NAV on 2019/01/17
|NAV on 2019/01/16
|52 week high on 2018/09/04
|52 week low on 2018/12/20
|Total Expense Ratio on 2018/09/30
|Total Expense Ratio (performance fee) on 2018/09/30
Sanlam Collective Investments
South African--Multi Asset--Low Equity
CPI for all urban areas plus 3% over 36 month rolling period
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Sage Wealth Management Proprietary Limited
Sage SCI Protection Solution FoF - Sep 18
The FoF is a combination of underlying managers all of whom have proven track records and the ability to generate significant outperformance over time. The FoF has been constructed to make full use of the available equity allowance within the sector, but managers have considerable discretion in whether they choose to utilise it.
At quarter-end, the look through equity allocation of the FoF was 38,4% which is close to the 40% maximum allowed by the category. The bulk of the equity allocation (24,7%) is South African (SA) equities with the foreign allocation of 24,7% split between foreign equity (11,1%) and foreign cash (10,4%), with a small allocation to foreign bonds and foreign property.
SA equities had a poor quarter (down -1.7%) after a difficult September (down -4,2%) and are now down-7,4% year-to-date. The weakness in the SA equity market has not been confined to domestic-orientated stocks with both Naspers and BTI (two large rand hedge shares listed on the JSE) significantly down from their recent highs. Other SA assets (i.e. SA bonds and SA property) continued to lag SA cash over the quarter, with international equities (up 7,7%) the only significant outperformer.
The underlying managers in the FoFs continue to favour SA equities as an asset class, despite its recent poor performance, on valuation grounds. SA bonds also look reasonably attractive (offering a real yield of 4%) and both Investec and Matrix has reasonable exposure to this asset class, while Prudential has a significant exposure in inflation-linked bonds.
Two manager appointments were made over the quarter to improve the consistency of the returns of the portfolio. Investec Cautious Managed forms part of the quality franchise at Investec, while Matrix has successfully run the Sanlam Select Defensive Balanced Fund since its inception. Both managers have strong fixed interest capabilities, and Investec especially offers something different in how they construct equities too.
The portfolio had a difficult quarter relative to its CPI+3% p.a. benchmark, and remains behind year-to-date, and over its stated three-year investment horizon. The challenging returns over the recent period (for the FoF and its peergroup) have mainly been driven by subdued SA equity market returns. The FoF remains well diversified across managers and asset classes with a preference for SA bonds, SA equities and international equities. The Allan Gray Stable Fund remains the standout performer over the past year, with Nedgroup Investment Opportunity Fund a material detractor.
The objective of the Sage Sanlam Collective Investments Protection Solution Fund of Funds is to protect capital and to offer a return of at least CPI plus 3% over a rolling three year period. The portfolio will aim never to have a negative return over a one year period.
The investment manager, Sage Wealth Management (Pty) Ltd follows the multi manager style of investing and will invest the portfolio in the participatory interests of various collective investment schemes managed by different specialist investment managers. The target of CPI plus 3% will be achieved through the construction of a portfolio with a strategic asset allocation appropriate for a CPI plus 3% return objective.
The objective will be achieved by investing in assets in liquid form, and participatory interests or any other form of participation in collective investment scheme portfolios or other similar collective investment schemes the Act may allow from time to time, managed by specialist investment managers. In line with the multi manager investment philosophy, the portfolio will be constructed to achieve diversification across different asset classes as well as different investment managers and investment processes. The philosophy therefore categorically excludes the possibility of the portfolio only investing in underlying collective investment schemes of just one manager. Key value proportions are the selection of multiple specialist investment managers as well as the combination of these managers into optimal portfolio structures in order to achieve the investment objective.
The strategic asset allocation will be achieved by combining participatory interests of collective investment scheme portfolios managed by specialist investment managers who use different and uncorrelated investment strategies.
The portfolio will be investing in participatory interests of portfolios which provide exposure to a flexible combination of equity, bonds, money market instruments, non-equity and property, as well as to various absolute return investment strategies.
The asset allocation will be actively managed by the multi-manager to reflect its view of the changing economic and market conditions. The portfolio will have an equity exposure of maximum 40% at all times, depending on the investment manager's investment strategy for a CPI plus 3% return objective at the time. This portfolio is part of a range of risk profiled, multi managed fund of funds portfolios and the SMMI house view tactical asset allocation given specific market conditions will be applied uniformly to the range of portfolios. Therefore, should the house view be bullish on equities, the tactical allocation to equities will increase across the range of portfolios in line with their respective maximum equity exposure limitations, whilst equities exposure will decrease uniformly across all three portfolios should the house view be bearish on equities. Given the application of the SMMI house view exposure approach it is highly unlikely that these portfolios will ever have similar effective equity exposures.
The portfolio will obtain offshore exposure through investment in participatory interests of collective investment schemes approved in terms of the Act.
This portfolio will comply with regulations governing pension funds.