Download adviceworx old mutual inflation plus 3

JANUARY 2017
STRATEGY FUND - MULTI-MANAGED
THIS IS THE MINIMUM DISCLOSURE DOCUMENT AS REQUIRED BY BOARD NOTICE 92
YOUR ADVICEWORX MULTI-MANAGED STRATEGY: INFLATION PLUS 3 - 4%
Adviceworx guides clients along their journeys in achieving lasting financial well-being. Our range of strategy funds is specifically designed and managed
to match clients’ Wealth strategy objectives. Our experienced investment team researches and selects asset managers and continually monitors the
funds to ensure that they remain appropriate and efficient.
ADVICEWORX OLD MUTUAL INFLATION PLUS 3 - 4% FUND OF FUNDS
INCEPTION DATE: April 2014
PERFORMANCE TARGET: CPI + 3 - 4% p.a. (net of fees)
ASSETS UNDER MANAGEMENT: R485 million
CATEGORY: South African - Multi-Asset - Medium Equity
INVESTMENT MANAGER: Adviceworx (Pty) Ltd - FSPII Licence no. 44914
RISK PROFILE:
INVESTMENT OBJECTIVE
This is a multi-managed asset allocation fund that aims to produce returns
of inflation plus 3 – 4% net of fees over rolling 4-year periods through a
strategy of flexible asset allocation and stock selection implemented by
some of the best managers in the industry. The fund is ideal for investors
who do not want to manage their own asset allocation and believe in the
benefit of investing with more than one manager.
REGULATION 28 COMPLIANCE
This fund complies with retirement fund legislation. It is therefore suitable
as a stand-alone fund in retirement products where Regulation 28 compliance
is specifically required.
Old Mutual
Multi-Managers
Low to Moderate
Moderate
Moderate to High
High
1
2
3
4
5
PERFORMANCE TO 31 JANUARY 2017
128
Fund
CPI +3% p.a.
Inflation
124
120
116
112
108
104
ASSET MANAGERS OF UNDERLYING FUNDS*
Manager
Low
Responsibility
% Allocation
South African equity & international
2.3%
fixed income
South African & international equity
13.6%
South African equity, fixed income &
27.3%
international equity (emerging markets)
South African equity & fixed income
100
Source: Morningstar
96
Mar-14
Jul-14
Nov-14
Mar-15
2.1%
International equity
1.1%
International equity
2.2%
International equity
1.4%
International equity
0.7%
South African & international property
5.2%
International property
2.7%
South African property
2.9%
South African fixed income
10.7%
International fixed income
2.8%
Nov-15
Mar-16
Jul-16
Nov-16
% Performance (annualised)
24.8%
South African equity
Jul-15
1 year
7.4%
9.4%
6.4%
Fund
CPI +3% p.a.
Benchmark: CPI
3 years
-
5 years
-
Cumulative
since
7 years inception
19.2%
24.8%
15.2%
Source: Morningstar
Fund (since inception)
Rolling 12-month returns
Highest
Average
Lowest
11.6%
6.0%
1.5%
ACTUAL FUND RETURNS WITHIN THE EXPECTED RANGE OF RETURNS*
30%
20%
* This excludes the allocation to the capital account.
ASSET ALLOCATION
50%
10%
47.5%
Actual
Strategic
40%
36.0%
0%
37.0%
-10%
30%
1
24.6%
3
5
10
15
20
Periods (years) to 31 January 2017
20%
14.2%
10%
5.7%
7.0%
8.0%
7.0%
2.9%
5.1%
5.0%
0%
SA Equity
2
SA Fixed Income
SA Property
International
Equity
International
Fixed Income
International
Property
* This is based on historical data using the strategic allocations per asset class for this investment
strategy and the historical returns of each asset class. The bars show the range of returns (highest
and lowest returns) experienced over each rolling investment term over this period. In other words,
the longer the investment period, the smaller the difference between the highest and the lowest
return, indicating reduced volatility. The strategic asset allocations of the investment strategies used
in this analysis may not be the same as the actual asset allocations of the fund. The investment
performance is for illustrative purposes and is calculated by taking the actual initial fees and all
ongoing fees into account and income is re-invested on the reinvestment date.
