Fund Availability on Linked Platforms

Transcription

1 Fund Availability on Linked Platforms March 2015

2

3 01 About STANLIB 02 STANLIB Core Range 04 STANLIB Funds on External Guided Architecture Platforms 05 STANLIB Funds on Buy Lists 06 STANLIB Funds on External Open Architecture Platforms 07 STANLIB Offshore Funds on External Offshore Platforms 08 STANLIB Core and Extended Range Insights 29 STANLIB Franchise Model 30 Contact Details

4 A leading asset management company with sound investment principles

5 About STANLIB STANLIB is a leading asset management company in South Africa and manages assets in excess of R551 billion* for over retail and institutional clients across the African continent. We have a physical presence in ten African countries and are able to leverage from a wider Standard Bank Group Africa footprint. STANLIB Focused Investing Our Belief There is no one size fits all investment solution for clients. Diverse clients need diverse investment outcomes. We therefore look at investments through many lenses and from many angles - this gives us an in-depth understanding of an ever changing investment landscape. Our investment model thus houses multiple focused units with unique philosophies, which cater for diverse client needs. Our Franchise Model The STANLIB investment team consists of Franchises made up of specialist teams of investment professionals. They manage clients assets in their area of expertise, namely: fixed interest, property, equities, multi-asset allocation, multi-management and alternatives. These specialist investment teams deal with market changes with agility and speed, as they are supported by dedicated research, trade, implementation, risk management and compliance teams. Our Multi-Specialist Franchise Model truly reflects the complex investment world we operate in and echoes our desire to deliver tailored solutions for diverse clients. Result A broad investment offering designed to deliver our investment promise to clients. Additional Facts STANLIB has more than 96 investment experts. We have one of the oldest existing unit trusts in South Africa, the STANLIB Equity Fund. STANLIB pioneered the Fundisa Fund which is a unit trust investment created to encourage lower income families to save for their children s tertiary education for as little as R40 per month. It s the first ever public/private partnership in the services industry. We employ over 820 employees directly. STANLIB manages over R100 billion in money market assets and we are the largest player in the money market space. STANLIB is proud to have been awarded the following accolades at the Raging Bull 2014 Award ceremony Top Outright Performers Best (FSB-Approved) Offshore USA Equity General Fund Best (FSB-Approved) Offshore Global Fixed Interest Bond Fund Top Risk-Adjusted Performers Best (FSB-Approved) Offshore USA Equity General Fund on a risk-adjusted basis Best (FSB-Approved) Offshore Global Fixed Interest Bond Fund on a risk-adjusted basis About This Document This document is aimed at you, the financial adviser, providing a guide on how to access STANLIB funds via the following Linked Product Platforms: AIMS Allan Gray Ashburton Discovery Glacier Investec Momentum Old Mutual PPS PSG Sygnia Additional updates on all STANLIB portfolios are available from your Investment Specialist or Relationship Manager, the STANLIB call centre ( ) or visit our website on *As at 31 March

6 STANLIB Core Range Time Horizon Conservative Moderately Conservative Moderate Moderately Aggressive Aggressive Maximum Exposure to Growth Assets Risk Profile 5 years+ STANLIB Equity Fund 100% 25% Aggressive 3-5 years STANLIB Balanced Fund 75% 25% 25% Moderately Aggressive STANLIB Absolute Plus Fund 75% 25% * Moderate 1-3 years STANLIB Balanced Cautious Fund 40% 25% 15% Moderately Conservative 1 year+ STANLIB Flexible Income Fund 10% Conservative Domestic Equity Property Offshore 2

7 Fund Objective Portfolio Limits Regulation 28 Performance Fees Offshore Exposure Launch Date The Fund aims to provide long-term capital growth by investing in both local and offshore equities. Exposure to offshore assets is limited to a maximum of 25% X X v Jan 70 The Fund aims to provide capital growth over time at a lower risk than pure equity funds. The Fund invests in a diversified spread of cash, bonds, property, equity and offshore assets. Exposure to equities is limited to a maximum of 75% v X v Aug 94 The Fund aims to provide investors exposure to the potential upside of domestic equities with limited downside. The Fund aims to provide 90% capital protection over a rolling one-year period by investing in financial instruments that protect the Portfolio in down markets. Exposure to equities is limited to a maximum of 75% v X X Dec 05 The Fund aims to provide reasonable capital growth and income over a threeyear investment horizon. The Fund invests in a diversified spread of cash, bonds, property, equity and offshore assets with a maximum of 40% in property and equities. Exposure to equities and properties is limited to a maximum of 40% v X v Jan 09 The Fund aims to provide income generation and capital growth, targeting outperformance over traditional money market income funds, by investing in the full spectrum of fixed interest instruments and property. Maximum weighted average maturity of two years and exposure to property is limited to a maximum of 10% v X X Apr 04 *Regualtion 28 stipulates that the maximum exposure to equities and property combined is 90% 3

