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Skip Navigation LinksCore Funds

Sanlam Investment Management
General Equity Fund

If you’re willing to take the bold step towards a share portfolio, there’s a team of investment professionals who carefully select these companies for you, scouting everywhere for good value.

Quick Facts About The Fund*

Sanlam Investment Management (SIM) General Equity Fund

Launch Date: 01 July 2004
Fund Size: R7 949.9 million
Benchmark: FTSE/JSE All Share Index
Time Horizon: 5 years+
*As at 30 November 2017
Risk Profile: Aggressive
Fund Classification: SA - Equity - General
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 1.52%
Launch Date: 01 July 2004
Fund Size: R7 949.9 million
Benchmark: FTSE/JSE All Share Index
Time Horizon: 5 years+
Risk Profile: Aggressive
Fund Classification: SA - Equity - General
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 1.52%
*As at 30 November 2017

Fund Strategy

This fund aims to outperform the FTSE/JSE All Share Index through active stock selection across all sectors and market capitalisation on the JSE. The fund may at any time hold a maximum of 25% in offshore assets. This fund may also invest in derivatives for efficient portfolio management.


Illustrative Cumulative Growth of an investment of R100

Performance

Annualised Total Return on a rolling monthly basis
(as at 30 November 2017)
Retail Class Fund (%) Benchmark (%)
1 year 20.41 22.54
3 year 7.79 9.33
5 year 12.67 12.71
10 year 10.55 10.21

Annualised return is the weighted average compound growth rate over the period measured
Highest and Lowest Annual Returns over 10 years
Highest Annual % 35.21
Lowest Annual % (27.7)

Minimum Disclosure Document (Fund Fact Sheet)

Quick Facts

Performance Fees FAQ

Cumulative Growth Over Time

Sanlam Investment Management (SIM)
General Equity Fund
FTSE/JSE All Share Index

Source of graph : Morningstar Direct

Sanlam Investment Management (SIM) General
Equity Fund
FTSE/JSE All Share Index

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. Naspers -N- 17.94%
2. BTI Group 6.56%
3. Steinhoff Int Hldgs N.v 4.88%
4. Old Mutual 4.49%
5. Barclays Group Africa 4.15%
6. Sasol 4.11%
7. Stanbank 4.05%
8. MTN 3.17%
9. Mondi 3.11%
10. Anglos 2.79%
Cash And Money Market Assets
International Assets
Equity Technology
Equity Financials
Equity Telecommunications
Equity Consumer Services
Property
Equity Health Care
Equity Consumer Goods
Equity Industrials
Equity Basic Materials
Preference Shares
1. Naspers -N- 17.94%
2. BTI Group 6.56%
3. Steinhoff Int Hldgs N.v 4.88%
4. Old Mutual 4.49%
5. Barclays Group Africa 4.15%
6. Sasol 4.11%
7. Stanbank 4.05%
8. MTN 3.17%
9. Mondi 3.11%
10. Anglos 2.79%

Patrice Rassou

Head of Equity – Sanlam Investment Management

Chartered Accountant, Patrice has a BSc (Econ) in Monetary Economics with first class honours and an MSc (Econ), both from the London School of Economics. He also has an MBA with distinction from Manchester Business School, which he completed in 2003. Initially, he worked at PricewaterhouseCoopers in London and Johannesburg, then moved to Old Mutual Asset Managers where he won the Raging Bull and S&P award for top performance in 2004. Now, he is treasurer of the Association of Black Securities Professionals (ABSP) in the Western Cape and Head of Equity at Sanlam Investment Management. He managed the SIM Top Choice unit trust from the end of 2006 and in 2007 was promoted to voting member of the Model Portfolio Group, where he has a direct impact on the core house view equity portfolio.

Patrice Rassou

Head of Equity – Sanlam Investment Management

Chartered Accountant, Patrice has a BSc (Econ) in Monetary Economics with first class honours and an MSc (Econ), both from the London School of Economics. He also has an MBA with distinction from Manchester Business School, which he completed in 2003. Initially, he worked at PricewaterhouseCoopers in London and Johannesburg, then moved to Old Mutual Asset Managers where he won the Raging Bull and S&P award for top performance in 2004. Now, he is treasurer of the Association of Black Securities Professionals (ABSP) in the Western Cape and Head of Equity at Sanlam Investment Management. He managed the SIM Top Choice unit trust from the end of 2006 and in 2007 was promoted to voting member of the Model Portfolio Group, where he has a direct impact on the core house view equity portfolio.

