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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: R4 646.0 million
Benchmark: STeFI+0.5% p.a.
Time Horizon: 1 - 2 years
*As at 30 September 2017
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: R4 646.0 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 30 September 2017

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 31 September 2017)
A1- Class Fund (%) Benchmark (%)
1 year 9.64 8.12
3 year 8.77 7.54
5 year 7.69 6.89
10 year N/A N/A
Since Inception 7.74 6.74

Annualised return is the weighted average compound growth rate over the period measured
Highest and Lowest Annual Returns since inception
Highest Annual % 9.64
Lowest Annual % 5.88

Minimum Disclosure Document (Fund Fact Sheet)

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 F/R 09042015 17.10%
2. First Rand Bank Limited 15.60%
3. ABSA Pref 12.90%
4. NedBank 8.90%
5. RSA Government 7.40%
6. Barclays 3.20%
7. Thekwini Fund 10 RF Ltd F/R 180717 2.40%
8. Investec 2.00%
9. HSBC Holdings 1.90%
20. Telkom 1.70%
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 F/R 09042015 17.10%
2. First Rand Bank Limited 15.60%
3. ABSA Pref 12.90%
4. NedBank 8.90%
5. RSA Government 7.40%
6. Barclays 3.20%
7. Thekwini Fund 10 RF Ltd F/R 180717 2.40%
8. Investec 2.00%
9. HSBC Holdings 1.90%
20. Telkom 1.70%

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 July 2014 to 30 June 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 July 2014 to 30 June 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

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 third quarter of 2017 marked the 10-year anniversary of the start of the global financial crisis; generally agreed to have started during August 2007 with a series of credit shocks and 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, including the US, UK, Europe and Japan. Global trade and global growth levels retreated sharply during the 2007 to 2008 global financial crisis. Since then, global growth levels have recovered to historical norms, albeit belowtrend growth levels, while global trade has remained below pre-crisis levels. The higher growth rates have not been accompanied by higher inflation despite the expansionary monetary policy measures being implemented, as wage growth has remained sluggish while corporate profits continued to rise. This has helped fuel political instability in many major economies worldwide. Global financial markets have performed well with global equity markets posting new all-time highs on a frequent basis. The financial and banking sectors have been left behind and underperformed equity markets in general while a number of technology stocks delivered phenomenal returns to those investors who were willing to hold on. Global bond markets have also delivered stellar performances over the last decade as the sustained downward trend in interest rates have resulted in healthy total returns. The world economy and financial markets have grown accustomed to the support of central banks’ accommodative policies and we are still to see the impact if they are adjusted or normalised going forward. The question remains to what extent these lower interest rates and accommodative monetary policies have resulted in inflated asset prices elsewhere in the financial system.

Taking a look at the third quarter of 2017 it was marked by strong performance and new all-time highs in global equity markets, with volatility measures still at all-time lows despite geopolitical tensions and the threat of central bank normalisation looming. One of the central themes in financial markets towards the end of the third quarter was the potential unwinding of monetary stimulus in the US and Europe going forward. Global and local 10-year government bond yields started the quarter at elevated levels following hawkish comments from the US Fed and the ECB in Europe. We subsequently saw yields trending lower during July and August until they gave back their gains and global bond yields moved upwards again during September, with local yields following suit.

The South African Reserve Bank (SARB)’s Monetary Policy Committee (MPC) surprised the market by cutting the repo rate by 25 basis points to 6.75% at their scheduled meeting in July. The vote was split four to two, with four members voting in favour of an interest rate cut. The SARB made unexpectedly large downward adjustments to their inflation forecasts and this was one of the main drivers for the decision. Most market participants subsequently expected the SARB to cut interest rates at one of the next scheduled meetings in either September or November. However, the central bank surprised again by keeping the repo rate unchanged at their meeting in September, accompanied by a particularly hawkish statement highlighting the risks that sovereign credit rating downgrades pose combined with fiscal slippage concerns. The surprise move and accompanying communication highlighted the unusual nature of the current local conditions and their influence on monetary policy. The current cutting cycle is proving to be very gradual and measured. The decision in September was split equally, with three members in favour of a policy rate cut and three against.

On the credit side, debt issuance in the primary bond market continued on a strong pace during the third quarter. Credit issuances were muted during the first part of the second quarter with the uncertainty on the political front and the effects of South Africa’s sovereign credit rating and other ensuing credit rating downgrades weighing on market sentiment. Subsequently though, the credit market has been very strong, in particular from the demand side. Auctions have been clearing at strong levels with very strong investor appetite. Looking at the volume of bids submitted and the range of bid levels, there is a substantial amount of capital available and looking for relatively fewer available opportunities. Issuance was dominated by the banks and financials, which made up more than half of the total. Some of the issuance was driven by regulatory capital considerations as a substantial amount of subordinated paper was placed - Tier II debt as well as Additional Tier 1 debt. Subordinated issuances were well supported and cleared at significantly lower levels compared to where the paper was placed previously. Securitisations and corporates made up for most of the balance of the issuance, with state-owned enterprises (SOEs) lagging behind compared to previous years. On the municipal side, City of Cape Town was in the market again for the first time in more than seven years, issuing a Green Bond that also saw significant support and participation by investors. They managed to place R1 billion at below the indicated price guidance, and received R4.3 billion worth of bids.

In general, credit spreads in the secondary market seem to have stabilised and have narrowed in some sectors. The difference in spread moves can be seen by looking more closely at primary market placements and also by differentiating between sectors. The tide has turned on the corporate and financial front where spreads in the primary market are contracting - on the financials and banking front spreads decreased on both senior and subordinated paper issuances. Spreads on SOEs continue to trend higher and trade at elevated levels, as investor sentiment and governance issues continued to weigh on the sector.

MTN Group released their interim results for the period ending June 2016 during the third quarter. The group released their results in both reported-currency and constant-currency terms due to the significant currency depreciation in a number of the company’s operating countries, hyperinflation and also once-off items. Revenue decreased significantly by 19% to R64 billion in the first half due to the impact of local currency depreciations. For instance, the depreciation in Nigeria’s naira caused overall group revenue to decline from 37% to 28% year-on-year. EBITDA was reported at R21 billion, which is also down sharply from R29 billion in the first half of 2016 while the group’s cash flow from operations decreased by 26% to R18 billion, again due in large part to lower profits from Nigeria. Credit quality and rating risks are skewed to the downside with the potential for further downgrades. Moody’s downgraded MTN in June to Ba1 and is currently rated Aa3.za on a national scale rating with a stable outlook while S&P downgraded MTN to BB+ in November 2016 and is currently rated zaAA on a national scale rating with a stable outlook. Fitch downgraded MTN in April to BBB- with a negative outlook and is currently rated AA (zaf) on a national scale rating.

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