8 STANLIB Funds on External Guided Architecture Platforms Allan Gray Investment Platform Fund Management Fee Administration Fee Fund Fee Discount STANLIB Balanced Fund (A) 1.50% 0.50% 0.50% 0.00% Effective Platform Fee Ashburton Investments STANLIB Bond Fund (A) 0.75% STANLIB Property Income Fund (B1) 1.00% Glacier Fusion Total Annual Fee Annual Investment Fee STANLIB Absolute Plus Fund (B4) 2.10% 0.60% 0.75% STANLIB Aggressive Income Fund (B5) 2.10% 0.60% 0.75% STANLIB Balanced Fund (B4)* 2.10% 0.60% 0.75% STANLIB Balanced Cautious Fund (B4) 2.10% 0.60% 0.75% STANLIB Income Fund (B8) 2.10% 0.60% 0.75% STANLIB Global Balanced Cautious Feeder Fund (B4) 2.35% 0.85% 0.75% Investec i-select Fund Management Fee STANLIB Balanced Fund (B1) 1.00% 0.50% Investec Fund Select Total Annual Fee Annual Investment Fee STANLIB Balanced Fund (B4)* 2.10% 0.60% 0.75% Momentum Essential Total Annual Fee Annual Investment Fee STANLIB Balanced Fund (B4)* 2.10% 0.60% 0.75% STANLIB Balanced Cautious Fund (B4) 2.10% 0.60% 0.75% STANLIB Equity Fund (B4) 2.10% 0.60% 0.75% STANLIB Income Fund (B8) 2.10% 0.60% 0.75% STANLIB Inflation + 5% Fund (B4) 2.10% 0.60% 0.75% STANLIB Property Income Fund (B4) 2.10% 0.60% 0.75% STANLIB SA Equity Fund (B4)* 2.10% 0.60% 0.75% STANLIB Quants Fund (B4) 2.10% 0.60% 0.75% STANLIB Value Fund (B4)* 2.10% 0.60% 0.75% PPS Investments STANLIB Absolute Plus Fund (B1) 1.00% STANLIB Balanced Fund (B1) 1.00% STANLIB Equity Fund (R) 1.00% Investment Management Fee Distribution Fee Fund Fee Saving Distribution Fee Distribution Fee Annual Management Fee PSG Asset Management Total Annual Fee Fund Rebate STANLIB Absolute Plus Fund (B1) 1.00% 0.00% STANLIB Aggressive Income Fund (B1) 0.90% 0.00% STANLIB Balanced Fund (B1) 1.00% 0.00% STANLIB Euro Currency Fund of Funds (A) 0.50% 0.10% STANLIB Extra Income Fund (R) 0.75% 0.00% STANLIB Flexible Income Fund (B1) 0.75% 0.00% STANLIB Global Balanced Feeder Fund (B1) 1.00% 0.00% STANLIB Global Bond Feeder Fund (A) 1.50% 0.50% STANLIB Global Equity Feeder Fund (R) 1.00% 0.00% STANLIB Global Property Feeder Fund (B1) 0.60% 0.00% STANLIB Income Fund (B6) 0.60% 0.00% STANLIB Multi-Manager Global Equity Feeder Fund (A) 1.35% 0.50% STANLIB Property Income Fund (B1) 1.00% 0.00% Sygnia Emporium STANLIB Flexible Income Fund (B1) 0.75% Investment Management Fee * Excluding performance fee ^ Fees quoted exclude VAT 4

9 STANLIB Funds on Buy Lists ABSA Approved List STANLIB ALSI 40 Fund STANLIB Bond Fund STANLIB Global Equity Feeder Fund STANLIB Global Property Feeder Fund STANLIB Index Fund STANLIB Industrial Fund STANLIB Global Balanced Feeder Fund STANLIB Property Income Fund FNB STANLIB Bond Fund STANLIB Property Income Fund Glacier Shopping List STANLIB Bond Fund STANLIB Income Fund STANLIB Property Income Fund PSG Wealth Product Menu STANLIB Aggressive Income Fund STANLIB Flexible Income Fund STANLIB Global Balanced Feeder Fund STANLIB Global Equity Feeder Fund STANLIB Global Equity Fund (USD) STANLIB Global Property Feeder Fund STANLIB Property Income Fund 5

10 STANLIB Funds on External Open Architecture Platforms (Linked Platforms) Domestic AIMS Discovery Glacier Investec Momentum Old Mutual STANLIB Absolute Plus Fund* X X X STANLIB Aggressive Income Fund X X X X X X STANLIB ALSI 40 Fund X X X X STANLIB Balanced Fund* X X X X X X STANLIB Balanced Cautious Fund* X X X X STANLIB Balanced Trustees Fund of Funds* STANLIB Bond Fund X X X X X STANLIB Capital Growth Fund X X X X STANLIB Enhanced Yield Fund X X X STANLIB Equity Fund X X X X STANLIB Extra Income Fund* X X X X STANLIB Financials Fund X X X STANLIB Flexible Income Fund* X X X X STANLIB Income Fund X X X X X X STANLIB Index Fund X X X X STANLIB Industrial Fund X X X STANLIB Inflation Plus 3% Fund* X X X X STANLIB Inflation Plus 5% Fund* X X X X STANLIB Property Income Fund X X X X X X STANLIB Quants Fund X X X X STANLIB Resources Fund X X X X STANLIB SA Equity Fund X X X X STANLIB Shari ah Equity Fund X X X X STANLIB Value Fund X X X X X * Regulation 28 Compliant Global (Rand Denominated) AIMS Discovery Glacier Investec Momentum Old Mutual STANLIB Euro Currency Fund of Funds X X X X STANLIB European Equity Feeder Fund X X X X X STANLIB Global Bond Feeder Fund X X X X X STANLIB Global Equity Feeder Fund X X X X X STANLIB Global Balanced Feeder Fund X X X X STANLIB Global Balanced Cautious Feeder Fund X X X X X STANLIB Global Property Feeder Fund X X X X X STANLIB US Dollar Currency Fund of Funds X X X X X 6

