Download Satrix Balanced Index Fund

(Fund Fact Sheet)
Satrix Balanced Index Fund
January 2017
Fund Objective
The Satrix Balanced Index Fund is Regulation 28 compliant and offers diversified
exposure to all the key local and international asset classes. The Fund tracks a
composite index benchmark, with a long term strategic asset allocation, rebalanced
on a bi-annual basis in March and September
Total Expense Ratio (TER) | The Total Expense Ratio (TER) is the charges incurred by the
portfolio, for the payment of services rendered in the administration of the CIS. The TER is
expressed as a percentage of the daily NAV of the CIS and calculated over a period of 1 year.
The TER is calculated since inception from 1 October 2015 to 30 September 2016. A higher TER
does not imply a poor return nor does a low TER imply a good return.
The Transaction Cost (TC) is the cost incurred by the portfolio in the buying and selling of
underlying assets. This is expressed as a percentage of the daily NAV of the CIS and calculated
over a period of 1 year on an annualised basis.
Fund Strategy
Top 10 Holdings
The composite benchmark of the fund comprises the following asset class building
blocks:
Securities
Naspers -N-
4.75
Asset class Index exposures
Smart SA equity core (55%)
25% Proprietary Satrix Stable
Dividend Index
25% S&P Quality Index
50% Proprietary Satrix Momentum Index
SA bonds (8%)
FTSE/JSE All Bond Index
SA property (6%)
FTSE/JSE SA Listed Property Index
SA inflation-linked bonds (6%)
Barclays SA Gov Inflation-Linked Bond Index
SA cash (5%)
SA Nominal Cash
International equities (15%)
MSCI World Equity Index
International bonds (5%)
Barclays Global Treasury Index
The asset composition of the index aims to target a CPI+5.5% return over the long
term.
FirstRand / RMBH
3.66
Steinhoff Int Hldgs N.v
2.80
Bidvest
2.18
Sanlam
2.18
AVI
2.06
Capitec
2.01
Stanbank
1.94
BTI Group
1.72
Vodacom
1.54
% of Portfolio
Top 10 Holdings as at 31 Dec 2016
Tax Free Unit Trust
This Fund qualifies as a tax free investment according to section 12T of the Income
Tax Act, with effect from 1 March 2015. South African individuals qualify for the
associated tax benefits namely no tax on dividends, income or capital gains whilst
still enjoying all the benefits of a unit trust. Note contributions to tax free investments
are limited to R30 000 per tax year, with a lifetime limit of R500 000. Amounts
invested in excess of these permissible thresholds are taxable.
Fund Information
Performance (Annualised) as at 31 Jan 2017 on a rolling monthly basis
ASISA Fund Classification
Risk profile
Benchmark
Proprietary Satrix Balanced Index
Portfolio launch date
Oct 2013
Performance (Cumulative) as at 31 Jan 2017 on a rolling monthly basis
Fee class launch date
Oct 2013
B1-Class
Minimum investment
Lump sum: R10 000 l Monthly: R500
1 year
7.84
8.21
Portfolio size
R1 464.7 million
3 year
27.44
30.95
Last two distributions
30 Jun 2016: 25.60 cents per unit
31 Dec 2016: 16.26 cents per unit
5 year
B1-Class
Fund (%)
Benchmark (%)
1 year
7.84
8.21
3 year
8.42
9.40
5 year
N/A
N/A
SA - Multi-Asset - High Equity
Since inception
7.53
8.47
Moderate Aggressive
Annualized return is the weighted average compound growth rate over the period measured.
Since inception
Fund (%)
Benchmark (%)
N/A
N/A
26.62
30.25
Income decl. dates
30 June l 31 Dec
Income price dates
1st working day in July & January
Valuation time of fund
17:00
Transaction cut off time
15:00
Actual highest and lowest annual returns*
Daily price information
Local newspaper and www.satrix.co.za
Highest Annual %
19.45
Repurchase period
3 working days
Lowest Annual %
(1.06)
Cumulative return is aggregate return of the portfolio for a specified period
Fees (Incl. VAT)
B1-Class (%)
Advice initial fee (max.)
N/A
Manager initial fee
N/A
Advice annual fee (max.)
1.14
Manager annual fee
0.29
Total Expense Ratio (TER)
0.39
Transaction Cost (TC)
0.29
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.
Where this fund invests into other unit trusts, it does so into zero fee classes except for offshore
equity (0.30%) and offshore bonds (0.12%).
