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for private investors can be accessed on the Personal area of our site. Terms & conditions.
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
Minimum Disclosure Document (Fund Fact Sheet)
Performance Fees FAQ
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.
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.
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 October 2013 to 30 September 2016 Total Expense Ratio (TER) | 0.49% of the value of the Financial Product was incurred as.
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.
In April 2016 African Bank’s curatorship effectively ended. The old African Bank (ABIL) was split
into a ‘good’ (ABK) and ‘bad’ (RDS) bank. 80% of all senior unsecured exposure to ABIL was
rolled into instruments issued ABK, while a 10% cash repayment was received and 10% of
nominal exposure remains in RDS. The ABK bonds will receive interest at the same rate as
previous ABIL instruments and start to mature after a 2 year interest-only period. Recovery
expectations w.r.t the 10% exposure in RDS is low at this stage, although recent results from African Bank were more positive than expected.
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
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.
The fourth quarter of the year was again an interesting one and brought to a close a
calendar year that was full of political surprises. The US elections during November
proved to be one of the more noteworthy events of the year, catching both market
participants as well as most of the general public by surprise as Donald Trump was
elected to become the next president of the USA. The polls were forecasting roughly
a 90% probability of Hillary Clinton going home victorious. Although the markets
were initially jittery, the US equity markets ended up having a strong week while US
treasuries weakened substantially on the back of increased inflation fears stemming
from the potential of increased fiscal spending as well as suspicions that the Federal
Reserve (Fed) may be on a more aggressive interest rate hiking path going forward.
The Bloomberg Barclays Global Aggregate Total Return Bond Index lost 4% in
November, which was one of the biggest retreats since the start of the index. Yields
had already been on the rise since the end of September with the outcome of the
US elections providing a final push higher. The year was characterised by the
appearance of binary outcomes on the back of political events, both locally and
internationally - be it the UK’s ‘Brexit’ vote, the US elections or the local political
Locally, President Zuma withdrew the application to block the publication of a report
on the extent of the influence of the Gupta family over government, and the Medium
Term Budget Policy Statement (MTBPS) was released by National Treasury
towards the end of October. It was likely one of the most closely watched MTBPS
releases, set against a backdrop of significant political noise. The MTBPS showed
National Treasury’s intent to continue following a path of fiscal consolidation,
however, the weak economy is proving to be a formidable headwind and the gross
loan debt ratio continues to rise. The market was disappointed by the budget as
there was a need for more concrete plans to address the challenging growth
environment. There will be tax announcements in the February 2017 Budget which
will aim to increase revenue by an additional R13 billion to R28 billion in 2017/18
and R15 billion in 2018/19.
South African growth slowed sharply during the third quarter after showing a strong
rebound in the second quarter. South Africa’s GDP growth rate decreased to +0.2%
in the third quarter following an (upwardly revised) +3.5% in the second quarter.
Growth forecasts going into 2017 have been revised lower by a number of agencies
and data from the expenditure side shows that domestic demand remains weak.
The momentum in most sectors decreased with the government sector being the
only one showing improvement. The breakdown by expenditure shows a steep drop
in exports to -9.0% and a marginal decline in gross fixed capital formation to -0.2%,
offset by an increase in inventories to +6.3%. South Africa’s joblessness rate rose to
27.1% in the third quarter, which is the worst employment data released since 2003,
and the current account deficit widened to 4.1% of GDP (R173 billion) in the third
quarter following a downward revised 2.9% of GDP (R123 billion) in the second
South African inflation increased to 6.6% year-on-year for November from 6.4% year
-on-year for October. Rising oil prices should put upward pressure on inflation in the
months ahead, however, inflation is expected to return within the South African
Reserve Bank (SARB) 3% to 6% target band by the second quarter of 2017.
The SARB’s Monetary Policy Committee (MPC) decided to keep the repo rate
unchanged at 7.0% at their scheduled meeting in November. Market expectations
were for rates to remain unchanged at the last meeting of the year. The last time the
repo rate was changed was during the first quarter of 2016 when it was increased
repo rate was changed was during the first quarter of 2016 when it was increased
twice by a total of 75 basis points (bps). The forecasts of the SARB continue to
signal the hiking cycle may have peaked for the time being. The market is pricing in
a muted probability of significant further policy rate increases going into 2017 - in
particular compared to where the market was pricing at the beginning of the year.
In the US, the Federal Reserve Open Market Committee (FOMC) hiked the target
federal funds rate by 25bps in December, from 0.25%-0.50% to 0.50%-0.75%. On
the other side of the Atlantic, the European Central Bank (ECB) maintained its loose
monetary policy and announced that it will extend the bond buying programme -
which was initially scheduled to conclude in March 2017 - and will now continue at
least until December 2017, although scaling back the purchases from €80 billion per
month to €60 billion per month from April onwards.
The looming threat of a sovereign credit rating downgrade for South Africa and
political noise were again in the news headlines during the quarter. It continued to
weigh on market sentiment putting pressure on South African financial markets. The
major credit rating agencies all reviewed their credit ratings on South Africa during
the fourth quarter of 2016, after last reviewing it during the second quarter when all
three affirmed their investment grade ratings. In November, Fitch announced that
they have changed their outlook for South Africa to negative from stable, while
keeping the credit rating unchanged at BBB- for the local and foreign currency
rating. Fitch were previously the only rating agency with a stable outlook, with
Moody’s and S&P both having previously attached negative outlooks to their credit
rating. Moody’s kept their rating unchanged at Baa2 with a negative outlook, while in
December S&P announced that they are downgrading South Africa’s local currency
rating to BBB (from BBB+) and kept the foreign currency rating unchanged at BBB-,
still with a negative outlook.
While much has been speculated about the impact of a downgrade on bonds, South
Africa’s credit rating in and of itself is not the most important driver on the return on
local financial assets. Inflation expectations, the credibility of monetary policy and
the sustainability of fiscal policies play a much more significant role in government
bond yields, while on the other hand balance sheet strength, earnings power and
valuations are more important when assessing company prospects and potential
returns. However, a sovereign downgrade and the potential ramifications is still an
event we remain mindful of and also, more importantly, whether the issues that
credit rating agencies are rightly highlighting are addressed by local policymakers.
Credit spreads have been widening since the second half of 2014 and during the
last year 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 fourth quarter while we also disinvested from
a significant amount of assets where the yield was no longer appropriate given the
underlying fundamentals and also compared to other opportunities available
elsewhere in the market. We realigned a significant portion of the fund in favour of
more attractive opportunities.
Local yields increased significantly towards the end of 2015 and we were waiting for
the appropriate time to adjust the interest rate risk exposure in the Fund as
valuations and the outlook improved during 2016. We took advantage of a good
opportunity to do so during June and subsequently the market offered a number of
opportunities to adjust the curve exposure during the third quarter. During the fourth
quarter we decreased the interest rate exposure in the fund and also entered into a
position in corporate and government inflation-linked bonds, both of which proved to
be well timed.