11 STANLIB Offshore Funds on External Offshore Platforms Equity Funds Currency Momentum Wealth International STANLIB Global Equity Fund USD X X STANLIB European Equity Fund USD X X Glacier International Allan Gray Old Mutual International Fixed Interest And Cash Currency Momentum Wealth International Glacier International STANLIB Global Bond Fund USD X X X STANLIB Euro Cash Fund EUR X X STANLIB Sterling Cash Fund GBP X X STANLIB US Dollar Cash Fund USD X X Allan Gray Old Mutual International Managed Solutions Currency Momentum Wealth International Glacier International Allan Gray STANLIB Global Balanced Fund USD X X X STANLIB Global Balanced Cautious Fund USD X X X X Old Mutual International Property Currency Momentum Wealth International Glacier International Allan Gray STANLIB Global Property Fund USD X X X Old Mutual International For more information on STANLIB s offshore range, please speak to your Investment Specialist or visit All of the above funds are FSB approved. 7

12 STANLIB Core and Extended Range Insights Absolute Return Franchise STANLIB Absolute Plus Fund 9 Balanced Franchise STANLIB Balanced Fund 11 STANLIB Balanced Cautious Fund 13 Equity Franchise STANLIB Equity Fund 14 STANLIB SA Equity Fund 16 Fixed Interest Franchise STANLIB Aggressive Income Fund 17 STANLIB Flexible Income Fund 18 STANLIB Bond Fund 19 STANLIB Income Fund 20 Property Franchise STANLIB Property Income Fund 22 STANLIB Global Property Feeder Fund 24 Global Solutions STANLIB Global Equity Feeder Fund 25 STANLIB Global Balanced Feeder Fund 26 STANLIB Global Balanced Cautious Feeder Fund 27 Note: STANLIB funds not listed above are accessible on Linked Platforms and access to these funds is detailed on page 6. 8

13 ƴƴ Eben Maré ƴƴ Marius Oberholzer Absolute Return Franchise Eben Maré s fund management career began at Nedbank, moving on to Genbel Standard Bank and ABSA. He joined STANLIB from Liberty Life where his focus was on markets and credit risk. He has a Ph.D in Applied Mathematics, having initially obtained a BSc(Hons) and an MSc. Marius Oberholzer joined us from Sarala Capital in Cape Town, where he was a Managing Partner responsible for providing strategic direction for the firm. His role was focused on corporate finance solutions and spearheading the group s unlisted investment activities. Marius holds a BCom degree (Stellenbosch) and an MSc in Global Finance from the Hong Kong University of Science and Technology and New York University. STANLIB Absolute Plus Fund (Regulation 28 compliant) The Fund is a specialist portfolio and aims to achieve capital growth, as well as some level of capital protection over the long term. In the short term the Fund aims to profit from a rising equity market and protect investors against capital losses in a weak equity market. Who should invest? The Fund is targeted at investors who: Are aiming for a certain level of targeted return and capital preservation over their investment term Find comfort in their money being managed towards clearly defined investment objectives Fund update quarter Market review The Global Economy remains on a reasonably firm footing despite individual economic blocks moving at different growth trajectories. The US is moving toward (if we were to believe the Fed) a rate tightening cycle driven by strong employment data and wages showing some early signs of wage pressure. However, inflationary data from the US remains benign for the moment, and more importantly high frequency data was poor throughout the first quarter of 2015 and the chances of a rate hike appear balanced. While the Fed may be moving toward tightening at the margin, global easy money policy remains entrenched with more than 25 rate cuts taking place globally in Q and the formal announcement and implementation of a European Quantitative Easing program. 9

14 The rapid fall in the Euro is by design and the previously mentioned advent of the European Central Bank (ECB) quantitative easing program announced in January will continue to make market participants feel as if a Central Bank life raft is never far away. The Bank of Japan (BOJ) and ECB especially are acting as anchors to global rates (US 10 year yields % more than German 10 Year Bunds) and its fair to expect continued broad based US dollar strength given the environment of easing globally relative to the US. The US Dollar strength has had a negative effect on US earnings in the final quarter of 2014 and should continue to put pressure on US earnings and inflation expectations in the short term. The Euro weakness versus the dollar ignited a sentiment shift toward investing in Europe as investors expect exports to support economic growth at the same time as the ECB buys assets (even into negative yield territory). The Dollar has also added to the now recognised structural slowdown of China s traditional growth engine and the rebalance from an investment to service led economy is clear to see through sharply falling commodity prices. The fast moves lower in commodities and currencies relative to the US Dollar (USD) will surely still bring about a few casualties. The previous economic growth cycle saw a huge amount of dollar debt issued by countries who are now finding dollar strength to be an added drain on their ability to service those debts at the same time as commodity exports not helping them as had been the case previously. Should the dollar continue along its path of strength against most currencies it could well usher in a period of very high volatility as companies, economies and currencies adjust to a new regime. Nigeria could be a fine example and the devaluation of the Naira may still be incomplete given the continued weakness in oil markets that continue to face supply (and potentially growing) headwinds. While the rest of the world aside from the US is easing, South Africa finds itself with a conundrum of low growth and inflation expectations shifting rapidly higher given electricity price hikes, a sharp increase in the fuel levy and wage demands which continue to escalate higher. The South African Reserve Bank (SARB) is taking a hawkish stance and the strategy appears at odds with global trends. During the 1Q 2015, the Johannesburg All Share returned 5.85%, The All Bond returned 2.99% and listed Property returned 13.69% (all numbers on total return basis). Over the same period the fund delivered 3.1%. Looking ahead On the positive side, despite asset values being expensive the formalisation of the ECB quantitative easing program is highly likely to continue to support asset values globally, especially when looking at $5.2trillion of european sovereign debt now providing negative nominal yields. From a global valuation perspective, there is little that can be considered cheap on an outright basis. Cyclically adjusted equity multiples look stretched and historic precedent suggests the outlook from these valuations typically show mundane returns in the medium term. That said, there is a lack of options globally and with bond yields trading ever lower, equity risk-premia looks attractively priced on a relative basis. However, we have made the case before, diversification is reliant on different assets having different valuation multiples. When everything is expensive, diversification might not be enough of a riskmitigator when things eventually begin to unravel. The relative value argument should continue to force investors to take more exposure to riskier assets like equities. While the relative argument is less strong in the South African context, correlations between global equity markets and our local market remain very high relative to history and with the abundance of liquidity globally this is unlikely to change without some form of internal or external shock. Whilst risk may appear hidden, that doesn t mean they don t exist and we remain reasonably cautious given absolute valuation levels. Performance figures (March 2015) Performance Quarter 1 year STANLIB Absolute Plus Fund A Quartile Sector Average Fund benchmark CPI 3 years 5 years 1st 2nd 3rd 4th Quartile Source: Morningstar 10