Total Expense Ratio (TER) | The Total Expense Ratio (TER) is the charges incurred by the
portfolio, for the payment of services rendered in the administration of the CIS. The TER is
expressed as a percentage of the daily NAV of the CIS and calculated over a period of 1 year.
The TER is calculated since inception from 1 October
2015 toMinimum
30 September
2016.Document
A higher TER
This monthly
Disclosure
should be viewed in conjunction with the Glossary Terms Sheet.
does not imply a poor return nor does a low TER imply a good return.
The Transaction Cost (TC) is the cost incurred by the portfolio in the buying and selling of
underlying assets. This is expressed as a percentage of the daily NAV of the CIS and calculated
over a period of 1 year on an annualised basis.
Issue Date: 20 Feb 2017
Page 1
(Fund Fact Sheet)
Satrix Balanced Index Fund
January 2017
high levels of economic and policy uncertainty on both the domestic and
international stages keeping us pensive as we embark on 2017. The last time the
momentum factor experienced a drawdown to this extent was during the 2008 global
financial crisis; the difference here in 2016 was that the market factor did not
spectacularly collapse as it did in 2008 - one might say strange things happen as we
emerge from an environment of financial repression. On the international stage the
price and earnings revision factors have also been among the poorer performers.
There has, though, been a recovery in the factor during the last quarter of 2016.
Asset Allocation
Bonds
7.99
Property
6.34
Equities
55.16
International Assets
19.10
Inflation Linked Bonds
5.91
Cash and Money Market Assets
5.50
00
05
10
15
20
25
30
35
40
45
50
55
60
Portfolio Manager(s) Quarterly Comment - 31 Dec 2016
Market review | Global and Local Capital Markets
The year 2016 was definitely full of surprises starting with the Bank of Japan
stunning the market with a surprise move to negative interest rates, muted Chinese
GDP growth and the Brexit vote that wiped out about $2 trillion of global stocks
overnight and knocked the British pound to 31-year lows. This was followed by
Trump winning the presidency in a historic election upset in the US, which led to the
dollar reaching a 14-year high in November and also the long-awaited Fed interest
rate hike in December, with probably more to come in 2017.
The standout event over the last quarter must be the spectacular sell-off in US long
bonds following the election of Donald Trump as president. The yield of the 30-year
bond increased from 2.3% in October to 3.2% in mid-December as markets priced in
the likelihood of fiscal stimulus with the Republicans firmly in control. The Fed
continued on a path of vigilance against inflation as leading indicators point to
growth and the first signs of wage inflation become visible. Both these events are a
harbinger for a process that is likely to lead to higher global bond yields in future.
The 2016 performance of global equity markets was reasonable at best. The USD
return of the MSCI Developed Markets Index was 8.2% and that for the MSCI
Emerging Markets (EM) Index was 11.6%. The MSCI World Value Index
outperformed its Growth counterpart by 7.8% over the last six months, a level that
only occurred for 6% of the time over the last 20 years. Despite the 2016 rally, the
MSCI Value shares are still close to historic lows in terms of earnings, valuations
and price levels relative to Growth shares. The underperformance of Value stocks
has closely tracked bond yields and inflation expectations, both of which are in a
bottoming process. Foreign bonds had a particularly tough final quarter of 2016 (7.1% in USD), but returned 2.1% in USD for the full calendar year. The global bond
sell-off (post the Trump victory) came on the back of higher inflation and economic
growth expectations accompanied by a steeper interest rate trajectory.
It is our view that global growth will be driven by an acceleration in the US with
stable growth in the Eurozone. The Chinese economy will probably grow at a slightly
lower rate as fiscal stimulus and the leveraging of the property sector slow down.
We also expect stable growth in emerging markets in general and SA recovering
from a low base as commodity prices stabilise. The MSCI SA Index (+18.4%)
outperformed the MSCI EM Index (+11.6%) in dollar terms in 2016, as the rand
(+12.6%) recovered to end 2016 as the third-best performing EM currency, helped
by the political landscape stabilising somewhat, SA avoiding the foreign currency
ratings downgrade and an improvement in commodity prices and EM sentiment.
However, in local currency terms, the FTSE/JSE All Share Index (+2.6%)
underperformed SA bonds (+15.5%), SA property (10.2%), cash (+7.4%) and SA
inflation-linked bonds (6.3%) in 2016. From a sector perspective 2016 was a year for
value cyclicals with General Mining (+61.6%), Platinum (+50.5%) and Banks
(+33.6%) among the best performing sectors. The eventual appointment of Finance
Minister Pravin Gordhan, who helped SA avoid the ratings downgrade in 2016, and
an improvement in EM risk sentiment helped the rand to achieve its best year since
2009, appreciating by 12.6% in 2016.
