NAV on 2019/09/16
|NAV on 2019/09/13
|52 week high on 2019/06/20
|52 week low on 2019/08/27
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
Satrix Managers (Pty) Ltd.
South African--Equity--Large Cap
FTSE/JSE Equally Weighted Top 40 Index (J110) (gross of fees)
Satrix Investment Team
Satrix Equally Weighted Top 40 Index Fund -Jun 19
Global equities rebounded in June as the US-China trade war ebbed and Trump backed off on some of his threats. Global growth data remained negative with further declines in PMIs. Although the 19 June Federal Open market Committee meeting saw no rate change, it delivered a strong statement, virtually promising a rate cut at the 31 July meeting.
During the second quarter of 2019, the MSCI World Index realised a gross return of just more than 4%, outperforming the MSCI Emerging Markets Index, which managed a very modest return of 0.6% over the same period. Global bond yields continued to rally with US 10-year yields down to 2.01% and trading sub-2% for the first time since late 2016. US 10-year yields are down more than 125 basis points since November 2018.
In the first half of 2019, the MSCI World Index delivered a total return of 17.4%, outperforming Emerging Markets (+10.8%). Within the MSCI World, North America was the best performing region with a return of 18.9%, followed by Europe’s 16.5% and the Pacific region’s 11.3%.
In South Africa weak economic data dominated the post-election headlines with firstquarter GDP falling 3.2% quarter-on-quarter, worse than the -1.6% Bloomberg consensus. The President’s State of the Nation Address promised little more than further Eskom bailouts and progress on spectrum auctions with few details/deadlines.
During the second quarter of 2019, the FTSE/JSE All Share Index (ALSI) posted a total return of 3.9% versus the 8% for the first three months of 2019. SA Financials was the best performer, returning 5.4%, followed by SA Industrials with a total return of 4%. SA Resources only managed a gain of 2.4% in the second quarter after the large 17.8% total return in the previous quarter. The FTSE/JSE All Bond Index (ALBI) returned 3.7% after posting a similar return of 3.8% in the first quarter. SA Property managed to outperform bonds, posting a total return of 4.5%. Among the other important indices the FTSE/JSE Shareholder Weighted All Share Index (SWIX) (2.86%) performed in line with the FTSE/JSE Capped Shareholder Weighted All Share Index (Capped SWIX) (2.90%).
In the first half of 2019, SA Equities was the best performing asset class, with the ALSI delivering a total return of 12.2%. SA Bonds gained 7.7%, whilst SA Property was the worst performing asset class with a total return of 6%. Cash posted a total return of 3.6%.
Portfolio performance and changes
In the second quarter of 2019, the FTSE/JSE Equally Weighted Top 40 Index realised a return of 4.85%, marginally outperforming the FTSE/JSE Top 40 Index returns of 4.61%. For the first time in quite a while this was one of the best performing Top 40 indices, but over the longer term it is still struggling relative to the SWIX 40 and ALSI 40 indices.
Some of the contributors to the relative outperformance for the quarter were the overweight position in Gold Fields (GFI) and underweight position in Naspers (NPN). Gold Fields experienced a very strong share price performance during the last three months while Naspers only returned 2.3% for the quarter. An underweight position in Richemont (CFR) and overweight position in Netcare (NTC) detracted from performance.
During the June quarterly index rebalance Exxaro (EXX) was added to the index while Netcare (NTC) was deleted and all the shares in the index were rebalanced to the equal weighting of 2.5%. The one-way churn in the index was about 6.07%.
The investment objective of this index tracker portfolio will be to focus on capital growth and achieving a compound annual return which will equate to the total compound annual return of the FTSE/JSE Equally Weighted Top 40 Index (J110) as adjusted to take into account transactions and other costs, and to comply with statutory requirements. Income generation will not be an objective of this portfolio.
The Manager shall seek to achieve this objective by investing in assets in liquid form and securities that will consist of a selection of financially sound ordinary shares, to be acquired at fair market price, as included in the FTSE/JSE Equally Weighted Top 40 Index at proportions so determined as to best replicate the performance of the FTSE/JSE Equally Weighted Top 40 Index. This portfolio will be fully invested in equities subject to statutory investment limitations.The combination of shares will enable the investment manager to track the performance of the FTSE/JSE Equally Weighted Top 40 Index. This index comprises 40 shares in equal weightings of 2,5% each. When investing in derivatives, the Manager will adhere to prevailing derivative regulations. The Manager will be permitted to hold offshore investments as legislation permits. This will be applicable in cases where the portfolio is exposed to a corporate event resulting in a share being inward listed where such share forms part of the FTSE/JSE Equally Weighted Top 40 Index.