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Sanlam Investment Management
Top Choice Equity Fund

Included in our range is a high conviction portfolio of SIM’s best investment ideas – no more than 20 shares in this portfolio. For investors who are comfortable with extreme price fluctuations over the short term in pursuit of superior performance over the long term.

Quick Facts About The Fund*

Sanlam Investment Management (SIM) Top Choice Equity Fund

Launch Date: 18 August 2006
Fund Size: R1 479.6 million
Benchmark: Composite benchmark:
FTSE/JSE SWIX: 97% | STeFI: 3%
Time Horizon: 5 years +
*As at 31 August 2017
Risk Profile: Aggressive
Fund Classification: SA - Equity - General
Min Investment Amount: Lump sum: R10 000 | Monthly: R500
Total Expense Ratio (TER): 1.19%
Launch Date: 18 August 2006
Fund Size: R1 475.0 million
Benchmark: Composite benchmark: FTSE/JSE SWIX: 97% | STeFI: 3%
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): 1.19%
*As at 31 August 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.


Cumulative Growth Over Time

Performance

Annualised Total Return as at 31 August 2017 on a rolling monthly basis
Retail Class Fund (%) Benchmark (%)
1 year 7.23 7.94
3 year 6.28 7.13
5 year 14.54 13.30
10 year 11.05 11.04

Annualised return is the weighted average compound growth rate over the period measured
Highest and lowest annual returns over 10 years
Highest Annual % 30.44
Lowest Annual % -9.99

Minimum Disclosure Document (Fund Fact Sheet)

Performance Fees FAQ

Cumulative Growth Over Time

Sanlam Investment Management (SIM)
Top Choice Equity Fund
Composite benchmark: FTSE/JSE SWIX: 97% | STeFI: 3%

Source of graph : Morningstar and Sanlam Investments

Sanlam Investment Management (SIM) Top
Choice Equity Fund
Composite benchmark: FTSE/JSE SWIX: 97% | STeFI: 3%

Source of graph : Morningstar and Sanlam Investments

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- 19.19%
2. BTI Group 9.52%
3. Steinhoff Int Hldgs N.v 7.91%
4. Old Mutual 6.72%
5. FirstRand / RMBH 6.24%
6. Barclays Group Africa 5.46%
7. Investec 4.86%
8. Mondi 4.81%
9. Sasol 3.84%
10. MTN 3.75%
Cash And Money Market Assets
Preference Shares
Equity Financials
Equity Telecommunications
Equity Consumer Services
Property
Equity Health Care
Equity Consumer Goods
Equity Industrials
Equity Basic Materials
1. Naspers -N- 19.19%
2. BTI Group 9.52%
3. Steinhoff Int Hldgs N.v 7.91%
4. Old Mutual 6.72%
5. FirstRand / RMBH 6.24%
6. Barclays Group Africa 5.46%
7. Investec 4.86%
8. Mondi 4.81%
9. Sasol 3.84%
10. MTN 3.75%

Unit Trust application forms

View, print and complete the form of your choice.
Email or fax the completed form to UTinstructions@sanlaminvestmentssupport.com or 0860 724 467

Note: Fund minimums change from 1 April 2017.
The debit-order contribution minimum will increase from R200 p.m. to R500 p.m.
The lump-sum contribution minimum will increase from R5 000 to R10 000.
This will apply to all funds except the Money Market Fund, which will remain at R1 000 p.m. for debit orders and R20 000 for lump-sum contributions.

Application Form – Individual Investors (new investors only) ENG  |  AFR
Application Form – Non-Individual Investors (new investors only) ENG  |  AFR
Application Form – Tax-Free Unit Trusts (new investors only) ENG  |  AFR
Additional Investment Form (existing investors) ENG  |  AFR

*Total expense Ratio - September 2016 Download PDF

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.) 3.30%
Manager initial fee N/A
Advice annual fee (max.) 1.14%
Manager annual fee 1.02%
Total Expense Ratio (TER) 1.19%

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.

