NAV on 2019/01/16
|NAV on 2019/01/15
|52 week high on 2018/09/05
|52 week low on 2018/03/26
|Total Expense Ratio on 2018/09/30
|Total Expense Ratio (performance fee) on 2018/09/30
Satrix Managers (Pty) Ltd.
MSCI World Equity Index (Developed Markets)
Johann has 24 years investment experience of which 14 years was spent as an equity analyst. The last 10 years were spent as a portfolio manager.
He was one of the founder members of the large cap team and played a role in designing the large cap investment process.
He is currently a member of the equity selection group at Sanlam Investment Management.
Satrix Investment Team
Satrix MSCI World Equity Index Feeder Fund-Dec 18
The S&P 500 delivered a total return of 7.7% over the last three months, 10.6% year to date and 14.4% since its February lows. Unfortunately, this strength is not shared broadly, with European, Australasian, Far Eastern (EAFE) and Emerging markets (EM) returning in US dollar 1.4% and -0.9% for the quarter and -1.0% and -7.4% year to date.
A spate of news flows from across the globe is currently driving markets. America’s trade war against what seems to be the rest of the entire world remains an ongoing concern for investors. This has led to some participants betting that China will increase their current stimulus programme in the coming months. Trump also made another enemy in Opec, publicly calling them out to reduce oil prices by increasing supply. At the same time, focus was on the Federal Open Market Committee, which raised rates again - the third this year - and reaffirmed a hawkish outlook going into 2019 and beyond. It would seem as if another hike in December is almost assured.
Additional to this, the laundry list of potential market headwinds is quite long: with the yield curve that is flattening; disruptive mid-term elections; peak margins; increasing corporate leverage; problems in emerging markets; and a stock market trading at record price-to-sales. Despite this litany of concerns, we think none will cause the transition from market risk to a market problem.
Despite the best efforts by bears, international equities are so far rather resilient. MSCI World is up 5.9% year to date, outperforming bonds by 700bp, on a total return basis. The performance, however, is quite US centric, but it is notable that even accounting for the latest Italy setback, Eurozone equities are also holding up relative to fixed income this year, with the MSCI Eurozone at 0.7% against bonds at -0.7%. The general market expectation is that there would be further gains into yearend, as the US dollar is potentially peaking, the US business cycle remains well supported, and there is some stabilisation in emerging markets/Eurozone activity evident. Fundamentally, growth drivers are also far from exhausted. Although the yield curve has flattened, stocks have never peaked before the yield curve inverted. The current yield curve shape is consistent with double-digit S&P500 returns over the next 12 months.
Emerging market (EM) equities have performed poorly in 2018 and were at the recent low point down as much as 20% from January highs. Our best view is that EMs are flattening out as they tend to have a strong inverse correlation to the US dollar, which could be peaking out.
Prospects for the rand and other EM currencies have swung as they have moved from being some of the most promising asset classes this year to becoming the worst-performing asset classes in the first half of the year, largely due to tailwinds from the global economy turning into headwinds.
The MSCI World Index (developed markets) realised a net return of about 5 % in US dollar terms for the third quarter of 2018, which was better than that of the MSCI Emerging Markets of -1.1%. Our feeder fund buys and sells units in a “parent fund” called the Satrix MSCI World Index fund, which tracks 23 developed countries with more than 1600 shares included in the index. We do the tracking of this index through a process of optimisation with an ex-ante tracking error varying between 15 and 18 basis points.
The MSCI World Index (in rand terms) managed a return of about 8.4% (5% in US dollar) over the last three months. This difference in return was mainly due to the rand depreciating by about 3% against the US dollar over this period.
For the year to date 2018 the rand return for this index was more than 28%.
The objective of the Satrix MSCI World Equity Index Feeder Fund is to provide an investment vehicle for investors wishing to track the movement of the MSCI World Equity Index (Developed Markets) by investing in securities of global companies which are primarily constituents of the MSCI World Equity Index (Developed Markets).
The portfolio will apart from assets in liquid form, invest in participatory interests of the Sanlam World Equity Tracker Fund established under the Sanlam Universal Funds PLC approved by the Irish Regulator in August 2011. The Sanlam World Equity Tracker Fund will employ replication, sampling and optimisation techniques and, subject to the limits and within the conditions laid down by the Central Bank of Ireland, may use financial derivative instruments for efficient portfolio management purposes to track the performance of the MSCI World Equity Index (Developed Markets), rather than attempting to hold all of the securities in the MSCI World Equity Index (DevelopedMarkets). The Sanlam World Equity Tracker Fund may also invest indirectly in such securities through quoted investment vehicles, such as Exchange Traded Funds, and holdings in UCITS funds domiciled in a Member State and other open-ended collective investment schemes that satisfy the requirements of the Central Bank of Ireland.