Source: Old Mutual Multi-Managers
Adviceworx | Tel +27 (0) 11 268 9600 | Fax +27 (0) 11 268 9635 | [email protected] | www.adviceworx.co.za
JANUARY 2017
STRATEGY FUND - MULTI-MANAGED
ADVICEWORX OLD MUTUAL INFLATION PLUS 3 - 4% FUND OF FUNDS
FUND COMMENTARY
Equity markets have started the year on a positive note, responding to
the continued better than expected economic news releases, both locally
and abroad. Surprisingly, the United Kingdom was the western world’s
best performing economy last year expanding at 2.0%, followed by Europe
at 1.9% and then the US at 1.6%. The marginally weaker US dollar was
supportive of commodity prices in January, which led to our resource
shares performing well in the month. The proposed lower tax rates and
deregulation of the banking sector in the US by President Trump have
seen the US equity market hit its all-time high.
At the first meeting of the South African Monetary Policy Committee
(MPC), they increased their forecast inflation rate from 5.8% to 6.2% for
2017 on the back of the higher oil price. Despite this and the general
hawkish tone of the statement, they kept interest rates at 7.0% (prime
overdraft rate 10.5%). The MPC expects our economy to rebound to 1.1%
gross domestic product growth rate this year.
Our local equity market performed well in January, increasing by 4.6%.
The weak start to equity markets means last year’s base is fairly low and
this boosted the 12-month return to 10.3%. Our bond market performed
well benefiting from the high yields at the start of 2016 following the
Nenegate sell-off at the end of 2015. The bond market returned 11.8%
for the 12 months to end January 2017. The local property market returned
a healthy 15.4% and cash returned a good 7.1% over the past 12 months.
The MSCI All Country World Index returned an excellent 17.9% in US dollars
over the last 12 months to end January 2017 but returned -1.5% in rand
terms, once again highlighting the impact the strong rand had on returns.
Global property returned 9.3% for the last 12-month period, while global
bonds delivered 2.4%. In the prevailing environment of low interest rates
and accommodative monetary policy, the returns on global cash remain
just above zero in the UK and US and just below zero in Europe and Japan.
Asset allocation
We are currently targeting a neutral equity allocation for the strategies.
This means that the total equity allocation for local and offshore is now
in line with the total strategic allocation for equity. We remain cognisant
of the overweight exposure to international equity, and the underweight
exposure to local equity, relative to its strategic asset allocation, but we
still believe that international equity is offering better value than local
equity. The strategy also maintains an overweight exposure to SA fixed
income. Fixed income instruments are now reasonably valued. The flexible
fixed income mandate used in the strategy ensures that the manager has
the ability to opportunistically position the portfolio to take advantage of
this, while also maintaining a focus on capital preservation. We are
confident that the strategy is optimally positioned to achieve its long term
objective.
TOP 10 EQUITY EXPOSURES AS AT 31/12/2016
Holding
Naspers Limited
British American Tobacco plc
Standard Bank Group Limited
Old Mutual plc
Steinhoff International Holdings
MTN Group Limited
Barclays Africa Group Limited
Sasol Limited
Anglo American Plc
FirstRand Limited
Sector
Consumer Services
Consumer Goods
Financials
Financials
Consumer Goods
Telecommunications
Financials
Basic Materials
Basic Materials
Financials
% of Fund
3.6%
1.0%
0.9%
0.9%
0.9%
0.8%
0.7%
0.6%
0.6%
0.5%
10.5%
Source: Old Mutual Multi-Managers
DISTRIBUTIONS (QUARTERLY):
For the last 12 months: 31/12/2016
30/09/2016
30/06/2016
31/03/2016
8.91c per unit
1.36c per unit
3.32c per unit
1.57c per unit
2.66c per unit
ONGOING (ALL FEES ARE VAT INCLUSIVE):
Total expenses (30/09/2016)
Total Expense Ratio (TER)
Transaction Cost (TC)
Total Investment Charge*
Class B1
1.98%
0.09%
2.07%
*This includes:
• Fund of funds service fee: 0.97% p.a., which is inclusive of
0.40% FSPII investment management fees.
• Underlying funds’ service fee, which is accrued daily and paid
on a monthly basis (certain managers may charge performance
fees).
• Other charges incurred by the underlying funds are deducted
from their portfolios.
• As the weightings of the underlying funds may change from
time to time, the total fees may vary.
