nov 2016
Fund Size: R7 305.8 million
Benchmark: STeFI+1% p.a.
Time Horizon: 0 - 2 years
Risk Profile: Conservative
Fund Classification: SA - Multi Asset - Income
Min Investment Amount: Lump sum: R10 000 l Monthly: R500
Total Expense Ratio (TER): 0.92%
Fees: View Fees
*As at 31 July 2018

Fund Strategy

Returns are sought through tactical asset allocation and high conviction bets across the income-yielding universe, including corporate and government bonds, money market instruments, preference shares and listed property. Opportunities are taken across the entire duration and credit spectrum. The fund is mandated to invest in unlisted financial instruments (derivatives) for efficient portfolio management. This portfolio may also invest in participatory interests of underlying unit trust portfolios.


Illustrative Cumulative Growth of an investment of R100

Performance

Annualised Total Return on a rolling monthly basis
(as at 31 July 2018)
Retail Class Fund (%) Benchmark (%)
1 year 7.42 8.32
3 year 8.13 8.3
5 year 7.64 7.74
10 year 8.4 8.46

Annualised return is the weighted average compound growth rate over the period measured
Highest and Lowest Annual Returns over 10 years
Highest Annual % 14.19
Lowest Annual % 6.06

Fund Factsheet

Performance Fees FAQ

Cumulative Growth Over Time

Sanlam Investment Management (SIM) Active
Income Fund
STeFI +1%

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. R209 RSA 6.25% 3103363.43%
2. FirstRand F/R 020920222.01%
3. HSBC CALL (SIM)1.87%
4. FirstRand F/R 240520221.57%
5. Nedbank F/R 230720211.20%
6. Nedbank F/R 200320231.18%
7. Nedbank NCD 8.4% 110920181.11%
8. Standard Bank F/R 020620201.06%
9. Standard Bank NCD 8.4% 090720181.02%
10. ABSA F/R 101120201.02%
Cash And Money Market Assets
Inflation Linked Bonds
Property
Bonds 12+ years
Bonds 7 - 12 years
Bonds 3 - 7 years
Bonds 0 - 3 years
Bond Cash
1. R209 RSA 6.25% 3103363.43%
2. FirstRand F/R 020920222.01%
3. HSBC CALL (SIM)1.87%
4. FirstRand F/R 240520221.57%
5. Nedbank F/R 230720211.20%
6. Nedbank F/R 200320231.18%
7. Nedbank NCD 8.4% 110920181.11%
8. Standard Bank F/R 020620201.06%
9. Standard Bank NCD 8.4% 090720181.02%
10. ABSA F/R 101120201.02%

Melville du Plessis

Portfolio Manager - Sanlam Investment Management

Melville du Plessis joined Sanlam Investment Management in 2011 as a Portfolio Manager in the fixed interest team. He is responsible for a range of actively managed mandates, including local Bond Funds, Enhanced Yield Funds and International Debt Portfolios. Prior to SIM he was with Novare Investments, having joined in 2006 as an analyst in the Fund of Hedge Funds and Investment Research teams, and later taking responsibility as portfolio manager of the Multi-Asset Class and Multi-Manager products. Melville has a BComm (Institutional Investments) and a BCommHons (Financial Risk Management), both from the University of Stellenbosch. He is also a CFA charter holder, a CAIA charter holder and a certified FRM.

Melville du Plessis

Portfolio Manager - Sanlam Investment Management

Melville du Plessis joined Sanlam Investment Management in 2011 as a Portfolio Manager in the fixed interest team. He is responsible for a range of actively managed mandates, including local Bond Funds, Enhanced Yield Funds and International Debt Portfolios. Prior to SIM he was with Novare Investments, having joined in 2006 as an analyst in the Fund of Hedge Funds and Investment Research teams, and later taking responsibility as portfolio manager of the Multi-Asset Class and Multi-Manager products. Melville has a BComm (Institutional Investments) and a BCommHons (Financial Risk Management), both from the University of Stellenbosch. He is also a CFA charter holder, a CAIA charter holder and a certified FRM.

Traditional Investing (when you invest via a financial adviser or other)

A1-Class (%)

Advice initial fee (max.) 1.15%
Manager initial fee N/A
Advice annual fee (max.) 1.15%
Manager annual fee 0.92%
Total Expense Ratio (TER) 0.92%

Advice fee

Any advice fee is negotiable between the client and their financial adviser. An annual advice fee negotiated is paid via a repurchase of units from the investor.

Total Expense Ratio (TER)

This is the percentage of the value of the Financial Product that 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.

Transaction Cost (TC)

This is the percentage of the value of the Financial Product that 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)

This is the percentage of the value of the Financial Product that was incurred as costs relating to the investment of the Financial Product.

For more detail please view the fund factsheet

When you invest online

Our smart online system is working to make investing more profitable for you. The management fee you 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%.
  • 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

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.

