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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.

Quick Facts About The Fund*

Sanlam Investment Management (SIM) Enhanced Yield Fund

Launch Date: 03 May 2011
Fund Size: R5 806.8 million
Benchmark: STeFI+0.5% p.a.
Time Horizon: 1 - 2 years
*As at 28 February 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%
Launch Date: 03 May 2011
Fund Size: R5 806.8 million
Benchmark: STeFI+0.5% p.a.
Time Horizon: 1 - 2 years
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%
*As at 28 February 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 28 February 2018)
A1- Class Fund (%) Benchmark (%)
1 year 9.53 7.98
3 year 8.78 7.68
5 year 7.86 7.07
Since Inception 7.82 6.8

Annualised return is the weighted average compound growth rate over the period measured
Highest and Lowest Annual Returns since inception
Highest Annual % 10.62
Lowest Annual % 4.5

Minimum Disclosure Document (Fund Fact Sheet)

Quick Facts

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. SBS58 Standard Bank of South Africa Ltd F/R 14062027 22.10%
2. First Rand Bank Limited 14.60%
3. AB09 ABSA 10.28% 030517 9.90%
4. Nedbank 7.90%
5. Barclays 3.20%
6. Investec F/R 31072017 2.50%
7. Thekwini Fund 10 RF Ltd F/R 180717 2.50%
8. RSA Government 2.40%
9. Telkom 1.70%
10. CLINDEB INVESTMENTS LTD 8.34% 08082017 1.60%
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. SBS58 Standard Bank of South Africa Ltd F/R 14062027 22.10%
2. First Rand Bank Limited 14.60%
3. AB09 ABSA 10.28% 030517 9.90%
4. Nedbank 7.90%
5. Barclays 3.20%
6. Iinvestec F/R 31072017 2.50%
7. Thekwini Fund 10 RF Ltd F/R 180717 2.50%
8. RSA Government 2.40%
9. Telkom 1.70%
10. CLINDEB INVESTMENTS LTD 8.34% 08082017 1.60%

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.) 1.14%
Manager annual fee 0.47%
Total Expense Ratio (TER) 0.49%

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.

Total Expense Ratio (TER) | PERIOD: 01 January 2015 to 31 December 2017

Total Expense Ratio (TER) | 0.49% 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.

Transaction Cost (TC) | 0.02% 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) | 0.51% of the value of the Financial Product was incurred as costs relating to the investment of the Financial Product.

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. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down.

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

It has been roughly a decade since the start of the global financial crisis, generally agreed to have started during the second half of 2007 with a series of credit shocks leading to an international banking crisis. The economic downturn that followed was one of the worst recessions in decades in many global economies. Reflecting back on the last decade, we have seen unprecedented economic policies being implemented. Expansionary fiscal policies were implemented in an effort to avert a repeat of the prolonged deep recessions and high unemployment rates which were seen in the 1930s. The increased levels of spending combined with lower economic growth levels have led to higher government debt levels worldwide. On the other hand we have also seen the use of unconventional monetary policy measures, with exceptionally low and even negative interest rates in some developed markets as well as quantitative easing policies implemented by a number of major economies, most notably in the United States, Europe and Japan. The world economy and financial markets have grown accustomed to the support of central bankers’ accommodative policies and we are still to see the impact if these policy measures are adjusted or normalised going forward.

Internationally, there are signs of stronger global growth and in particular a recovery in Europe, the US and even Japan. The outlook for 2018 suggests relatively synchronised global growth accompanied by divergent central bank policies. European economies are on track to grow at the fastest pace in almost a decade, while growth in the US has also been strong with employment at a 28-year low. Japan has also finally surprised on the upside with consecutive quarters of stronger growth. China posted third quarter growth figures in line with expectations, helping to soothe some concerns and boost commodity prices. Eyes remain on the important factors influencing economic growth going forward, such as the impact of the divergent central bank policies worldwide, proposed tax reforms in the United States as well as the impact of China on the rest of the world economy. During October, the South African Reserve Bank (SARB) published its Monetary Policy Review. The communication gave some previously unpublished details regarding their assessment of the interaction between monetary policy and the South African economy. It also discussed how the Monetary Policy Committee (MPC) is changing its inflation forecasting model, a discussion around the output gap and the neutral real interest rate. It essentially shows that local interest rate policy has been reasonably accommodative since the global financial crisis. The MPC kept the repurchase (repo) rate unchanged at 6.75% in a unanimous decision at their scheduled meeting in November, which was also broadly in line with market expectations. The inflation forecast profile suggested both headline and core inflation to be close to the turning points, but that inflation risks are to the upside. Governor Lesetja Kganyago mentioned that the inflation forecast had deteriorated since the previous meeting on the back of a weaker currency, higher international oil prices as well as higher wage growth. He also made specific mention that we are ‘at a time when imminent key event risks contribute to an environment of particularly elevated uncertainty,’ which highlights their acknowledgement of significant deterioration on the fiscal side. They also mentioned the downgrade risks that remain on the horizon, which also reinforces their cautious approach to the policy rate in the face of the looming uncertainties.