With effect from 1 January 2016, a new methodology in respect of the calculation of total expense
ratios (TERs) was implemented by the unit trust industry. The key change in the methodology
is that TERs used to be calculated on a rolling one-year basis, which has now moved to a
rolling three-year basis (or since inception if less than three years history is available). This has
negatively impacted the TER’s of the Adviceworx funds as they do not have a three year history.
As a result costs incurred at the inception of the fund, when assets under management were
relatively small, have a significant impact on the overall TER calculation.
The TER is a historic measure of the impact the deduction of management and operating costs
has on a fund’s value. A higher TER does not necessarily imply a poor return, nor does a low TER
imply a good return. The current TER, which includes the annual service fee, may not necessarily
be an accurate indication of future TERs. Transaction Cost (TC) is a necessary cost in administering
the fund and impacts fund 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 fund, the
investment decisions of the investment manager and the TER.
TAX REFERENCE NUMBER: 1338/497/18/1
Source: Old Mutual Multi-Managers as at 31 January 2017
We aim to treat our clients fairly by giving you the information you need in as simple a way as possible, to enable you to make informed decisions about your investments.
• We believe in the value of sound advice and so recommend that you consult a financial planner before buying or selling unit trusts. You may, however, buy and sell without the help of a financial planner. If you do use
a planner, we remind you that they are entitled to certain negotiable planner fees or commissions.
• You should ideally see unit trusts as a medium- to long-term investment. The fluctuations of particular investment strategies affect how a fund performs. Your fund value may go up or down. Therefore, we cannot
guarantee the investment capital or return of your investment. How a fund has performed in the past does not necessarily indicate how it will perform in the future.
• The fees and costs that we charge for managing your investment are disclosed in the relevant fund’s Minimum Disclosure Document (MDD) or table of fees and charges, both available on our public website or from
our contact centre.
• Additional information on this proposed investment can be obtained, free of charge, from our contact centre.
• Fund valuations take place at approximately 16:00 each business day. Purchase and redemption requests must be received by the manager by 14:00 each business day to receive that day’s price. For the manager to
receive the requests by 14:00 from Old Mutual Investment Services (Pty) Limited (OMIS), you must submit your request to OMIS by 15:00 the previous business day.
• Unit trusts are traded at ruling prices, may borrow to fund client disinvestments and may engage in scrip lending. The daily price is based on the current market value of the fund’s assets plus income minus expenses
(NAV of the portfolio) divided by the number of units on issue. Daily prices are available from OMUT or Adviceworx contact centres.
• This fund holds assets in foreign countries and therefore it may have risks regarding liquidity, the repatriation of funds, political and macro-economic situations, foreign exchange, tax, settlement, and the availability
of information.
• A fund of fund is a portfolio that invests in other funds which levy their own charges, which could result in a higher fee structure for the fund of funds.
• OMUT is the manager of this co-branded fund and has full legal responsibility for it.
• The Net Asset Value to Net Asset Value figures are used for the performance calculations. The performance quoted is for a lump sum investment. The performance calculation includes income distributions prior to the
deduction of taxes and distributions are reinvested on the ex-dividend date. Performances may differ as a result of actual initial fees, the actual investment date, the date of reinvestment and dividend withholding
tax. Annualised returns are the weighted average compound growth rates over the performance period measured. Performances are in ZAR and as at 31 January 2017. Sources: Morningstar and Old Mutual Wealth.
Adviceworx partnered with Old Mutual Unit Trust Managers (RF) (Pty) Ltd (“OMUT”) to create a range of co- branded collective investment scheme funds of funds underlying the investment strategies offered by Adviceworx
to their clients. Adviceworx and OMUT are both part of the Old Mutual Wealth group.
Old Mutual Unit Trust Managers (RF) (Pty) Ltd (OMUT), registration number 1965 008 47107, is a registered manager in terms of the Collective Investment Schemes Control Act 45 of 2002. Old Mutual is a member of the Association
for Savings and Investment South Africa (ASISA). OMUT has the right to close the portfolio to new investors in order to manage it more efficiently in accordance with its mandate. Tel: 0860 234 234, Internet: www.omut.co.za,
Email: [email protected]. Trustee: Standard Bank, PO Box 54, Cape Town 8000. Tel: +27 21 401 2002, Fax: +27 21 401 3887.
Issued: February 2017
Adviceworx | Tel +27 (0) 11 268 9600 | Fax +27 (0) 11 268 9635 | [email protected] | www.adviceworx.co.za