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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: R2 622.6 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%
Launch Date: 03 May 2011
Fund Size: R2 819.3 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%

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 Annualised Investment Performance

Performance

Annualised as at 30 Apr 2017 on a rolling monthly basis
A1- Class Fund (%) Benchmark (%)
1 year 10.04 8.09
3 year 8.43 7.32
5 year 7.67 6.72
10 year N/A N/A
Since Inception 7.59 6.64

Annualised return is the weighted average compound growth rate over the period measured
Actual highest and lowest annual figures for rolling 10 years
Highest Annual % 10.04
Lowest Annual % 4.73

Minimum Disclosure Document (Fund Fact Sheet)

Performance Fees FAQ

Illustrative Annualised Investment Performance

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

Source of graph : Morningstar

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

Source of graph : Morningstar

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 in the table above is a graphical representation of your selection (of the benchmark's past performance of the fund you selected) – including your investment objective, risk profile and fund choice – and is based on the past performance of the fund in relation to your investment. This performance is indicative and not guaranteed. The graph is for illustrative purposes only and investment performance is calculated by taking into account initial fees and all ongoing fees that you have to pay and the income reinvested on the reinvestment date.

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. Nedbank Ltd 13.55%
2. ABSA Bank Ltd 11.26%
3. Standard Bank of SA Ltd 9.70%
4. RSA Government 8.28%
5. Firstrand Bank Ltd 5.82%
6. The Thekwini Fund 13 (RF) Ltd 3.93%
7. Telkom SA Soc Ltd 2.57%
8. Mercedes-Benz SA Ltd 2.40%
9. Redefine Properties Ltd 2.28%
10. Clindeb Investments (Pty) Ltd 2.15%
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. Nedbank Ltd 13.55%
2. ABSA Bank Ltd 11.26%
3. Standard Bank of SA Ltd 9.70%
4. RSA Government 8.28%
5. Firstrand Bank Ltd 5.82%
6. The Thekwini Fund 13 (RF) Ltd 3.93%
7. Telkom SA Soc Ltd 2.57%
8. Mercedes-Benz SA Ltd 2.40%
9. Redefine Properties Ltd 2.28%
10. Clindeb Investments (Pty) Ltd 2.15%

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%

Income funds derive their income from interest-bearing instruments as defined.

The yield is a current yield and is calculated daily. Total Expense Ratio (TER) | PERIOD: 1 April 2014 to 31 March 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. Total Expense Ratio (TER) | PERIOD: 1 April 2014 to 31 March 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.

Please note that African Bank (ABL) has had a name change to African Phoenix Investments Ltd (AXL), with the effective date being 01/02/17. The suspension of the bank has been lifted.

When you invest online

Traditionally, investment advice come with a fee of up to 1.14%. But our smart online system is working to make investing cheaper and more profitable for you and hence no initial or annual advice fees will be charged. The management fee you do 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 2.28%.
  • 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

  • Total Annual Fee: 1.14%

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

Politics dominated local news headlines and financial market returns towards the end of the first quarter. At first, both the finance minister and his deputy were told to return home early from their international roadshow early on during the last week of March. They were both subsequently replaced amid a broader cabinet reshuffle by the president later in the week. This negatively impacted South African financial markets with bond yields and the rand trading significantly weaker.

South Africa’s real gross domestic product (GDP) growth figures for the fourth quarter of 2016 were reported to have declined to -0.3% from an upward revised +0.4% in the third quarter. This brings annual GDP growth for South Africa to a meagre +0.3% for 2016, compared to +1.3% in 2015. Mining declined by -11.5% during the quarter, while manufacturing declined by -3.1% and agriculture by -0.1%. The sectors that performed reasonably better were transport (+2.6%), electricity (+2.4%), trade (+2.1%) and finance (+1.6%), however, it was still not sufficient to lift growth. The depressed levels of consumer and business confidence remain an element of concern. The local growth outlook could potentially benefit from disinflation and a peak in the interest rate cycle, an easing impact of the drought, a terms-of-trade rebound and an expected improvement in global growth, however, the risks seem to be tilted on the downside.

The 2017 Budget was released by National Treasury during February. Although there were relatively few surprises relative to pre-Budget expectations, it should be noted that some of the negative news was released in the October 2017 Medium Term Budget Policy Statement. The budget did, however, map out a credible path to the stabilisation of the government debt ratio over the medium term. Government revenue was projected to exceed non-interest spending on the Main Budget by 2018/19 and the consolidated budget deficit to narrow from -3.4% of GDP in 2016/17 to -2.6% of GDP in 2019/20. Gross loan debt is expected to peak at 52.9% of GDP in 2018/19. The importance of stabilising the debt position is illustrated by the continued increase in debt service costs from R146.3 billion in 2016/17 to R162.4 billion in 2017/18 - absorbing scarce financial resources which could be usefully deployed elsewhere, such as for development expenditure. Overall, the minister delivered a credible budget, however, questions remained regarding longer-term fiscal sustainability with little room for a downturn in growth and no room for spending on items such as National Health Insurance. As the Minister noted, we were at the crossroads - as we have been for some time. The ideal direction would be decisive implementation of economic reform measures which lift potential GDP growth materially.