Market review

The Fund delivered good returns over a relatively challenging investment period locally as well as globally with resulting spillover effects into our local market. Global investment returns did not bear much fruit during the first half of the year and came accompanied with a fair share of volatility. Global developed market (DM) equities ended the first half of the year relatively flat with emerging market (EM) equities down more sharply and South African equities finished the first half marginally negative - although all of these were bumpy rides along the way. International bond and credit markets have been under pressure amid rising global tensions and the US Federal Reserve (Fed) continuing on their path of monetary policy normalisation with another two hikes in the federal funds target rate in the first half of the year. Investment-grade credit in the US has had a particularly bad start to the year and delivered negative returns for the first half, even underperforming US equities over the period. EM fixed-income markets have had a tough year to date, with EM sovereign as well as credit indices finishing the first half in negative territory, both in local currency and hard currency terms.

Locally, the FTSE/JSE All Bond Index did relatively well and managed to outperform cash by a small margin over the first six months of the year, but looking more closely at the path it was a bumpy course with a tale of two quarters. The first quarter of the year delivered stellar returns from local fixed-interest assets on the back of ‘Ramaphoria’ and positive local sentiment, with the trend subsequently turning around sharply in the second quarter as international factors took centre stage and weighted on local market performance. Foreigners were significant sellers of local bonds during the quarter, in particular during May and June when sales were in excess of R30 billion each month. Yields on local inflation-linked bonds also tracked nominal yields higher over the quarter. The currency underperformed bonds over the quarter, which suggests that foreign investors may have only partially liquidated their SA bond holdings and opted to hedge positions through foreign exchange markets.

Local inflation numbers surprised on the downside during the quarter. The March inflation number printed at 3.8% year-on-year (y/y) with core inflation unchanged while food price inflation continued to decline. Headline CPI then printed at 4.5% y/y in April and 4.4% y/y in May. Core inflation - which is CPI excluding food and nonalcoholic beverages, petrol and energy - eased to 4.4% y/y in May 2018 from 4.5% y/y in April, which indicates that core inflationary pressures are relatively contained. We expect inflation to increase in the second half of the year but still remain contained with the South African Reserve Bank (SARB)’s 3-6% target band, although overall risks to the inflation outlook are pointing to the upside on the back of uncertainty regarding electricity tariffs, weaker exchange rate bias and higher oil prices.

The Monetary Policy Committee (MPC) at the SARB kept the repo rate unchanged at their scheduled meeting in May after previously cutting the repo rate by 25 basis points to 6.5% at their scheduled meeting in March. This time around the vote was unanimous in favour of keeping the repo rate unchanged and indicates that the bar for rate cuts is higher than before. Their statement had a hawkish tone and emphasised that monetary policy should still be viewed as being accommodative at current levels. The MPC reiterated their intention to contain inflation well within the inflation target range of 3-6%. The SARB’s inflation forecasts were essentially left unchanged from the previous meeting in March: at an annual average of 4.9% in 2018 and 5.2% in 2019. The asset allocation in the SIM Active Income Fund has worked well so far this year and we are relatively pleased with the overall outcomes and positioning of the Fund. The Fund has managed to deliver performance during volatile market circumstances, which were driven by swings on the local as well as the international front. The Fund has been able to participate in market strength but has also been more insulated from market volatility than could otherwise have been the case, especially considering the events and market movements during the first and second quarter of the year. The Fund’s investment objectives are always a key consideration when evaluating the overall positioning and underlying investments. This has continued to prove to work well for the Fund as the performance has managed to keep pace with the local market during periods of strength, while in addition we have had scope available to take advantage of investment opportunities as they became available, as for instance again during the second quarter. The Fund has also continued to perform well, in particular when considering the riskadjusted real returns delivered as compared to inflation and even when compared to other available assets classes. When looking at the return of the SIM Active Income Fund compared to inflation, the Fund has performed as good as it can be expected to. Going forward it should reasonably be expected that the performance will again normalise closer to historic norms.

The mandate of the SIM Active Income Fund is aimed at higher-quality assets and it is also important to remember that the SIM Active Income Fund does not invest in offshore assets. The Fund only has locally classified SA assets and does not utilise any foreign allowance. Offshore asset allocation has the potential to bring currency diversification benefits to the table, as well as a broader investable universe. This opportunity set could have added value during the last 12 months as we witnessed big moves in the local currency, in particular reversals over shorter periods than is otherwise more generally the case.

The Fund has had low exposure to listed property assets during the past 12 months and the market finally offered a good opportunity for us to increase exposure during the second quarter. The weakness in the local listed property sector gave us some opportunities, and we took advantage by buying additional listed property exposure for the Fund. The listed property sector has been trading weaker over the quarter, which detracted from the overall performance of the Fund, even though the Fund’s allocation was at the lower end of the range.

The investment case for the Fund remains a compelling one: the orientation of the Fund towards quality assets in an environment where local fixed-interest assets are offering attractive income-generating returns and good value at current levels. This rings even more true when remembering that we are still in a low return environment globally and yields on DM bonds are still at ultra-low levels. The Fund is also a good alternative when considering that return expectations should likely be moderated for risky asset classes where valuations remain on the higher end and the outlook has deteriorated. The economic growth outlook has weakened from as recently as the beginning of the year when most forecasts were very rosy. This would also weigh on risk assets as weaker earnings should be expected to follow suit. Lastly, the Fed is still on a path of policy tightening which makes US cash look more attractive but also brings with it the potential to impact valuations more generally. All of this suggests that the SIM Active Income Fund is an attractive income solution especially in the current global environment.

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