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for private investors can be accessed on the Personal area of our site. Terms & conditions.
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
Minimum Disclosure Document (Fund Fact Sheet)
Performance Fees FAQ
Cumulative Growth Over Time
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.
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.
Retail Class (%)
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.
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) | 1.13% 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 1.13%, a performance fee of 0.09% of the net asset value of the class of participatory
interest of the portfolio was recovered.
Transaction Cost (TC) | 0.45% 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) | 1.58% 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.
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
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 end of the quarter brought a number of 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 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 under-shooting 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 toward emerging markets globally. The latter is
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 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 R63bn for the year (while the overall
market recorded net outflows of some R35bn). 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.
As a concentrated fund, the Steinhoff debacle was a huge blow and detracted substantially
from what had been a solid performance in 2017 until the end of November. The fund
performance, which was among the top quartile, dropped towards the third quartile of the
category - a huge disappointment due principally to the Steinhoff share price collapse. The
return for the year aggregated to 11.9% - below the category average return. Steinhoff was
a high conviction holding across our range of funds and as a result we had a large holding
in this concentrated portfolio. We will be working tirelessly in pursuing every legal route to
recover value for our investors and make sure that severe action is taken against members
of the management team found negligent.
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
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 investment
process allows for a bear case scenario, which would incorporate our worst case forecast
assumptions, and even then we saw upside to the stock. In reality, even our bear case 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’ - 100 year old business with $100bn 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 a 100% premium to
embedded value and will be committing further capital to develop a bank.
The General Miners lagged, up 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 metals, was 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.
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 Federal Reserve actions. Last year emerging markets benefitted 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 side-lines,
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
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 whose valuations are below our estimate of fair value.
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