Momentum: Price momentum and earnings revision factors have been sternly
tested in the 2016 calendar year. This last year has brought with it extraordinarily
high levels of economic and policy uncertainty on both the domestic and
Stock selection within the resource sector was the primary driver of positive relative
performance. Financials were benign in effect while industrials were slightly
negative. Stocks that detracted most were Naspers (NPN), British American
Tobacco (BTI) and Mediclinic International PLC (MEI). In the resources sector the
overweight position in Assore (ASR) added most after being the heaviest detractor
in the previous quarter. Kumba Iron Ore (KIO) and Anglo American plc (AGL) were
also among the top value-adding positions over the quarter.
As we closed the year, we transitioned the portfolio based on the evaluation of new
factor signals and the risk levels in the portfolio with only one share (AngloGold
Ashanti ANG) being removed. The portfolio has now completed its exit from all
shares with outright gold exposure. South 32 (S32) exposure has been topped up
while underweights to MTN Group (MTN) and Sasol (SOL) were narrowed to keep
tracking error limits within bounds. The biggest fundamental change in the portfolio’s
positioning over the course of 2016 has been the rotation into the hard commodity
stocks whose price and earnings revision signals remain strongest in our domestic
universe. It is important to mention and note that within this uncertain environment
our risk management overlays in our portfolio have added value when one
compares our performance to other similar, competing, passive and active
momentum products.
Stable Dividend: Strong dividend yield and cash flow-related value attributes
helped steer this index home to a strong display in 2016. Accompanied exposure
from shares with strong foreign sensitivity exposure enhanced the performance of
this factor in the last quarter of 2016. Simultaneous underexposure to price
momentum and large-cap shares (Naspers NPN in particular) was a helpful
enhancer.
As mentioned, the largest relative performance value-add came from the
underweight position to Naspers (NPN) while overweight positions in the Foschini
Group (TFG), Truworths (TRU) and Barloworld (BAW) made positive contributions.
The overweight position in Woolworths (WHL) and underweight positions in Anglo
American plc (AGL) and Sasol (SOL) detracted ever so slightly.
As long as the extraordinarily uncertain market environment persists this factor is
likely to provide investors with the necessary defensive character inside their
portfolio construct.
Quality: The S&P Quality Index had a largely indifferent 2016 and final quarter of
2016 delivering a return which was largely similar to the market (SWIX). In spite of
this, its diversification benefits have been of significant value within this factor
portfolio construct. As experienced in the third quarter of 2016, exposure to the mid
Issue Date: 20 Feb 2017
Risk Profile (Moderate)
Glossary Terms
This is a medium-risk portfolio that aims to deliver income and capital growth over the medium
term. This portfolio is designed to minimise volatility and aims to cultivate as smooth a ride as
possible. There is some exposure to risky asset classes (such as equities) necessary to grow
capital over the medium to long term. This portfolio has a medium to long-term investment horizon.
The portfolio is diversified across all major asset classes with an average exposure to equities,
and offers real (after inflation) returns but with lower volatility.
Collective investment scheme (CIS)
A collective investment scheme (or unit trust) comprises a pool of assets such as equities, bonds,
cash and listed property, which are managed by an investment manager and is governed by the
Collective Investment Schemes Control Act no 45 of 2002. Each investor has a proportional stake
in the CIS portfolio based on how much money he or she contributed. The word “unit” refers to the
portion or part of the CIS portfolio that is owned by the investor. The “trust” is the financial
instrument that is created in order to manage the investment. The trust enables financial experts to
invest the money on behalf of the CIS investor.
Additional Information
Although all reasonable steps have been taken to ensure the information on this
website/advertisement/brochure is accurate. The information to follow does not constitute financial
advice as contemplated in terms of the Financial Advisory and Intermediary Services Act. Use or
rely on this information at your own risk. Independent professional financial advice should always
be sought before making an investment decision.
*The highest and lowest annualised performance numbers are based on 10 non-overlapping one
year periods or the number of non-overlapping one year periods from inception where
performance history does not yet exist for 10 years.