Traditional Investing (when you invest via a Financial Adviser or other)

Retail Class (%)

Advice initial fee (max.) 3.42%
Manager initial fee N/A
Advice annual fee (max.) 1.14%
Manager annual fee 1.25%
Total expense Ratio (TER) 1.52%

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.

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.

Sanlam Reality members may qualify for a discount on the Manager annual fee.

Total Expense Ratio (TER) | PERIOD: 1 October 2014 to 30 September 2017.
Total Expense Ratio (TER) | 1.52% 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. Inclusive of the TER of 1.52%, a performance fee of 0.24% of the net asset value of the class of participatory interest of the portfolio was recovered.

Transaction Cost (TC) | 0.24% 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) | 1.76% of the value of the Financial Product was incurred as costs relating to the investment of the Financial Product.

Manager Performance Fee (incl. VAT) | Performance Fee Benchmark: FTSE/JSE All Share Index Base Fee: 1.25%, Fee at Benchmark: 1.25%, Fee hurdle: FTSE/JSE All Share Index Sharing ratio: 20%, Minimum fee: 1.25%, Maximum fee: 3.42%, Fee example: 1.25% p.a. if the fund performs in line with its Performance Fee benchmark being FTSE/JSE All Share Index.

The performance fee is accrued daily, based on performance over a rolling one year period with payment to the manager being made monthly. Performance fees will only be charged once the performance fee benchmark is outperformed and only if the fund performance is positive. A copy of the Performance fee Frequently Asked Questions can be obtained from our website: www.sanlaminvestments.com.

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 end of the quarter brought a number of unknown unknowns to the fore, leading to some sharp share price dislocations. We knew about the precarious financial position of state-owned enterprises, but did not know that it would be Steinhoff International that would make the ignominious headline as possibly one of the largest collapses in the history of corporate South Africa. We also knew that South Africa’s credit rating was on a knife-edge, but did not know that Moody’s would decide on a stay of execution. And finally, we have become accustomed to expect the unexpected when it comes to global political events. And yet, it still came as a surprise that one of the longest-serving African presidents, Robert Mugabe, was deposed in a bloodless coup and that Cyril Ramaphosa was chosen to lead the ANC, 17 years after standing next to Nelson Mandela on the balcony of the Cape Town City Hall.

As long-term investors, we always position our portfolios for the long term, but markets will always be prone to over- and undershooting and in the commentary we discuss the shockwaves that impacted our markets at the end of this year.

The FTSE/JSE Shareholder Weighted Index (Swix) had a strong close to the year and was up by some 9.6% in the final quarter to end the year up 21%, delivering exceptionally strong returns against a politically and economically challenging backdrop. This is also a reflection of very positive risk-on sentiment towards emerging markets globally, with the latter also up a whopping 34% in dollars in 2017; which propelled global equities up by over 20%, the best returns we have experienced since 2009. Globally, politics played a key role with Trump’s tax reform plan driving the S&P up almost 20%, while Emmanuel Macron’s unexpected victory at the French presidential elections helped inspire European equities (+22%) and Japanese Prime Minister Shinzō Abe’s landslide victory fuelled the Japanese market (+22%) in anticipation of more reflationary policies.

December saw the Steinhoff International share price collapse as auditors held back on signing off its financial statements and its CEO abruptly departed. This could well be one of the worst cases of value destruction that corporate South Africa has witnessed as the market value of Steinhoff International, a global company ranking second in Europe in the household goods sector to IKEA with over 130 000 employees, dwindled from R242 billion to R20 billion in a matter of days. Industrials had a challenging final quarter, up only 5%, as the Steinhoff International debacle weighed on sentiment, but nonetheless were up by over 23% for the year.

Financial stocks experienced a Santa Claus rally, helped by the positive developments discussed above, up some 16% in the final quarter to end the year up over 20%. This was partly driven by a strengthening of the rand by some 14% against most major currencies this year and net inflows into domestic stocks of some R63 billion for the year (while the overall market recorded net outflows of some R35 billion). On a relative basis, resources stocks lagged after a bumper 2016, up just under 18% and under 5% in the final quarter. In the case of commodity stocks, the bellwether copper price was up by over 30%, an indicator of strong global demand and supply discipline, while Brent crude was up 16% (back to its 2015 levels) as Opec supply cuts kicked in.