15 ƴ ƴ Robin Eagar ƴ ƴ Herman van Velze ƴ ƴ Warren Buhai ƴ ƴ Kobus Nell Multi-Asset Franchise Robin Eagar started his investment career in 1998 working in corporate finance and private equity. At STANLIB he began as an Industrial Analyst, transferring in 2006 to managing general equity funds. Robin has successfully managed Balanced Funds since 2007 and is currently Co- Head of the Multi-Asset Franchise. Herman van Velze holds a Bachelor of Engineering (Mining) and Masters of Business Leadership (MBL). Herman joined the STANLIB group as portfolio manager in April 2001 after the SCMB and Liberty merger. He was head of the pension fund division and later also head of the external client division. In 2006 he assumed overall responsibility for managing the Liberty Life asset book. Herman left STANLIB and joined a private equity firm from October 2007 to September He returned to STANLIB in November 2009 as Head of the Multi-Asset Fund propositions. Following five years in corporate finance at Standard Bank, Warren Buhai joined STANLIB in 2005 where he initially specialised in resources analysis and portfolio management. He has been a portfolio manager in the Multi-Asset Franchise since Kobus Nell joined STANLIB in 2003 on completion of his accountancy articles in the Unit Trust pricing department and Corporate Actions and Confirmations. He joined the Unconstrained Equity Franchise as a research analyst and assistant portfolio manager in He also specialises in the Resources sector research and has been managing the STANLIB Gold and Precious Metals Fund (now merged with the STANLIB Resources Fund) since He is a PricewaterhouseCoopers-trained chartered accountant, and is also a CFA charter holder. STANLIB Balanced Fund (Regulation 28 compliant) The STANLIB Balanced Fund provides capital growth over time at a lower risk than pure equity funds. The Fund invests in a diversified spread of cash, bonds, property, equity and offshore assets with a maximum of 75% in equities. The Fund is suitable for retirement savings schemes. Who should invest? The Fund is targeted at investors: Aiming to achieve capital growth with lower risk than equity only funds With a time horizon of five years or more to invest With a moderately aggressive risk profile 11

16 Fund updated quarter Fund review The STANLIB Balanced Fund gained 4.0% for the past quarter ended 31 March 2015, relative to the 5.8% gain for the benchmark. Following the volatile fourth quarter of 2014, with the prospects of European Central Bank (ECB) quantitative easing starting in March and the US rate hiking cycle being pushed further out, global equity markets saw strong gains to start the new year with both domestic and offshore equities producing close to 7% returns in rand terms for the quarter. Given the subdued growth and inflation outlooks both in South Africa and across much of the world, the domestic and offshore bonds also produced decent first quarter returns of close to 3%, while local property produced yet another stellar quarter with a 13.7% return. The strong domestic equity returns were widespread across the financial and industrial sectors, which added to your portfolio s return in the quarter. These included financials such as JSE-listed FirstRand and Sanlam, together with offshore-listed Japan Exchange Group and Chinese insurance company Ping An. Similarly, positions in industrial counters with significant offshore exposure added to your Fund s performance, including JSE-listed Steinhoff and Medi-Clinic, together with offshore-listed consumer electronic goods producer Apple, Japanese silicon wafer manufacturer Sumco and pharmaceutical giant Pfizer. Added to these, underweights in certain expensive domestic-focused industrial companies that struggled in the quarter added to your Fund s performance, including Tiger Brands and Shoprite. Coming into 2015, resource counters continued to struggle given the ongoing stronger dollar and weaker commodity prices, which meant that certain resource counters that we believe have long-term intrinsic value upside detracted from performance, namely Glencore and Impala Platinum. Similarly, underweights in Naspers and Standard Bank also detracted from performance in the quarter, together with overweights in JSE-listed Aspen Pharmacare, Tsogo Sun and Tongaat Hulett, as well as offshore-listed motor manufacturer Mazda, credit card company American Express and rail transportation company Union Pacific. In terms of asset allocation, no major changes were made within the past quarter with your Fund s overall equity exposure sitting close to 57% with our preference remaining skewed to offshore equities, where we find far more value and conviction relative to an expensive domestic equity market. Looking ahead We continue to caution investors to temper their expectations given the exceptional returns, significantly above inflation, which have been enjoyed over the past six years. The growth outlook for the world s major developed economies, as well as many emerging markets including China and South Africa, remains uncertain. We expect this uncertainty to lead to more volatility across risk assets until the economic outlook stabilises and ultimately improves to support the higher valuation levels across asset classes. Performance figures (March 2015) Performance Quarter 1 year STANLIB Balanced Fund B1 Quartile Sector Average Fund benchmark 3 years 5 years 1st 2nd 3rd 4th Quartile Source: Morningstar FTSE/JSE Shareholders Weighted All Share Index 60%; BEASSA All Bond Index 25%; MSCI World Index 9%; Barclays Global Aggregate Bond Index 6% 12