The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective
investment schemes are generally medium- to long-term investments. Please note 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. A schedule of fees and charges and
maximum commissions is available from the Manager, Satrix Managers (RF) (Pty) Ltd, a
registered and approved Manager in Collective Investment Schemes in Securities. Additional
information of the proposed investment, including brochures, application forms and annual or
quarterly reports, can be obtained from the Manager, free of charge. Collective investments are
traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are
calculated on a net asset value basis, which is the total market value of all assets in the portfolio
including any income accruals and less any deductible expenses such as audit fees, brokerage
and service fees. Actual investment performance of the portfolio and the investor will differ
depending on the initial fees applicable, the actual investment date, and the date of reinvestment
of income as well as dividend withholding tax. Forward pricing is used. The Manager does not
provide any guarantee either with respect to the capital or the return of a portfolio. The
performance of the portfolio depends on the underlying assets and variable market factors.
Performance is based on NAV to NAV calculations with income reinvestments done on the ex-div
date. Lump sum investment performances are quoted. The portfolio may invest in other unit trust
portfolios which levy their own fees, and may result is a higher fee structure for our portfolio. All the
portfolio options presented are approved collective investment schemes in terms of Collective
Investment Schemes Control Act, No 45 of 2002 (“CISCA”). The fund may from time to time invest
in foreign instruments which could be accompanied by additional risks as well as potential
limitations on the availability of market information. The Manager has the right to close any
portfolios to new investors to manage them more efficiently in accordance with their mandates.
The portfolio management of all the portfolios is outsourced to financial services providers
authorized in terms of the Financial Advisory and Intermediary Services Act, 2002. Standard
Chartered Bank is the appointed trustee of the Satrix Managers Scheme.
Trustee Information
Standard Chartered Bank
Tel no.: 011 217 6600, E-mail: [email protected]
Composite benchmark
Multi-asset class funds offer exposure to various asset classes including cash, equity, bonds and
property both locally and internationally. In a passively managed multi-asset class fund each
underlying asset class is managed to deliver the return of its respective index. For example, in the
SATRIX Balanced Index Fund the property exposure is managed to deliver the performance of the
FTSE/JSE SA Listed Property Index (J253). The composite index simply combines the underlying
indices, each adhering to a specified weight.
Linked Investment Service Provider (LISP)
A Linked Investment Service Provider is a financial institution which packages, distributes and
administers a broad range of unit trust based investments. Any investment made through these
products gives an investor a single point of entry into a selection of different investments.
Index
An index is a unique grouping of shares, selected according to a pre-defined methodology e.g.
largest market capitalisation or highest dividend yield. An index can be constructed to represent
the overall market, a specific sector or a theme. The index performance can be used as a
benchmark against which to compare active fund performances. A well-constructed index should
be transparent, replicable and investable.
Long term strategic asset allocation
The long term strategic asset allocation is the target allocations for the various asset classes
within the composite benchmark. The composite is rebalanced back to the strategic asset
allocation biannually (March and September). The strategic asset allocation of the SATRIX
Balanced Index aims to return CPI+5.5%pa, over the long-term.
Rand-hedge protection
A Rand-hedge is a way of maximising returns on your investment in rand terms, through an
offshore investment. The rand value of your investment increases if the currency declines (when
the rand depreciates, the rand value of your offshore investment appreciates).
Smart beta
Before we can explain smart beta, we need to define the investment terms beta and alpha. Simply
put, beta is the return you as an investor receive simply by being invested in the market. For
example, the return you receive by investing in the FTSE/JSE All Share index is a beta return. If
you employ an active fund manager (one who studies companies and chooses a basket of shares
for you) who gives you a return which is different to that of the market (either positive of negative),
this under- or outperformance of the market is called alpha.
Alpha = Fund performance - market performance (beta)
Smart beta funds attempt to capture excess returns in a systematic way. The idea is to deliver a
better return while taking on less risk than the JSE All Share index. The result of weighting stocks
differently to the JSE is that you have a fund which differs from the JSE in terms of: (a) individual
stock exposure (b) sector exposure (e.g. resources, financials and industrials), and (c) factor
exposure (e.g. foreign, size, yield and market sensitivity)
Total Expense Ratio (TER)
This is the total costs associated with managing and operating an investment (excluding
administration, financial planning and servicing fees). These costs consist primarily of
management fees and additional expenses such as trading fees, legal fees, auditor fees and other
operational expenses. The total cost of the fund is divided by the fund's total assets under
management to arrive at a percentage amount, which represents the TER.
Volatility
Volatility is a measure of ‘risk’, and refers to the extent to which the price of an investment or fund
fluctuates over a certain period of time. Funds with a high volatility usually offer the potential for