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.

Obtain a personalised cost estimate before investing by visiting www.sanlamunittrustsmdd.co.za and using our Effective Annual Cost (EAC) calculator. Alternatively, contact us at 0860 100 266. Sanlam Reality members may qualify for a discount on the Manager annual fee.

Total Expense Ratio (TER) | PERIOD: 1 July 2014 to 30 June 2017
Total Expense Ratio (TER) | 1.19% 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 1.19%, a performance fee of 0.14% of the net asset value of the class of participatory interest of the portfolio was recovered.

Transaction Cost (TC) | 0.49% 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) | 1.68% 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: Composite benchmark: FTSE/JSE SWIX: 97% |STeFI: 3%, Base Fee: 1.02%, Fee at Benchmark: 1.02%, Fee hurdle: Composite benchmark: FTSE/JSE SWIX: 97% |STeFI: 3%, Sharing ratio: 15%, Minimum fee: 1.02%, Maximum fee: 2.28%, Fee example: 1.02% p.a. if the fund performs in line with its Performance Fee benchmark being Composite benchmark: FTSE/JSE SWIX: 97% |STeFI: 3%. 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 FAQ is available on www.sanlamunittrusts.co.za.

Total Expense Ratio (TER) | PERIOD: 1 July 2014 to 30 June 2017
Total Expense Ratio (TER) | 1.19% 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 1.19%, a performance fee of 0.14% of the net asset value of the class of participatory interest of the portfolio was recovered.

Transaction Cost (TC) | 0.49% 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) | 1.68% 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: Composite benchmark: FTSE/JSE SWIX: 97% |STeFI: 3%, Base Fee: 1.02%, Fee at Benchmark: 1.02%, Fee hurdle: Composite benchmark: FTSE/JSE SWIX: 97% |STeFI: 3%, Sharing ratio: 15%, Minimum fee: 1.02%, Maximum fee: 2.28%, Fee example: 1.02% p.a. if the fund performs in line with its Performance Fee benchmark being Composite benchmark: FTSE/JSE SWIX: 97% |STeFI: 3%. 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 FAQ is available on www.sanlamunittrusts.co.za.

When you invest online

Traditionally, investment advice come with a fee of up to 1%. 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%.
  • 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

Investors could not have predicted that globally stock markets would have a bumper first half. In fact 26 of 30 largest stock exchanges in the world registered gains. The MSCI World Equity index, up over 10%, had its fourth best half on record! Unfortunately for us, the JSE shareholder weighted index was flat this year, a reflection of our self-inflicted wounds.

This is despite attempts by our new Finance Minister to reassure investors locally and abroad that fiscal consolidation would remain a priority with the South African bond market, enjoying record inflows of more than R30 billion from abroad. The 10- year bond yield rallied from 9% to 8.5%, but weakened in unison with global bonds to 8.9% at quarter end. Yet concerns abound as to whether Moody’s would downgrade South Africa’s local credit rating, which could precipitate a downgrade from other credit rating agencies and force the country’s debt out of global sovereign bond indices into the less followed high-yield indices and lead to outflows estimated at US$10 billion.

First-quarter GDP growth was the sum of all fears at a dismal -0.7%, plunging the economy into a technical recession. The business cycle downturn has now been running for 46 months with the previous record lasting 51 months ahead of the 1994 democratic elections. The PMI number came in below 45 in April - the lowest since Nenegate - which was a direct impact of the unexpected Cabinet reshuffle and subsequent credit downgrades on business confidence. Nominal household expenditure during the current cycle has been one of the weakest on record, with four successive years of single-digit growth. We are witnessing a double dip in manufacturing fixed-investment plans further adding to the worrying picture. In June, the third draft of the Mining Charter caused much consternation, not because it upped its BEE requirements to 30%, but because key stakeholders such as labour unions and the Chamber of Mines had not been consulted. Furthermore, a deadline of 12 months had been set for compliance with onerous new requirements. In an industry which has shed an estimated 70 000 jobs over the past few years, the uncertainty and court challenge around the Charter is unlikely to foster much investment, furthering the rate of decline of deep level mines. There is a 1% revenue royalty proposed to be paid to BEE owners; this would amount to some R6 billion, which is equivalent to the total dividend paid to shareholders last year, denting future pay-outs.

