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Typically this fund will hold a large weighting in JSE shares with a maximum equity
exposure of 75%. Capital exposure will also include investments in money market
instruments, bonds, listed property and up to 25% in offshore assets. Fund risk is
lower than that of a pure equity fund. This portfolio may also invest in participatory
interests of underlying unit trust portfolios.
Illustrative Cumulative Growth of an investment of R100
Performance Fees FAQ
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.
Head - Balanced Funds
Over and above managing the SIM Balanced Fund, Fred has been the Head of Asset Allocation and Macro Research at Sanlam Investments since 2008. Up until then, he was Head of Resources, Strategy, and Process and Research. Fred holds an M.Eng from Stellenbosch University, is a qualified charted financial analyst (CFA) and obtained an MBA from Stanford University in 1996. Prior to joining Sanlam Investments, Fred held various roles at Investec Asset Management, including the Head of Resources.
Ralph was appointed to his current role as portfolio manager in Balanced Funds in 2016. Ralph has more than 12 years of financial services experience specialising in multi-asset structuring. Before joining the Sanlam Group, Ralph was a director at Deutsche Bank AG (South Africa) and a senior manager at Standard Bank. Through prior roles, Ralph has gained extensive experience in trading, structuring, research and analysis across asset classes within global financial markets
Ralph holds a B.Business Science from the University of Cape Town, and obtained an MBA (cum laude) from University of Cape Town (GSB) in 2014.
Retail Class (%)
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.
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.
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.
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
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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.
If the last quarter in domestic financial markets was a soccer match - equities left it until the dying moment in overtime to score a last-minute goal and emerge as the victorious asset class in an overall weak market. By the close of markets on the second last day of the quarter, only cash showed a positive return for the month, but after a very strong final day, equities sneaked in just ahead of it with a 2.1% return for the quarter. Domestic property declined (again) by 2.3% for the quarter, but this time it beat the longer duration fixed-interest assets, with both bonds (-3.8%) and inflation-linked bonds (-4.6%) declining by even more.
We began the quarter with a moderate local bond positioning, however, as bond yields rose above 9.2% (measured by the yield to maturity on the FTSE/JSE All Bond Index) towards the end of the quarter, we started to get interested in local bonds for the attractive real returns on offer and increased our exposure to access this attractive yield.
Even though domestic equities ended the quarter in positive return territory, it underperformed a weak MSCI Emerging Markets (EM) Index (more on EM below) by 4.6% in Rand terms due to comparatively poorer economic fundamentals than its peers. Domestic equities were priced ‘fairly’ throughout the majority of the quarter, and as a result we have not made any material changes to our local equity positioning. We maintain hedges covering about 15% of our equities, to provide partial protection in the event of a fall in equity markets.
Post the large correction in local property last quarter, we continued to hold a fairly sizeable position in SA listed property. The sector remained under pressure, however, this quarter it outperformed most fixed-interest assets (except cash). At yields of close to 8%, the asset class offers good real returns that require very little distribution growth before rivalling fixed-interest assets.
On the international front, developed market (DM) growth assets continued to outperform fixed-interest assets, with the nervousness and volatility that we wrote about last quarter clearly still a very prominent characteristic. Growth assets seem to be caught in a tug-of-war between (higher) valuation multiples due to low bond yields (DM bond yields declined again during the quarter) and the risk of rising yields. The fact that Donald Trump kept fuelling the uncertainty fire with continued and increasing talk of protectionism, has added to the volatility and uncertainty that we have experienced over the quarter. It seems as if the era of unprecedented stimulatory economic policies, which delivered one-way support to asset valuations, has been replaced with a new one of unprecedented (or is it un-presidential?) political behaviour in the world’s largest economy, which has in contrast had a gyrating effect on markets. Despite these factors, foreign equities returned about 1.8% in US Dollar terms, outperforming global bonds by 4.6% (global bonds returned -2.8%).
Amid this uncertainty, EMs as a collective were a bit of a punching bag during the last quarter. There was a double salvo of fear that EMs may be negatively impacted by ‘Trumptectionism’ (with risk rising along with the severity of the protectionism rhetoric), together with EMs once again reminding global investors of why EM investments carry a risk premium (a debilitating strike in Brazil, currency crisis and spiralling inflation in Argentina and Venezuela, financial crisis in Turkey). Consequently, everything EM sold off quite steeply during the quarter - be it currencies, bonds or equities. This was most disappointing, given a stage that merely six months ago seemed well set for a period of solid EM performance.
Commodities were strong and global growth was reasonably synchronised across the globe and at last approaching some longer-term trend level. At the same time EM assets, both equities and bonds, seemed much better priced than those in DMs, so they seemed to simultaneously offer both a value and momentum advantage. This global growth story has not fallen apart altogether and both growth and global earnings actually continued to experience upward revisions, but the momentum has slowed, leading indicators have rolled over and the risks that the growth story could unravel have increased.
In line with EM jitters, the Rand had a very weak quarter (15.9% weaker against the US Dollar), which saw it rapidly unwinding the bit of overvaluation it had built against DM currencies last year. This was the main source of foreign assets’ material outperformance during the quarter, with the MSCI World Index delivering more than 18% in Rand terms and the Barclays Global Aggregate Bond Index almost 13%.
Against this backdrop, we continue to avoid global fixed-interest assets and still hold the bulk of our foreign exposure via foreign equities. DM bonds are offering low or negative prospective real yields and it is difficult to find a scenario where foreign bonds provide any form of real return in the foreseeable future. In addition, their yields are more likely to rise than fall, due to quantitative easing policies of central banks coming to an end.
We retained a small position to a select basket of DM real estate investment trusts (REITs) and continued investing in a diversified portfolio of attractively priced real assets (property, renewable energy, infrastructure, utilities) where long-term contracts are in place for income to rise with inflation. These assets should maintain their low empirical correlation to equity markets and continue to provide an attractive real return given the attractive initial yield combined with the contractual growth in the income stream.
Our view is that foreign equities should continue to deliver returns that are better than expected from bonds. Our exposure to EMs was painful, given the underperformance of EMs during the quarter. The good performance by the real asset portfolio did offset some of this decline - highlighting the value of diversification in the portfolio - but it could not fully offset the severity of the EM product decline.
As mentioned last quarter, we were hesitant to increase foreign exposure given that foreign assets in general are trading off higher valuation levels than domestic assets. In retrospect we would have benefited by the sharp depreciation of the currency over the last quarter.
The nervousness that marked the first quarter of the year did indeed persist, as we thought likely. Asset class returns were still in line with the trend we expected - namely low general returns and outperformance by growth assets, but that outperformance certainly came with discomfort. We will continue to diligently seek out returns with risk management always top of mind.
Fred White and Ralph Thomas co-manage the SIM Balanced Fund, a multi-asset fund aiming to deliver the maximum returns possible through a well-diversified portfolio. But strong long-term returns often go hand in hand with large draw-downs. How do they protect your money against such risk?