What added to, and what detracted from performance?

The fund’s strong showing in the category this year was marred by the Steinhoff debacle in December, which led to the fund slipping to a second quartile position for the year with a return of 14% - still well above the category average return of closer to 12%. The value destruction inflicted by the Steinhoff debacle is nonetheless distressing and we will pursue all possible avenues to rescue some value for our investors.

The turn of events at Steinhoff International is extremely concerning from a governance perspective, given the scale of value destruction. As long-term value investors, before the announcement of accounting irregularities we saw upside in the stock, which was underpriced relative to its peers, and we thought that the upside to valuation compensated for some of the potential financial risks that could impact the investment case. Our for some of the potential financial risks that could impact the investment case. Our investment process allows for a bear case scenario, which would incorporate our worstcase forecast assumptions, and even then we saw upside to the stock. In reality, even our bear case scenario was not bearish enough. We are extremely disturbed by the current unfolding situation, which would suggest misstatement of financial statements since 2015, which means that our financial analysis and forecasts would have been based on incorrect data. In this context, the assurances that we received from management over the years about a number of issues could well have been imposturous. That said, our valuation process, however, does not rely on management views, which we are fully aware tend to be over-optimistic, but is based on historical fact and data, which at this point in time appear to be undependable.

Our largest holding, Naspers, performed well (up 71%) this year after delivering solid numbers. Globally there is positive sentiment towards IT stocks and Naspers’ investment in Tencent, the Chinese internet company, continues to drive the share price, up 18% in the final quarter. The company holds a number of leading positions across various emerging markets, which allows it to dominate the e-commerce space. The key issue remains the large discount to its underlying listed investments, which by itself provides a margin of safety. This discount is only likely to close when the investment programme into e-commerce slows down and the underlying investment starts delivering substantial free cash flow - something management is well aware of. The company strategy can be summarised as ‘3x 100’ - a 100-year-old business with a $100 billion market cap aiming to reach 100% revenue from online!

In the financial space, Barclays Africa Group was up 31% in the final quarter as the positive sentiment towards banking stocks as proxies for SA Inc. helped lift the whole banking index some 28% in the final quarter of the year. However, we do not have a holding in Discovery, which was up 32% this quarter and now trades at 100% premium to embedded value and will be committing further capital to develop a bank.

The General Miners lagged only 6% in the final quarter, which belies a more solid 26% for the year, driven by positive growth data from China and a rebound in commodity prices, with Brent notably up 16% as Opec supply cuts kicked in and the palladium price, the star performer in the precious metals group, up 58% for the year. The palladium price overtook the platinum price for the first time since 2001. This boosted Anglo American, up 31% this year after delivering strong half-year numbers and billionaire Anil Agarwal upping his stake in Anglo American by $2 billion. There were, however, contrasting fortunes for the precious metal producers. Gold shares were down 3% with the new buzzword among our clients being the role of Bitcoin as a currency - in other words, as an alternative for gold! In addition, there were disappointing results from Implats, which saw its share price drop once again by 24% this year. The spectre of electric vehicles continues to weigh on sentiment around platinum stocks, despite a complete phasing out of diesel cars and the combustion engine being some years away.

Our strategy

Last year, the risks linked to Fed tapering and a China hard landing informed a lot of the cautious views on global equities. Cheap money found its way into alternative assets with crypto currencies being all the rage. This year, the risk of a China hard landing appears to have abated but there are continued concerns about the path of the US economy and future Fed actions. Emerging markets last year benefited from a buoyant global growth environment but valuations have now normalised.

A year ago, there was general apathy towards SA equities and the focus on political and economic downside risks in South Africa meant that many investors sat on the sidelines, which teed up the strong relief rally we witnessed at the end of the year (the JSE is up 33% in dollars in 2017!). As contrarian investors, we become the most cautious when market participants become overly bullish and discount potential risks. In South Africa, the danger is that too much, too soon may be expected from the new ANC leadership and also, global risks from Fed tapering may now be underestimated. We also don’t know yet what will emerge from the Steinhoff wreckage but remain cautious of its potential ripple effects.

The fund remains focused on investing in companies with clear moats and diversified franchises with the muscle to stay the course in the long term.

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