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Skip Navigation LinksCore Funds

Sanlam Investment Management
Value Fund

A big portion of the long-term outperformance by value managers – relative to other share portfolio managers - comes from their focus on preserving capital when shares are expensive.

Quick Facts About The Fund

Sanlam Investment Management (SIM) Value Fund

Launch Date: 01 October 1998
Fund Size: R2 536.3 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): 1.64%
Launch Date: 01 October 1998
Fund Size: R2 536.3 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): 1.64%

Fund Strategy

This fund may invest in any listed share, but focuses on financially sound companies which offer exceptional value. This portfolio may invest in derivatives for efficient portfolio management. This portfolio may also invest in participatory interests of underlying unit trust portfolios.


Illustrative Annualised Investment Performance

Performance

Annualised as at 30 Apr 2017 on a rolling monthly basis
Retail Class Fund (%) Benchmark (%)
1 year 1.94 4.50
3 year 1.79 6.32
5 year 9.39 12.67
10 year 8.24 9.84

Annualised return is the weighted average compound growth rate over the period measured
Actual highest and lowest annual figures for rolling 10 years
Highest Annual % 48.74
Lowest Annual % -21.37

Minimum Disclosure Document (Fund Fact Sheet)

Performance Fees FAQ

Illustrative Annualised Investment Performance

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

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.

1. Anglos 4.96%
2. Steinhoff Int Hldgs N.v 4.44%
3. Allied Electronics Corp A 4.20%
4. Sanlam Global Best Ideas Universal Fund E 4.10%
5. Hudaco 3.97%
6. Old Mutual 3.86%
7. Reinet Investments 3.80%
8. Investec 3.19%
9. Sasol 3.07%
10. Stanbank 3.00%
Cash And Money Market Assets
Equity Investment Products
International Assets
Equity Technology
Equity Financials
Equity Telecommunications
Equity Consumer Services
Equity Consumer Goods
Equity Industrials
Equity Basic Materials
Property
Equity Health Care
1. Steinhoff Int Hldgs N.v 4.46%
2. Anglos 3.84%
3. Sasol 3.75%
4. Old Mutual 3.69%
5. Sanlam Global Best Ideas Universal Fund E 3.69%
6. Stanbank 3.60%
7. Oracle Corp 3.35%
8. Reinet Investments 3.30%
9. Hudaco 3.21%
10. BHP Billiton 3.05%

Claude Van Cuyck

Portfolio Manager - B.Com (Hons); CFA

Claude began his career in 1993 when he worked for Karlein Investments (a private client investment company). He first joined Sanlam Asset Management in 1994 as an equity analyst. After five and a half years of service he worked as an analyst and portfolio manager with Gryphon Asset Management, where he was responsible for running unit trusts and pension fund portfolios, as well as retaining research responsibilities. He returned to SIM in 2002, where he became the Head of Equities and also successfully ran the Sanlam Investment Management General Equity unit trust for five years from January 2006, achieving consistent top-quartile performance for each of the five years during which the fund was under his management. Before that, he ran the SIM Industrial Fund, which achieved S&P and a Raging Bull award. Claude co-founded SIM Unconstrained Capital Partners with Ricco Friedrich in 2011.

Claude Van Cuyck

Portfolio Manager - B.Com (Hons); CFA

Claude began his career in 1993 when he worked for Karlein Investments (a private client investment company). He first joined Sanlam Asset Management in 1994 as an equity analyst. After five and a half years of service he worked as an analyst and portfolio manager with Gryphon Asset Management, where he was responsible for running unit trusts and pension fund portfolios, as well as retaining research responsibilities. He returned to SIM in 2002, where he became the Head of Equities and also successfully ran the Sanlam Investment Management General Equity unit trust for five years from January 2006, achieving consistent top-quartile performance for each of the five years during which the fund was under his management. Before that, he ran the SIM Industrial Fund, which achieved S&P and a Raging Bull award. Claude co-founded SIM Unconstrained Capital Partners with Ricco Friedrich in 2011.

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

Retail Class (%)

Advice initial fee (max.) 3.00%
Manager initial fee N/A
Advice annual fee (max.) 1.14%
Manager annual fee 1.53%
Total Expense Ratio (TER) 1.64%

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.

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 own.

Total Expense Ratio (TER) | PERIOD: 1 October 2013 to 30 September 2016
Total Expense Ratio (TER) | 1.64% 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 1.64%, a performance fee of 0.06% of the net asset value of the class of participatory interest of the portfolio was recovered.

Transaction Cost (TC) | 0.32% 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) | 1.96% 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: 1.53%, Fee at Benchmark: 1.53%, Fee hurdle: FTSE/JSE All Share Index, Sharing ratio: 20%, Minimum fee: 1.53%, Maximum fee: 3.42%, Fee example: 1.53% 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 FAQ is available on www.sanlamunittrusts.co.za.

