NAV on 2020/05/27
|NAV on 2020/05/26
|52 week high on 2020/02/20
|52 week low on 2020/03/24
|Total Expense Ratio on 2019/12/31
|Total Expense Ratio (performance fee) on 2019/12/31
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 - Dec 19
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 look through asset allocation of the FoF (i.e. the split between equities and fixed interest, and South African and foreign assets) reflects the aggregate asset allocation decisions of underlying managers each of whom have the discretion to implement their best investment view.
There were no manager changes over the quarter. More than two thirds of the FoF is now invested in fixed interest assets (mainly SA cash, but allocations to SA bonds and foreign cash too) while managers in aggregate continue to favour SA equities (17.8%) over foreign equities (10.1%).
Over the past year, the FoF outperformed its CPI+3% p.a. benchmark and benefited from the manager changes that were implemented earlier in the year. Managers that were introduced into the fund recently and that performed particularly pleasingly included Investec, Matrix and Abax. These changes have made the portfolio less dependent on the performance of SA equities than it was in the past.
Over the three-year investment horizon of the FoF, foreign equities (up 19.9% p.a.) and SA nominal bonds (up 9.4% p.a.) have both delivered returns in excess of the CPI+3% p.a. benchmark of the FoF. Unfortunately, both SA cash (up 7.4% p.a.) and SA equities (up 3.5% p.a.) and have delivered more muted returns. While the return from SA cash is expected (and remains a significant allocation in the FoF given its capital protection focus) the underperformance of SA equity has contributed to the underperformance of the FoF relative to its CPI+3% p.a. objective over the past three years.
South African economic growth surprised on the downside in 2019, and is vulnerable for further weakness. The fairly defensive positioning of the FoF at year-end (with 27.9% invested in equities compared to its 40% allowance) is indicative of the relative attractiveness of fixed interest assets in this environment. As was discussed last quarter, the FoF in its diversified allocation to asset classes that could benefit from rate cuts consequently protects investors from the reinvestment risk of only holding cash, while at the same time the focus on capital protection should limit downside risk
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.