17 STANLIB Balanced Cautious Fund (Regulation 28 compliant) The STANLIB Balanced Cautious Fund is a low equity balanced fund aiming to provide reasonable capital growth and income over a three-year investment horizon. The Fund invests in a diversified spread of cash, bonds, property, equity and offshore assets with a maximum of 40% in property and equities. The Fund is suitable for retirement savings schemes. Who should invest? The Fund is targeted at investors: With a time horizon of three years to invest Aiming for moderate capital growth and a reasonable level of income With a moderately conservative risk profile Fund update quarter Fund review The STANLIB Balanced Cautious Fund gained 3.8% for the past quarter ended 31 March 2015, relative to the 4.0% gain for the benchmark. Following the volatile fourth quarter of 2014, with the prospects of European Central Bank (ECB) quantitative easing starting in March and the US rate hiking cycle being pushed further out, global equity markets saw strong gains to start the new year with both domestic and offshore equities producing close to 7% returns in rand terms for the quarter. Given the subdued growth and inflation outlooks both in South Africa and across much of the world, the domestic and offshore bonds also produced decent first quarter returns of close to 3%, while local property produced yet another stellar quarter with a 13.7% return. The strong domestic equity returns were widespread across the financial and industrial sectors, which added to your portfolio s return in the quarter. These included financials such as JSE-listed Sanlam, together with offshore-listed Japan Exchange Group and Chinese insurance company Ping An. Similarly, positions in industrial counters with significant offshore exposure added to your Fund s performance, including JSE-listed Steinhoff, together with offshore-listed consumer electronic goods producer Apple, Japanese silicon wafer manufacturer Sumco and pharmaceutical giant Pfizer. Added to these, underweights in certain expensive domesticfocused industrial companies that struggled in the quarter added to your Fund s performance, including Tiger Brands and Shoprite. Coming into 2015, resource counters continued to struggle given the ongoing stronger dollar and weaker commodity prices, which meant that certain resource counters that we believe have long-term intrinsic value upside detracted from performance, namely Glencore. Similarly, underweights in Naspers and Standard Bank also detracted from performance in the quarter, together with overweights in JSElisted Aspen Pharmacare, Tsogo Sun and Vodacom, as well as offshore-listed motor manufacturer Mazda, credit card company American Express and rail transportation company Union Pacific. In terms of asset allocation, no major changes were made within the past quarter with your Fund s overall equity exposure sitting close to 25% with our preference remaining skewed to offshore equities, where we find far more value and conviction relative to an expensive domestic equity market. Looking ahead The Balanced Cautious Fund is well diversified in terms of both asset classes and multi-national exposure, with a bias towards income generating investments to target a relatively stable return over long periods of time. Investors need to continue to temper their expectations given the exceptional returns, significantly above inflation, which have been enjoyed over the past six years with relatively low volatility and risk apparent in generating these high returns. Performance figures (March 2015) Performance Quarter 1 year 3 years STANLIB Balanced Cautious Fund A Quartile Sector Average Fund benchmark 5 years 1st 2nd 3rd 4th Quartile Source: Morningstar STeFI Call Deposit Rate Index 45%; FTSE/JSE Shareholders Weighted All Share Index 25%; BEASSA All Bond Index 15%; Barclays Global Aggregate Bond Index 6%; FTSE/JSE SA Listed Property Index (SAPY) 5%; MSCI AC World Index (in ZAR) 4%. 13

18 ƴ ƴ Robin Eagar ƴ ƴ Herman van Velze ƴ ƴ Warren Buhai ƴ ƴ Kobus Nell Core Equity Franchise Robin Eagar started his investment career in 1998 working in corporate finance and private equity. At STANLIB he began as an Industrial Analyst, transferring in 2006 to managing general equity funds. Robin has successfully managed Balanced Funds since 2007 and is currently Co- Head of the Balanced and Value Equity Franchise. Herman van Velze holds a Bachelor of Engineering (Mining) and Masters of Business Leadership (MBL). Herman joined the STANLIB group as portfolio manager in April 2001 after the SCMB and Liberty merger. He was head of the pension fund division and later also head of the external client division. In 2006 he assumed overall responsibility for managing the Liberty Life asset book. Herman left STANLIB and joined a private equity firm from October 2007 to September He returned to STANLIB in November 2009 as Head of the Multi-Asset and Core Equity propositions. Following five years in corporate finance at Standard Bank, Warren Buhai joined STANLIB in 2005 where he initially specialised in resources analysis and portfolio management. He has been a portfolio manager in the Multi-Asset Franchise since Kobus Nell joined STANLIB in 2003 on completion of his accountancy articles in the Unit Trust pricing department and Corporate Actions and Confirmations. He joined the Unconstrained Equity Franchise as a research analyst and assistant portfolio manager in He also specialises in Resources sector research and has been managing the STANLIB Gold and Precious Metals Fund (now merged with the STANLIB Resources Fund) since He is a PricewaterhouseCoopers-trained chartered accountant, and is also a CFA charter holder. STANLIB Equity Fund The STANLIB Equity Fund is a general equity fund that aims to outperform its composite benchmark over time. The Fund uses a bottom-up stock-picking approach and can invest in both local and offshore equities. The Fund has a mandate that is not restricted to any specific investment style. Investments are focused around companies that are housed within the Fund s benchmark, with offshore being limited to a maximum of 20% of the Fund. Who should invest? The Fund is targeted at investors: Aiming to achieve capital growth with a time horizon of five years or more to invest Who want a single equity fund for local and offshore equities Who prefer an equity mandate that is not restricted to a specific investment style 14

