STANLIB Balanced Cautious Fund

Transcription

1 STANLIB Balanced Cautious Fund 4

2 Why a STANLIB Balanced Cautious Fund? To enhance its balanced range STANLIB has introduced the STANLIB Balanced Cautious Fund to its range of asset allocation portfolios, for the risk-averse and volatility sensitive investor. Currently, the STANLIB Stability Fund (Balanced Fund) addresses the need for a moderately aggressive balanced portfolio, and investors seeking a lower equity and less volatile portfolio usually end up resorting to cash and/or income portfolios. The STANLIB Balanced Cautious Fund fills this gap, providing a low-equity balanced solution. Where does the portfolio fit into the STANLIB asset allocation fund range? The STANLIB Balanced Cautious Fund is a moderately conservative asset allocation portfolio that holds a limited amount of high risk growth assets, together with lower risk assets such as bonds and cash. On the risk/reward spectrum, the portfolio is positioned as a low risk asset allocation portfolio, between equity and bond portfolios. The fund s positioning relative to other STANLIB Asset Allocation Funds is illustrated below. Asset Allocation Fund Range Low Equity Medium Equity High Equity Balanced Solutions STANLIB Balanced Cautious Fund STANLIB Stability Fund (Balanced Fund) Risk Profiled Solutions STANLIB Conservative FoF STANLIB Moderately Conservative FoF STANLIB Moderate FoF STANLIB Moderately Aggressive FoF STANLIB Aggressive FoF Conservative Moderate High Risk spectrum Note: Not all STANLIB Asset Allocation Portfolios have been listed in the table above 3 5

3 The following diagrams illustrate the 5-year and 1-year historic comparative returns of baskets of high equity balanced portfolios (60-75% equities) and cash portfolios, against that of low equity balanced portfolios (max 40% equities). The data used is the average of the Prudential High Equity, Domestic Money Market and the Prudential Low Equity Sectors. 5 year comparison of Prudential High & Low Equity vs Money Market Sectors Prudential High Equity Sector Average Prudential Low Equity Sector Average Domestic Money Market Sector Average 04 Apr Jul Dec 05 Apr Jul Dec 06 Apr Jul Dec 07 Apr Jul Dec 08 Apr Jul Dec Over the long-term, equities generally outperform all other asset classes, however, in the short-term, they exhibit some highly volatile behaviour (see below). As can be seen in the graph above, even a high equity asset allocation portfolio has very volatile characteristics (red line). Being invested in cash on the other hand, means that the returns (yield) are linked to interest rates and over the medium to long-term, even cash returns fluctuate with interest rates, making it difficult to accumulate inflation-beating returns, especially after tax. Therefore, an element of equities held within a portfolio could contribute to beating inflation in the medium to long term. A low-equity balanced portfolio can potentially deliver smoother inflation-beating returns over time (blue line in the graph above), with reduced volatility, relatively high income and capital growth in the medium to long-term. A low-equity balanced portfolio can potentially deliver smoother inflationbeating returns over time. 4 6

4 As can be seen in the 1-year chart below, in the short-term, especially in times of high volatility, cash and low-equity balanced portfolios hold up better than high-equity balanced portfolios. 1 year comparison of Prudential High & Low Equity vs Money Market Sectors Domestic Money Market Sector Average Prudential Low Equity Sector Average Prudential High Equity Sector Average Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Target market The portfolio is targeted at cautious investors seeking a diversified portfolio of equities, property, bonds and cash, and seeks to provide capital growth at relatively low levels of risk and a reasonable level of income. Due to the investment mandate and asset allocation, the STANLIB Balanced Cautious Fund is also an investment option for retirement funds. Portfolio manager Thobelani Maphumulo Thobelani started at Investec as an economist, moving into asset management at Alliance Capital Management in Cape Town. Back in Johannesburg in 2003 he joined HSBC as Head of South African Investment Strategy and then BJM Securities as an investment strategist. He is now the Head of the Multi Asset Franchise at STANLIB and also manages the STANLIB Stability Fund. ACI category Domestic Asset Allocation Prudential Low Equity Funds. 5 7

5 Investment objective The portfolio aims to achieve a reasonable level of current income and long-term capital growth at moderate risk levels whilst aiming to comply with prudential investment guidelines. The portfolio is broadly diversified across all asset classes and sectors and is managed along a combination of strategic and tactical asset allocation. The portfolio s maximum equity exposure is 40% and other asset class limits will be within prudential investment guidlines. Fixed Interest and Cash Domestic Equities and Property 0% 10% 20% 30% 40% 50% 60% Benchmark for the STANLIB Balanced Cautious Fund relative to the STANLIB Stability Fund STANLIB Stability Fund STANLIB Balanced Cautious Fund 6% 60% FTSE/JSE Shareholders Index (SWIX) 5% 30% FTSE/JSE Shareholders Index (SWIX) 9% BEASSA All Bond Index BEASSA All Bond Index MSCI World Index STeFI Composite Index 25% JP Morgan Gobal Goverment Bond Index (USD) 45% 20% Property Index (SAPY) 6 8

6 The STANLIB Balanced Cautious Fund is also an investment option for retirement funds. Income distribution The portfolio will distribute quarterly. Distributions will be declared on the last working day of March, June, September and December. Payment will be made on or before the last business day of the month following distribution. Launch date 02 January 2009 Recommended minimum investment period Minimum of five years Investment minimums Lump sum: R2 000 Debit order: R200 Charge structure (A class) Maximum upfront manager charge (incl. VAT) Service charge (incl. VAT) Total charge (incl. intermediary s portion) Intermediary s portion Total charge (incl. intermediary s portion) Intermediary s portion 5.70% 3.42% 1.71% 0.57% Statutory disclosure and general terms and conditions Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. An investment in the participations of a CIS in securities is not the same as a deposit with a banking institution. CIS are traded at ruling prices and can engage in borrowing and scrip lending. Different classes of units apply to these portfolios and are subject to different fees and charges. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. Commission and incentives may be paid and if so, would be included in the overall costs. The exposure limit to a single security can be greater than is permitted for other portfolios in terms of the Collective Investment Schemes Control Act. Details are available from the company/scheme. Forward pricing is used. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. STANLIB Collective Investments Limited is a member of the Association of Collective Investments. TER is the annualised percent of the average Net Asset Value of the portfolio incurred as charges, levies and fees. A higher TER ratio does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER cannot be regarded as an indication of future TERs. This portfolio is valued on a daily basis at 15h30. Investments and repurchases will receive the price of the same day if received prior to 15h30. The Manager is a member of the Association of Collective Investments. Contact details of Trustees: Absa Bank Ltd, 6th Floor, Absa Towers North (6E1), 180 Commissioner Street, Johannesburg, Telephone No. (011) STANLIB Collective Investments Limited Reg. No. 1969/003468/06, Contact Centre C63A51 7 9