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Sanlam Investment Management
Balanced Fund

You’ve heard it before: when it comes to investing, never put your shares in one basket. But how do you choose between different shares, listed properties, bonds and offshore assets? Wouldn’t it be great if a professional could choose the most promising assets for you?

Quick Facts About The Fund*

Sanlam Investment Management (SIM) Balanced Fund

Launch Date: 01 February 1995
Fund Size: R17 101.2 million
Benchmark: Mean of the ASISA SA Multi Asset High Equity Category
Time Horizon: 3 – 5 years
*As at 30 September 2017
Risk Profile: Moderate
Fund Classification: SA - Multi Asset - High Equity
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 1.69%
Launch Date: 01 February 1995
Fund Size: R17 101.2 million
Benchmark: Mean of the ASISA SA Multi Asset High Equity Category
Time Horizon: 3 – 5 years
Risk Profile: Moderate
Fund Classification: SA - Multi Asset - High Equity
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 1.69%
*As at 30 September 2017

Fund Strategy

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

Annualised Total Return on a rolling monthly basis
(as at 30 September 2017)
Retail Class Fund (%) Benchmark (%)
1 year 6.92 6.02
3 year 6.72 6.34
5 year 10.73 9.81
10 year 8.82 8.11

Annualised return is the weighted average compound growth rate over the period measured
Highest and Lowest Annual Returns over 10 years
Highest Annual % 21.55
Lowest Annual % -8.09

Minimum Disclosure Document (Fund Fact Sheet)

Performance Fees FAQ

Illustrative Cumulative Growth of an investment of R100

Sanlam Investment Management (SIM)
Balanced Fund
(ASISA) South African Multi Asset High Equity

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. Sanlam World Eq 13.23%
2. Naspers -N- 10.06%
3. SIM Property Fund 7.47%
4. SIM Enhanced Yield Fund Class B3 (D) 6.59%
5. Sanlam World Equity Tracker Fund Class I USD 3.77%
6. BTI Group 2.60%
7. Sanlam Europe (ex UK) Equity Tracker Fund Class I 1.91%
8. Sasol 1.89%
9. MTN 1.85%
10. FirstRand / RMBH 1.81%
Cash And Money Market Assets
International Assets
Equities
Bonds 3 - 7 Years
Bonds 0 - 3 Years
Bonds 12+ Years
Property
Bonds 7 - 12 Years
Preference Shares
Exchange Traded Funds
1. Sanlam World Eq 13.23%
2. Naspers -N- 10.06%
3. SIM Property Fund 7.47%
4. SIM Enhanced Yield Fund Class B3 (D) 6.59%
5. Sanlam World Equity Tracker Fund Class I USD 3.77%
6. BTI Group 2.60%
7. Sanlam Europe (ex UK) Equity Tracker Fund Class I 1.91%
8. Sasol 1.89%
9. MTN 1.85%
10. FirstRand / RMBH 1.81%

Frederick White

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 Thomas

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.

Frederick White

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 Thomas

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.

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

Retail Class (%)

Advice initial fee (max.) 3.42%
Manager initial fee N/A
Advice annual fee (max.) 1.14%
Manager annual fee 1.25%
Total Expense Ratio (TER) 1.69%

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.

Obtain a personalised cost estimate before investing by visiting www.sanlamunittrustsmdd.co.za and using our Effective Annual Cost (EAC) calculator. Alternatively, contact us at 0860 100 266.

The portfolio manager may borrow up to 10% of the market value of the portfolio to bridge insufficient liquidity. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. This fund is also available via certain LISPS (Linked Investment Service Providers), which levy their own fees. Sanlam Reality members may qualify for a discount on the Manager annual fee.

Total Expense Ratio (TER) | PERIOD: 1 July 2014 to 30 June 2017
Total Expense Ratio (TER) | 1.69% of the value of the Financial Product 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. Inclusive of the TER of 1.69%, a performance fee of 0.30% of the net asset value of the class of participatory interest of the portfolio was recovered.