19 Fund update quarter Fund review The STANLIB Equity Fund gained 4.7% for the past quarter ended 31 March 2015, relative to the 6.9% gain for the SWIX benchmark. Following the volatile fourth quarter of 2014, with the prospects of European Central Bank (ECB) quantitative easing starting in March and the US rate hiking cycle being pushed further out, global equity markets saw strong gains to start the new year. These were widespread across the financial and industrial sectors, which added to your Fund s return in the quarter. These included financials such as JSE-listed FirstRand and Sanlam, together with offshore-listed Japan Exchange Group and Chinese insurance company Ping An. Similarly, positions in industrial counters with significant offshore exposure added to your Fund s performance, including JSE-listed Steinhoff and Medi-Clinic, together with offshore-listed consumer electronic goods producer Apple, Japanese silicon wafer manufacturer Sumco and pharmaceutical giant Pfizer. Added to these, underweights in certain expensive domestic-focused industrial companies that struggled in the quarter added to your Fund s performance, including Tiger Brands and Shoprite. Coming into 2015, resource counters continued to struggle given the ongoing stronger dollar and weaker commodity prices, which meant that certain resource counters that we believe have long-term intrinsic value upside detracted from performance, namely Glencore and Impala Platinum. Similarly, underweights in Naspers and Standard Bank also detracted from performance in the quarter, together with overweights in JSE-listed Aspen Pharmacare, British American Tobacco, Tsogo Sun, Tongaat Hulett and Barclays Africa, as well as offshore-listed motor manufacturer Mazda, credit card company American Express and rail transportation company Union Pacific. Your Fund remains approximately 70% invested domestically, with a focus on high quality multi-national businesses and the balance in offshore equities. Approximately 4.5% of the offshore equity exposure is African equities, including companies operating in Kenya, Nigeria and Botswana within high-growth sectors such as banking, cement, retailing and mobile telecoms. The balance of the global equities provides investors with exposure to North America, Japan, Europe and Emerging Markets, covering many diverse sectors including information technology, consumer discretionary, healthcare, consumer staples and financials. Looking ahead We will continue to focus on investing your funds in companies that are trading at a discount relative to our calculation of their intrinsic value, with a bias for companies that can take advantage of the business cycle stage that we envisage for the foreseeable future. We have positioned your Fund for a gradually improving global growth environment, however, given the extent of equity market gains over the past six years, together with the level of valuations and continued uncertainty around the global growth path; we remain cautiously tilted to higher quality multi-national companies that have a long-term history of compounding returns over time. Performance figures (March 2015) Performance Quarter 1 year STANLIB Equity Fund R Quartile Sector Average Fund benchmark 3 years 5 years FTSE/JSE Shareholders Weighted All Share Index 1st 2nd 3rd 4th Quartile Source: Morningstar 15

20 STANLIB SA Equity Fund The STANLIB SA Equity Fund is a general equity fund that aims to outperform the JSE Shareholders Weighted Index (SWIX) over time. The Fund uses a bottom-up stock-picking approach and can invest only in SA equities. The Fund has a mandate that is not restricted to any specific investment style. Holdings are focused around companies that are constituents of the Fund s benchmark. Who should invest? The Fund is targeted at investors: Aiming to achieve capital growth with a time horizon of five years or more Who want a single equity fund for local equities Who prefer an equity mandate that is not restricted to a specific investment style Fund update quarter Fund review The STANLIB SA Equity Fund gained 4.1% for the past quarter ended 31 March 2015, relative to the 6.9% gain for the SWIX benchmark. Following the volatile fourth quarter of 2014, with the prospects of European Central Bank (ECB) quantitative easing starting in March and the US rate hiking cycle being pushed further out, global equity markets saw strong gains to start the new year. Domestic equity markets gains were widespread across the financial and industrial sectors, which added to your Fund s return in the quarter. These included interest-rate sensitive financials such as FirstRand and Sanlam, together with industrial counters with significant offshore exposure including Steinhoff, Medi-Clinic and Netcare. Similarly, underweights in certain expensive domestic-focused industrial companies that struggled in the quarter added to your Fund s performance, including Tiger Brands and Shoprite. Coming into 2015, resource counters continued to struggle given the ongoing stronger dollar and weaker commodity prices, as Chinese demand growth continues to wane given their growth shift away from fixed asset investment toward the more consumer-orientated service sectors. This meant that certain resource counters that we believe have long-term intrinsic value upside detracted from performance, namely Glencore and Impala Platinum. Similarly, underweights in Naspers and Standard Bank also detracted from performance in the quarter, together with overweights in multi-national counters including Aspen Pharmacare and British American Tobacco, as well as the more domesticallyfocused Tsogo Sun, Tongaat Hulett and Barclays Africa. During the fourth quarter, we continued to reduce your Fund s holding in MTN given the deteriorating outlook for growth in South Africa and Nigeria, in favour of an increased exposure to companies that are focused on growing their offshore profits, including Steinhoff and Sanlam. Your Fund continues to have significant exposure to large globally diversified rand-hedge industrial counters, including British American Tobacco, Steinhoff, Aspen, Naspers and Richemont. Likewise, core holdings remain in well-managed South African industrial and financial businesses that have gradually been increasing their offshore exposure over the past decade, including MTN, Medi-Clinic, Netcare, Bidvest, FirstRand and Sanlam. Looking ahead We will continue to focus on investing your funds in companies that are trading at a discount relative to our calculation of their intrinsic value, with a bias for companies that can take advantage of the business cycle stage that we envisage for the foreseeable future. We have positioned your Fund for a gradually improving global growth environment, however, given the extent of equity market gains over the past six years, together with the level of valuations and continued uncertainty around the global growth path; we remain cautiously tilted to higher quality multi-national companies that have a long-term history of compounding returns over time. Performance figures (March 2015) Performance Quarter 1 year STANLIB SA Equity Fund R Quartile Sector Average Fund benchmark 3 years 5 years FTSE/JSE Shareholders Weighted All Share Index 1st 2nd 3rd 4th Quartile Source: Morningstar 16