Therefore, a series of obstacles have beleaguered the JSE this year and the economy remains at the mercy of another downgrade by credit rating agencies, which would increase the cost of financing our budget deficit. As risk appetite remains high globally with the VIX fear index of volatility at record lows, we are missing out on the opportunity to attract foreign equity flows to our shores. As stock pickers, the current environment is truly distinguishing the true contrarian value investors from the rest and the proof remains our actions of capitalising on mispriced opportunities.

What did we do last quarter?

The FTSE/JSE Shareholder Weighted Index (SWIX) was flat for the quarter, with the industrial sector posting another strong quarter, up over 3%. Industrial stocks with a global footprint performed strongly, particularly Naspers, which was up 10%. The financial sector was flat, with the Cabinet reshuffle leading to fears of a repeat of Nene-gate. During the period, the fund outperformed its benchmark and posted a positive return for the year, ranking in the top 10 best performing general equity positive return for the year, ranking in the top 10 best performing general equity funds year to date. This adds to the excellent long-term track record of the fund for over a decade, with 4,6% per annum outperformance of the general equity peer group for over ten years. This means that it is ideally placed to create wealth for investors over the long term and often short-term volatility provides the opportunity to accumulate quality assets at a discounted price.

What added to, and detracted from, performance

The largest position in the portfolio remains Naspers, up 10% this quarter. Naspers’ associate Tencent, which is vying for the top spot as the largest emerging market stock together with Alibaba, reported its earnings up 46%, showing that the company’s growth trajectory remains intact. Tencent is solidifying its gaming and social network offering, while its advertising business has become a new growth vector. With strong cash flow generation, the company can now take more long- dated bets such as its investment in Elon Musk’s Tesla. With Naspers owning a third of Tencent, we therefore offer our clients the opportunity to gain exposure to this global technology theme without having to take money offshore.

Our ability to do detailed stock research has allowed us to identify Dischem as an investment opportunity early on, and we accumulated a stake at listing. This has done well for the fund, with the stock up 24% since listing. There is considerable visibility in the stock as it rolls out more stores and tries out a convenience format and expands its franchise offering to grab its share of the independent pharmacy market. The economics of the business are very attractive and are led by passionate founders.

This quarter was not a very favourable one for financial stocks, given the turmoil which followed the Cabinet reshuffle. We used the opportunity of Barclays Plc for its 33% stake in Absa, which was done at an attractive discount to build a sizeable position in the stock. On a valuation basis the stock trades at a discount to its peers and offers a dividend yield of some 8%, a premium to its peers. The fact that the largest book build in the history of the JSE and was oversubscribed shows that there is still appetite for SA assets if they are priced correctly.

Our strategy

Demand for emerging market equities and quality stocks remains selective. Barclays Plc placed shares of Absa in the largest accelerated book build in history with R37.7 billion of stock (34% shareholding) oversubscribed in the space of 38 minutes. This eclipses the placing done by AngloGold Ashanti in 2007 for R20 billion - interestingly, both placings amounted to US$2.9 billion. This is despite the Public Protector claiming that Absa needs to repay money used to bail out Bankorp, while launching a nefarious attack on the independence of the South African Reserve Bank.

The fund reflects the best views of SIM’s equity unit trust portfolio managers and holds approximately 20 stocks. It is not benchmark-cognisant and owns no offshore stocks. We believe that this portfolio provides the best of both worlds in terms of representing our investment ideas aggressively, while providing adequate diversification. The fund’s largest holdings are companies that are leaders in their respective sectors but whose valuations are below our estimate of fair value.

Sanlam Life Insurance is a licensed financial service provider.
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