South African yields continued on a bumpy path during the third quarter with yields going up sharply and subsequently coming almost all the way back, as such going almost full circle during the quarter. The South African 10-year government bond yield started the quarter at 8.7% and subsequently traded weaker during October, in particular after the delivery of the MTBPS at the end of October. Subsequently yields particular after the delivery of the MTBPS at the end of October. Subsequently yields continued to trade weaker with the South African 10-year government bond yield closing above 9.6% during November. The market traded much stronger during December as local interest rates rallied during the last few weeks of the year. The local 10-year yield made back almost all the lost ground and finished the quarter 10 basis points higher than where it started the quarter, ending the year at 8.82%. South Africa has seen a marked deterioration in the sovereign credit ratings of the country’s local and foreign currency debt from all three major credit rating agencies during the last few years. There were further downgrades during the last quarter of 2017 and the potential for another downgrade looming in the first quarter of 2018. On the scheduled review date on 24 November, S&P announced that they downgraded South Africa’s local currency debt to a non-investment grade level of BB+, the highest junk rating. They also lowered South Africa’s foreign currency debt rating by one notch to BB, putting it deeper into junk territory. On the same day, Moody’s issued an update saying they have not changed their South African sovereign debt rating but put it on review for a downgrade, which is due within 90 days of the announcement. This gives them the opportunity to incorporate the numbers from the National Budget into their assessment, which is due to be tabled in February 2018. Moody’s indicated that they would downgrade the credit rating if their review finds that South Africa’s economic, institutional and fiscal strength continues to weaken. Also, if measures to address the funding gaps are not adequate or if there is not enough progress on structural reforms it would reinforce a negative signal regarding the strength of South Africa’s institutions and government’s effectiveness - all of which result in an environment which is not conducive to investment and growth. Moody’s has both the local and foreign currency rating at Baa3, the lowest investment-grade rating. Also, on the sovereign rating front during November, Fitch Ratings affirmed South Africa's rating at BB+ with a stable outlook. Fitch noted that South Africa's ratings are weighed down by low growth, sizeable government debt and contingent liabilities as well as deteriorating governance standards. They did, however, note that these weaknesses are balanced by a favourable government debt structure, deep local capital markets and a flexible exchange rate, which helps to absorb external shocks. Business confidence continued to stay at depressed levels and was relatively unchanged towards the end of the year, with the fourth quarter number of 34 indicating that almost two-thirds of South African corporates find business conditions ‘unsatisfactory’ in the local economy. Businesses are surveyed in the wholesale, retail, manufacturing, building and motor vehicle dealing businesses - all except wholesalers remained deep in negative territory.

The local credit market was resilient during the year, with issuance strong and credit spreads trading with a stronger bias in most sectors. During the final quarter of the year issuance in the primary credit market continued on a strong path. Gross issuance for the year reached a new record and surpassed the previous record years, which were in 2012 and 2015. Issuance continues to be dominated by financials and banks, while corporates made up an above-average portion of the debt issuance during the year. Credit spreads traded stronger during the year, with bank and corporate spreads trading stronger while state-owned enterprise spreads continued to weaken. Credit spreads in general were supported by strong investor appetite during the year, in particular during the second half of the year. The events surrounding Steinhoff dominated headlines during December with the local equity and credit markets both affected. Steinhoff’s share price was down sharply after the announcement that it will no longer release its financial results due to ‘accounting irregularities’. Steinhoff’s share price ended the last month of the year down 92%. The Steinhoff Eurobonds traded internationally were also initially down sharply, but since recovered some of the losses, even though the trading was on thinner volumes and more sporadic. The local Steinhoff debt listed on the JSE did not initially move as much by comparison, but over the following trading days during December the local credit spreads moved higher and the locally held Steinhoff debt also repriced to more appropriate and weaker levels.

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