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Skip Navigation LinksCore Funds

Sanlam Investment Management
Enhanced Yield Fund

Not everybody is comfortable with the ups and downs of the share market. If you’re a conservative investor looking for returns a bit better than that offered by your bank, and don’t mind some fluctuation in the value of your investment, you may sleep better with an interest-bearing fund.

Fund Summary*

Sanlam Investment Management (SIM) Enhanced Yield Fund

Launch Date: 03 May 2011
Fund Size: R5 834.0 million
Benchmark: STeFI+0.5% p.a.
Time Horizon: 0 - 2 years
Quick Facts: Download
*As at 30 August 2018
Risk Profile: Conservative
Fund Classification: SA - Interest Bearing - Short Term
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 0.49%
Fees: View Fees
Launch Date: 03 May 2011
Fund Size: R5 834.0 million
Benchmark: STeFI+0.5% p.a.
Time Horizon: 0 - 2 years
Quick Facts: Download
Risk Profile: Conservative
Fund Classification: SA - Interest Bearing - Short Term
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 0.49%
Fees: View Fees
*As at 30 August 2018

Fund Strategy

The fund aims to enhance yield by investing in a blend of floating rate note and credit instruments in a range of maturities. 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 30 August 2018)
A1- Class Fund (%) Benchmark (%)
1 year 8.66 7.79
3 year 9.04 7.82
5 year 8.36 7.27
Since Inception 7.85 6.87

Annualised return is the weighted average compound growth rate over the period measured
Highest and Lowest Annual Returns since inception
Highest Annual % 10.14
Lowest Annual % 5.26

Fund Factsheet

Performance Fees FAQ

Illustrative Cumulative Growth of an investment of R100

Sanlam Investment Management (SIM)
Enhanced Yield
STeFI+0.5%

Source of graph : Morningstar Direct

Sanlam Investment Management (SIM) Enhanced
Yield Fund
STeFI+0.5%

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. Standard Bank of SA Limited20.30%
2. ABSA Bank Limited14.50%
3. First Rand Bank Limited10.90%
4. NedBank Limited8.40%
5. RSA Government6.90%
6. HSBC Holdings3.70%
7. Barclays2.80%
8. IBL78 Investec Bank Limited 10.0350% 251120222.30%
9. The Thekwini Fund 13 (RF) Limited2.00%
10. Investec Property Fund Limited1.40%
Cash and Money Market Assets
Fixed Interest Assets Bonds 3 - 7 Years
Fixed Interest Assets Bonds 0 - 3 Years
Inflation Linked Bonds
Fixed Interest Assets Bonds 7 - 12 Years
1. Standard Bank of SA Limited20.30%
2. ABSA Bank Limited14.50%
3. First Rand Bank Limited10.90%
4. NedBank Limited8.40%
5. RSA Government6.90%
6. HSBC Holdings3.70%
7. Barclays2.80%
8. IBL78 Investec Bank Limited 10.0350% 251120222.30%
9. The Thekwini Fund 13 (RF) Limited2.00%
10. Investec Property Fund Limited1.40%

Melville du Plessis

Fixed Interest Portfolio Manager - Sanlam Investment Management

Melville joined Sanlam Investments in 2011. As portfolio manager within the fixed interest team, his responsibilities include portfolio management, research, trading, valuations, investment process management and development, as well as product development and execution. He manages both institutional and retail portfolios totalling R50 billion. After obtaining a B.Comm. (Honours) degree from the University of Stellenbosch, Melville joined Novare Investments as a consulting team member of hedge funds, multi-manager and pension funds and then as portfolio manager for multi-manager products. Melville is a certified Financial Risk Manager, a Chartered Financial Analyst and a Chartered Alternative Investment Analyst.

Melville du Plessis

Fixed Interest Portfolio Manager - Sanlam Investment Management

Melville joined Sanlam Investments in 2011. As portfolio manager within the fixed interest team, his responsibilities include portfolio management, research, trading, valuations, investment process management and development, as well as product development and execution. He manages both institutional and retail portfolios totalling R50 billion. After obtaining a B.Comm. (Honours) degree from the University of Stellenbosch, Melville joined Novare Investments as a consulting team member of hedge funds, multi-manager and pension funds and then as portfolio manager for multi-manager products. Melville is a certified Financial Risk Manager, a Chartered Financial Analyst and a Chartered Alternative Investment Analyst.

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

A1-Class (%)

Advice initial fee (max.) 0.34%
Manager initial fee N/A
Advice annual fee (max.) 1.15%
Manager annual fee 0.48%
Total Expense Ratio (TER) 0.49%

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 reached its seven-year track record during the second quarter of 2018 and its performance compared well to the investment objectives of the Fund. The results show that the strategies employed for the Fund can deliver sustainable outperformance, but we have nevertheless continued to seek ways in which to further enhance the Funds’ performance profile of the last few years. Yield enhancement is pursued by using a combination of both interest rate and credit strategies. The Fund’s track record so far demonstrates that it is possible to outperform during various interest rate cycles, as well as favourable and even unfavourable credit market environments.

The first half of the year was a tale of two quarters. The first quarter was dominated by positive news flow and ‘Ramaphoria’ on the local front, which further supported South African fixed-interest assets and the currency, short on the heels of the very good performance delivered during December. By contrast, the second quarter was dominated by negative developments on the international front which weighed on emerging market assets in general, with South African fixed-interest assets and the currency not escaping unscathed. The international developments overshadowed positive developments on the local front, such as the news around an investment roadshow by President Ramaphosa and his team of envoys who also intend to host an investment con conference later in the year aimed at raising foreign investments into the country.