21 ƴƴ Henk Viljoen ƴƴ Victor Mphaphuli Fixed Interest Franchise Henk Viljoen is the Executive Director of Fixed Interest. After completing his BCom at the University of Pretoria, Henk started in the marketing division of Telkom, later moving on to the Treasury Division. Henk then became an economist at Senbank, specialising in International Economics. After a period of two and a half years he moved on to the Bond Trading Desk. In October 1990 he joined LibAM (now STANLIB) as a bond trader, and has since then taken over as Head of Fixed Interest. In 1998 he completed his MCom Economics (Cum Laude). He was appointed a Director of LibAM in Victor Mphaphuli joined SCMB Treasury in 1996 as a trainee dealer in the foreign exchange markets and later moved to Nedcor as a capital markets dealer. In early 2001, he joined LibAM s (now STANLIB) fixed interest team as a capital markets dealer and assistant to Henk Viljoen. He was promoted to Head of Bond and Income Funds in 2008, assuming full responsibility for the daily management of these funds. STANLIB Aggressive Income Fund The STANLIB Aggressive Income Fund aims to provide investors with a high level of income in addition to capital growth over the longer term. The Fund offers flexible exposure to property, bonds and money market instruments through different economic environments. The Fund is a more aggressive solution than the STANLIB Flexible Income Fund, allowing for a maximum property exposure of 50%. The Fund has no duration limit. Who should invest? The Fund is targeted at investors who: Would like to achieve a high level of income and the potential for capital growth Seek elements of both fixed instruments and property in a well diversified portfolio Prefer one actively managed solution for all their fixed interest needs Fund update quarter Fund review The Fund s size remained unchanged at R2.4 billion during the quarter. The Fund s modified duration was unchanged at 0.56 years during the first quarter of 2015, keeping the Fund defensive in the face of increased volatility and the threat of interest rate hikes by the SARB. The Fund s exposure to listed property was increased as property continued to do well. Looking ahead The bond market got off to a volatile start this year, with the Volatility index (VIX) hitting a high of 22%. Despite this, the All Bond Index (ALBI) benchmark returns remained positive for the quarter. The ALBI returned 3.0% during the quarter as sentiment generally was supportive for bond yields. The return for the first month of the year was as high as 6.50% after the RSA 10 year government bond staged an unrelenting yield decline of 90 basis points, touching a low of 7.04%. Over the next two months of the year the market paired back most of the gains, ending the quarter with a respectable return, after the yields retraced. 17

22 The game changer for the market was the significant decline in oil prices which kept a decent bid in the market. The bullish backdrop was premised on a suddenly benign short term inflation trajectory as oil prices had a massive drop to a low of $46/barrel. The local CPI declined over the quarter to a low of 3.9% for February, which is expected to be the low in the cycle. The drop in oil prices led to other emerging market economies cutting interest rates. The European Central Bank (ECB) also announced aggressive quantitative easing (QE) measure that will see them pumping liquidity of at least 1.1 trillion euros to the market to stave off the threat of deflation. These measures together with an indecisive and often divided Federal Open Market Commitee (FOMC) in terms of deciding when interest rates in the USA will lift off has contributed to higher demand for bonds across the globe. A few developed markets in Europe have traded in the negative yield territory as deflation threat cuts through the continent. The accommodative nature of the global measures led to the South African Reserve Bank (SARB) not increasing the repo rate during the quarter, although the last Monetary Policy Committee (MPC) meeting of the quarter turned very hawkish as the Rand traded weaker to R12.47/$ and oil prices strengthened. During the first quarter, the Minister of Finance delivered the budget speech which managed to stave off further threats of a rating downgrade, managing to keep the debt to GDP ratio below 50%, which turned out to be positive for the bond market. US data was mixed during the quarter leaving the FOMC is a conundrum as inflation and wages remained too low but unemployment continued to decline. The gap between the hard forward guidance and actual data has led to huge volatility in the bond market. US treasuries traded a range of 2.25% and 1.65% before ending the quarter at 1.91%. This created some slack in the US economy and contributed to lower inflation overall. The RSA sovereign spread tightened from an intra-quarter high of 241 basis points over US treasuries to end the quarter at 213 basis points as the allure for higher yield carry trade increased, given that developed markets yields remain at near zero level. The US dollar strengthened from 1.20 at the beginning of the year to against the Euro at the end of the quarter. The path for monetary policy is still data dependent as stated by the SARB and FOMC; however, with lower growth and inflation, the repo rate may remain unchanged for a considerable length of time although the current tone is firmly hawkish for domestic short term rates. Bond yields are expected to remain supported by QE from Europe and Japan, until such time that the US Fed starts to hike rates, which is expected to be later this year, although at a measured pace. Performance figures (March 2015) Performance Quarter 1 year 3 years STANLIB Aggressive Income Fund A Quartile Sector Average Fund benchmark 5 years 1st 2nd 3rd 4th Quartile Source: Morningstar FTSE/JSE SA Listed Property Index (SAPY) 33.33%; BEASSA All Bond Index 33.33%; STeFI Composite Index 33.33% STANLIB Flexible Income Fund (Regulation 28 compliant) The STANLIB Flexible Income Fund is a fixed interest fund that aims to provide income generation and capital growth, targeting outperformance over traditional money market and income funds, by investing in the full spectrum of fixed interest instruments and property. The Fund offers investors one solution to manage their fixed interest needs across changing interest rate cycles. The Fund has no maturity limitations. Property is limited to a maximum of 10% of the Fund. Who should invest? The Fund is targeted at investors who: Require a specialist fixed interest fund as part of a diversified portfolio Have a longer term investment horizon than traditional money market income funds Prefer one actively managed solution for all their fixed interest needs Fund update quarter Fund review The size of the Fund declined from R1.40 billion at the end of the fourth quarter of 2014 to R1.35 billion by the end of the first quarter of The Fund s exposure to floating rate notes was slightly reduced. The modified duration of the fund was increased from 0.73 to 1.10 years by the end of the first quarter. The Fund s exposure to listed property was at 1.1% but was as high as 5% during the quarter. The Fund purchased RSA 2018 (R204), RSA 2021 (R208) and RSA 2020 (R207) government paper as the market weakened. This led to the increase in modified duration. Looking ahead The year got off to a volatile start the bond market, with the Volatility index (VIX) hitting a high of 22%. Despite this, the All Bond Index (ALBI) benchmark returns remained positive for the quarter. The ALBI returned 3.0% during the quarter as sentiment generally was supportive for bond yields. The return for the first month of the year was as high as 6.50% after the RSA 10 year government bond staged an unrelenting yield decline of 90 basis points, touching a low of 7.04%. Over the next two months of the year the market paired back most of the gains, ending the quarter still with a respectable return, after the yields retraced. The game changer for the market was the significant decline in oil prices which kept a decent bid in the market. The bullish backdrop was premised on a suddenly benign short term inflation trajectory as oil prices had a massive drop to a low of $46/barrel. The local CPI declined over the quarter to a low of 3.9% for February, which is expected to be the low in the cycle. The drop in oil prices led to other emerging market economies cutting interest rates. The ECB also announced aggressive quantitative easing (QE) measure that will see them pumping liquidity of at least 1.1 trillion euros to the market to stave off the threat of deflation. These measures together with an indecisive and often divided FOMC in 18