Inflation slowed during the first quarter - as was generally expected - and was reported at 6.3% year on year to end February, from 6.6% in January and 6.7% at the end of December. Inflation should return to below the 6% level (upper end of the South African Reserve Bank (SARB)’s target band) during the second quarter. We expect inflation to trend lower over the coming months and average around 5.7% for the year. If there are no adverse shocks and assuming the exchange rate remains at current levels with the oil price increasing only moderately going forward, inflation can be expected to continue trending lower going into 2018 and to stabilise at just above 5.0% at the end of next year.

The SARB Monetary Policy Committee (MPC) kept the repo rate unchanged at 7% at their scheduled meetings in January and March, as was widely expected by the market. At the March meeting only one of the six MPC members voted for an interest rate cut with the rest of the committee members in agreement with no change. The March statement was less hawkish with the SARB signalling that it may be at the end of the tightening cycle. The SARB lowered its inflation forecasts and projects inflation to return within the target range in the second quarter of 2017 with the lower projection largely on the back of a stronger rand. The SARB also noted that the risk to their inflation forecast is only moderately to the upside.

Nominal bond yields traded stronger at the beginning of the first quarter and rallied significantly during the middle of March with foreigners seen as significant buyers of local bonds during the third week of March. Once the local political issues started, the local bond market snapped back sharply with yields trading higher and reversing the previous weeks’ gains. Yields on inflation-linked bonds moved sharply higher towards the end of the first quarter, by between 20 to 25 basis points (bps) across the curve. The market implied inflation breakeven was 6.6% at the end of the first quarter. The market was starting to price in the potential for interest rate cuts going into the remainder of the year, but is now pricing in a limited probability of interest rate cuts in the coming 12 to 18 months.

MTN Group released full-year financial results for the year ending December 2016. The company reported a loss of R3.1 billion reflecting the challenging circumstances the company was operating under. Revenue growth was 0.6% for the year but the bottom line was hit hard by a fine payable in Nigeria with associated fees, losses on subsidiaries as well as foreign exchange losses. Moody’s and Fitch have an investment grade credit rating with a negative outlook assigned to MTN Group at BBB3 and BBB- respectively, while S&P has a sub-investment grade rating of BB+ with a stable outlook. Although the market was aware of the bad operating environment which was affecting the company, the results were still a bit difficult to swallow by stakeholders.

Cell C was downgraded to a rating of D by S&P - which is the lowest junk status possible - after missing interest payments on senior secured bonds during January. Cell C is South Africa’s third largest mobile operator but has struggled to keep up and has lost relative market share compared to Vodacom and MTN over the last years. The company’s large debt load has proved onerous and challenging to restructure - they cancelled their plans to raise USD600 million on international debt markets during November 2016.

The ordinary and preference shares of holding company African Bank were converted and started trading under the aptly chosen new name of African Phoenix Investments, reflecting the company’s rise from the ashes after being put under curatorship almost two and a half years ago in August 2014. The new entity does not have a banking licence and will implement a new business strategy going forward. African Bank’s debt instruments had been reissued almost a year ago in April 2016, however, trading remains thin with investors both unwilling to part ways with their existing holdings while at the same time having limited interest in picking up additional script.

Ascendis released interim results for the six months ended December 2016. Revenue increased by 66% compared to the previous year (R3.11 billion compared to R1.87 billion), largely on the back of acquisitive revenue growth. Foreign revenue grew by 270% and now makes up almost half of total revenue. Borrowing increased by more than R2 billion during the period with the proceeds used to help finance the acquisitions of Remedica Holdings (EUR260 million) and Scitec International (EUR170 million).

SIM strategy

Credit spreads have been widening since the second half of 2014 and during the last two years we have been able to identify opportunities for the Fund which offer significant value. Spreads in the secondary market have been trending higher, but in particular new issuances in the primary market have been pricing at levels which offer value compared to previous years. We have been investing for the Fund in some of these opportunities during the first quarter of 2017. We continued to align the Fund in favour of more attractive opportunities.

Local yields rallied significantly during the first quarter, in particular during March before the political issues resurfaced. We have been more cautiously positioned in the Fund for some time and continued to implement a more cautious strategy as the market was trading stronger, which bode well for the Fund as it was relatively more insulated from the subsequent weakness towards the end of the first quarter.

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