When you invest online

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

  • No initial account set-up fees – usually charged at 2.28%.
  • 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

  • Total Annual Fee: 1.14%

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 2016 was another weak quarter for South African equities, which finished the year with a total return of 2.6%, underperforming cash for the second year in a row. The low returns in 2016 were largely due to the impact of the stronger rand (12.6% appreciation in USD) on the dual-listed heavyweights such as British American Tobacco (-9% for the year), Richemont (-14% for the year), South African Breweries (-16% before it was delisted) and Naspers (+1% for the year). In contrast, mid and small-cap shares returned 27% and 21% respectively in 2016.

The disappointing returns in the fourth quarter were in spite of South Africa managing to avoid a credit downgrade by Standard & Poor’s (for now) and the positive impact that the Trump victory had on non-precious metal commodity stocks. Even if you had correctly predicted the Trump victory, global markets reacted differently to what most would have expected. Overall, however, the impact of the Trump victory was negative for emerging markets and South Africa was no exception.

Financials (+2.9%) outperformed industrials (-4.7%) and resources (-1.2%). The best performing sectors in the fourth quarter were fixed-line telecoms (+25%), industrial metals (+19%), support services (+13%) and banks (+11%). The worst performing sectors included gold (-36%), platinum (-33%), media (-15%), healthcare (-13%) and tobacco (-11%).

Performance

Our continued focus on identifying mispriced opportunities and having the courage of our convictions to sometimes go against the crowd paid off for our clients in 2016. In spite of the market showing negative returns, our clients’ portfolios showed positive returns in the fourth quarter and significantly outperformed their respective benchmarks. Big contributors to these positive returns came from our investments in Barloworld (+42%), Altron (+42%), Anglo American (+13.8%), Investec (10.8%) and Hudaco (+11%).

Stocks which detracted from performance in the fourth quarter included our investments in Northam (-22%), Group Five (-11%), Reinet (-10%), Shoprite (-11%) and Steinhoff (-7%).

The benchmark-agnostic and diversified approach we take in allocating capital meant the portfolios were better able to withstand the several surprises and shocks during the year. In addition, the number of mispriced opportunities in the mid and small-cap space provided a source of differentiated returns compared to some of our peers. On a net basis our investments in smaller-cap companies contributed about 20% of the excess returns for the year.

The outperformance we achieved this year was based on a very conservative investment approach. Our portfolios did not have excessive concentration in any one sector or stock. In particular, our overall position in resources was not materially higher than the market and well below many of our competitors. However, the stocks which we were invested in like Anglo American (+182%) and Northam (+54%) performed substantially better than the Resources Index (+34.2%).

Outlook

There have only been three periods going back to 1960 when equities underperformed cash for more than two successive years. The last one was in the nineties when cash beat equities 60% of the time and equities actually underperformed cash for four consecutive years. In the years in which cash beat equities it was mostly (70% of the time) when returns from equities were negative. Looking back, the best time to invest in equities was in the year immediately after the year in which they underperformed cash. The average annual excess return from equities was 18% higher than cash in the year following equities’ underperformance. This is substantially ahead of the annual excess return from equities versus cash of 9.6% since 1960. Further supporting the case for equities is the current valuation. The FTSE/JSE All Share Index 12-month forward price-toearnings ratio has de-rated from almost 16x a year ago to 13x today, making equities the cheapest they have been since 2013.

While valuations are more favourable than they have been for some time, there is no shortage of potential surprises on the horizon. The rating agencies remain concerned about the adverse consequences of persistently low GDP growth in South Africa. While growth is expected to recover in 2017, it still remains below the levels required to create jobs. On the positive side, food inflation is likely to have peaked, alleviating pressure on consumers and staving off any further interest rate increases.

On the political front, the focus will increasingly shift to the ANC succession dynamics ahead of the elective conference at the end of the year. While we are hopeful that the best outcome will be achieved for all South Africans, the road will be bumpy.

On the international front, the Trump trade has probably run ahead of fundamentals. Many of Trump’s promises such as immigration tightening, tariffs, border taxes and repealing Obamacare are negative for risk assets. The market seems only to have focused on the positives such as tax cuts, infrastructure spending and deregulation. Whether he can deliver or not remains to be seen.

With the US interest rate cycle on the up, we see challenging times ahead for stocks which have benefited from artificially depressed interest rates. This includes defensive companies such as healthcare and tobacco as well as gold, all of which have been overpriced for some time. We remain underweight expensive rand hedge and defensive stocks and although we are starting to see better prices than we have had in a while, we have been slow to commit new capital to some of these companies as the margin of safety is still not big enough.

We continue to see good opportunities amongst select mid and small-cap stocks. In addition, easing food inflation will be supportive of food producers and we own several of them (Tiger Brands, Clover and Rhodes Food Group). Finally, there are always a few significantly mispriced opportunities which are trading well below intrinsic value. While these may not be of the best quality, the market’s assessment of their prospects is far too negative. These would include the likes of Old Mutual, Altron, Stefanutti and Datatec, to mention a few.

In conclusion, the outlook for 2017 on balance looks better than a year ago. Valuations are the most attractive since 2013 and the outlook for earnings growth is supportive of reasonable returns. The macro and political landscape, however, remains uncertain and may influence the improving fundamentals in the short term.

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