Internationally, the political situation in Italy and the trade tensions between the US and China weighed on market sentiment for most of the second quarter. Markets also started showing growing concerns that the US Federal Reserve (Fed) may hike interest rates more quickly than previously expected on the back of upside pressures on inflation. A stronger Dollar has also been a key theme in financial markets, which has also gone hand in hand with the aforementioned factors in the shorter term. The escalating threats of trade wars made headlines during April and the trade spat between the US and China weighed on the local market and currency. Markets reacted negatively after President Donald Trump announced a set of tariffs on steel and aluminium imports from China during March, and China subsequently retaliated in April with its own set of trade tariffs on a wide range of imports from the US.

During May, the trade war temporarily ceased as local and international concerns helped urge the US Treasury to announce that a consensus has been reached with China to reduce trade tariffs. Locally, the markets took a negative turn as South African mining output dropped to its lowest level in over two years. Impala Platinum announced the lowest production since 1999, highlighting the general sentiment felt across the mining industry. Losses in the platinum sector specifically have added to economic pressures, counteracting the positive boost to the Rand earlier in the year.

Global financial markets were pulled in a few different directions during June as trade war news continued to feature in headlines on the one hand, while on the other hand monetary policy in the US and Europe stood in contrast with each other as the Fed took a more hawkish tone while the European Central Bank was more dovish than expected. Emerging market equities were pulled down during June resulting in them being one of the worst performing asset classes for the year to date. Emerging market bonds have also had a tough year so far with most indices under water in local currency as well as hard currency terms for the year to date. South African fixed-interest and credit assets have performed relatively well given the prevailing local environment and global backdrop.

South African economic growth was disappointing and printed quite a bit worse than expectations. Real GDP in South Africa slowed down sharply to -2.2% during the first quarter of 2018 from 3.1% in the fourth quarter of 2017. In year-on-year terms real GDP slowed to 0.8% in the first quarter of 2018 from 1.5% in the fourth quarter of 2017. The decline in GDP growth was largely due to a decline in the primary and secondary sectors, specifically agriculture which declined -24.2%, while mining and quarrying was down -9.9% and manufacturing -6.4%. Further declines were in wholesale and retail trade (-3.1%), construction (-1.9%), electricity, gas and water (- 0.5%) and taxes (-0.4%). The sectors that registered positive momentum included general government (1.8%), personal services (1.2%), finance (1.1%) and transport (0.9%). There were thus seven sectors in decline during the first quarter representing more than half of total output. Real primary and secondary sector momentum declined to -13.8% and -4.9% respectively in the first quarter, compared to 4.9% and 3.1% previously, while the tertiary sector slowed to 0.7% in the first quarter from 2.7% in the previous quarter. We expect the economy to continue on an expansionary trend in the second quarter as it comes off a low technical base, and also on the back of improving confidence levels and global economic growth support - although overall the economy remains weak, with the weak growth outcome combined with softer leading indicators increasing downside risks to 2018 growth forecasts.

S&P kept their rating of the South African sovereign unchanged, at BB for the foreign currency rating and BB+ for the local currency rating. They also kept their outlook unchanged at stable. The announcement was generally expected. S&P noted that it appears the economic outlook is improving with their growth forecast for South Africa over the next three years assuming that improvements in confidence levels will translate into higher investment and consumption. The stable outlook reflects modest economic growth improvement while reforms are implemented. Fitch subsequently kept South Africa’s sovereign credit rating unchanged at BB+ on the local and foreign currency rating, with the outlook also unchanged at stable. The rating announcement was in line with most expectations with their update relatively balanced. It stood in contrast to S&P’s review, which was a bit more positive and alluded to a possible improvement in the outlook going forward if there are continued improvements on the political and economic front. S&P has a lower rating of BB and also the economic outlook had deteriorated since the time of their rating announcement. Both S&P and Fitch thus have South Africa’s sovereign credit rating below investment grade with any return to investment-grade ratings being a multiyear process. Only Moody’s still has an investment-grade credit rating on the South African sovereign, also with a stable outlook. The ratings outlooks could deteriorate if there is slippage on the fiscal front, if institutional credibility is undermined or if the investment and economic outlook is jeopardised.

Local credit spreads continued to be very supportive. Spreads on existing credit counterparties continued to trade with a stronger bias while new issuances also priced strongly with very healthy investor appetite for new paper. Credit spreads in the financial and corporate sectors have continued to trade stronger, while spreads on SOEs and municipalities have stabilised and trended sideways more recently. Credit is still being supported by very strong investor appetite. We take this into consideration when looking at new opportunities and are approaching current investments from a more cautionary starting point. Overall, the investment proposition for the SIM Enhanced Yield Fund remains a good one. The Fund is supported by well-established fixed-interest processes as well as an extensive credit process. In addition, the valuations of assets which form part of the investable universe of the Fund are more than fair. All of this suggest that going forward we should be able to deliver similarly good results that we have been able to achieve thus far.

Watch Video

The SIM Enhanced Yield Fund aims to give you a better return than leaving your money in the bank. The portfolio manager, Melville du Plessis, shows how he does this while preserving clients’ capital.

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