Transaction Cost (TC) | 0.17% of the value of the Financial Product 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) | 1.86% of the value of the Financial Product was incurred as costs relating to the investment of the Financial Product. Manager Performance Fee (incl. VAT) | Performance Fee Benchmark: Mean of the ASISA SA Multi Asset High Equity Category, Base Fee: 1.25%, Fee at Benchmark: 1.25%, Fee hurdle: Mean of the ASISA SA Multi Asset High Equity Category, Sharing ratio: 20%, Minimum fee: 1.25%, Maximum fee: 2.85%, Fee example: 1.25% p.a. if the fund performs in line with its Performance Fee benchmark being Mean of the ASISA SA Multi Asset High Equity Category. The performance fee is accrued daily, based on performance over a rolling one year period with payment to the manager being made monthly. Performance fees will only be charged once the performance fee benchmark is outperformed and only if the fund performance is positive. A copy of the performance fee FAQ is available on www.sanlamunittrustsmdd.co.za.

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.

Global equities continued to deliver positive returns and in the past quarter was again the best performing foreign asset class as well as the best performing overall asset class in rand terms. The low prospective returns from foreign fixed interest assets continue to support the valuations of foreign growth assets, while positive global economic developments continue to support the outlook for earnings and dividend growth. As long as global interest rates remain very low or rise very slowly and earnings do not contract sharply, the current pricing levels of equities could be maintained and equities are likely to continue delivering returns that are superior to that of fixed interest assets. For this reason we retain a moderately high position in foreign equities and continue to avoid global bonds. The US market is expensive in our opinion. US companies have, on average, also become riskier during the last few years as they issued debt to buy back stock. European equities remain cheaper on various valuation measures. We therefore continue to have a leaning towards Europe in our foreign equity position.

We also retained our moderately high exposure to locally listed equities, which seem reasonably priced. On an index basis one might get a different idea, since the dividend yield on the SA market is well below its long-term average and earnings multiples well above its long-term average. However, these index wide numbers are significantly influenced by Naspers, which has grown to become more than 20% of the index. Without it, valuations on most metrices seem much more palatable, especially in the context of globally re-priced equity markets. A bottom-up valuation of the SWIX, where we aggregate the fair values of its constituents as calculated by SIM's analysts, suggests that SA equities might even be slightly undervalued. This is on the back of:

  1. improved earnings prospects of the resources companies given higher commodity prices,
  2. a de-rating of companies with domestic earnings, and
  3. an increase in the fair value of Naspers, given earnings surprises from Tencent which is Naspers' largest holding.

During the last 30 months, a period that marked the convergence of returns among local asset classes, local property has de-rated the most of all local asset classes despite its resilient growth in dividends, which have kept pace with inflation and was much stronger than dividend growth from equities. Furthermore, a significant portion of JSE-listed property companies’ earnings are now from outside South Africa, with a skew towards euro exposure - a currency that still seems cheap against the rand on a purchasing power parity basis. This asset class offers an attractive yield and bar any further de-rating it requires very little distribution growth in order to outperform local fixed interest assets. We hence retain a fair bit of exposure to local property.

We also retain our small exposure to a select basket of developed market REITs. The properties we own typically have an average dividend yield of around 5.5%, while also offering growth in distributions and hence should deliver attractive real returns over time. Similar to local properties, global properties have also derated over the last two years and arguably now offer better value relative to global fixed interest assets.

In the local fixed interest markets we continue to see good returns on offer from just about all local assets, based on an increased risk premium applicable to South African investments. These prospective returns are higher than the long-term historical returns generated by local fixed interest assets and we remain comfortable holding a moderate position in these. Given that shorter-dated credit instruments offer returns that are similar to longer-dated government bonds, but with much lower volatility, we have deemed it prudent to divide exposure between these two investment options. As mentioned before, we avoid foreign fixed interest assets at this stage, since it is difficult to find a scenario where these will provide any form of real return in the foreseeable future.

Real yields have dropped substantially after the 2008 financial crisis. We remain unsure whether this is a temporary phenomenon due to central bank policies of quantitative easing, or whether this is more permanent due to globalisation and demographic changes. And even if temporary, we can't predict the rate of normalisation.

Assets are currently priced as if real yields are going to remain low for a prolonged period and we can express a rationale for such based on global debt levels. On a relative basis, risky assets are priced to continue giving the type of outperformance (over fixed interest assets) that they have historically given, hence our earlier mentioned healthy exposure to risky assets. The risk does lie in a more rapid normalisation of pricing levels (to historical average values) that would detract from risky assets' relative returns, which ties in with the high level of protection introduced into our portfolios.

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