23 terms of deciding when interest rates in the US will lift off has contributed to higher demand for bonds across the globe. A few developed markets in Europe have traded in the negative yield territory as deflation threat cuts through the continent. The accommodative nature of the global measures led to the SARB not increasing the repo rate during the quarter, although the last MPC meeting of the quarter turned very hawkish as the Rand traded weaker to R12.47/$ and oil prices strengthened. During the first quarter, the Minister of Finance delivered the budget speech which managed to stave off further threats of a rating downgrade, managing to keep the debt to GDP ratio below 50%, which turned out to be positive for the bond market. US data was mixed during the quarter leaving the FOMC is a conundrum as inflation and wages remained too low but unemployment continued to decline. The gap between the hard forward guidance and actual data has led to huge volatility in the bond market. US treasuries traded a range of 2.25% and 1.65% before ending the quarter at 1.91%. This created some slack in the US economy and contributed to lower inflation overall. The RSA sovereign spread tightened from an intra-quarter high of 241 basis points over US treasuries to end the quarter at 213 basis points as the allure for higher yield carry trade increased, given that developed markets yields remain at near zero level. The US dollar strengthened from 1.20 at the beginning of the year to against the Euro at the end of the quarter. The path for monetary policy is still data dependent as stated by the SARB and FOMC; however, with lower growth and inflation, the repo rate may remain unchanged for a considerable length of time although the current tone is firmly hawkish for domestic short term rates. Bond yields are expected to remain supported by QE from Europe and Japan, until such time that the US Fed starts to hike rates, which is expected to be later this year, although at a measured pace. Performance figures (March 2015) Performance Quarter 1 year STANLIB Flexible Income Fund A Quartile Sector Average Fund benchmark BEASSA All Bond 1-3 Year Index 3 years 5 years 1st 2nd 3rd 4th Quartile Source: Morningstar STANLIB Bond Fund The STANLIB Bond Fund is a fixed interest fund that aims to provide income generation and capital growth by investing in longer dated fixed interest securities. The weighted average maturity of this Fund must be more than two years. The Fund has a higher volatility than money market and traditional income funds, but a lower volatility than an equity fund. Who should invest? The Fund is targeted at investors: Who want an optimised total return of capital and income With a moderately conservative risk profile Fund update quarter Fund review The size of the STANLIB Bond Fund increased from R2.70 billion at the end of the fourth quarter of 2014 to end the first quarter of 2015 at R3.02 billion. The Fund s modified duration was increased to 6.6 years from 6.5 years as sentiment in the bond market was mixed, and also as the ALBI continued to lengthen in duration. The yield curve flattened further during the quarter, as the yield gap between the R186 (2026 paper) and R203 (2017) compressed from 107 basis points to 95 basis points. The Fund retained the overweight position in credit as demand for the asset class increased. Looking ahead The bond market got off to a volatile start this year, with the Volatility index (VIX) hitting a high of 22%. Despite this, the All Bond Index (ALBI) benchmark returns remained positive for the quarter. The ALBI returned 3.0% during the quarter as sentiment generally was supportive for bond yields. The return for the first month of the year was as high as 6.50% after the RSA 10 year government bond staged an unrelenting yield decline of 90 basis points, touching a low of 7.04%. Over the next two months of the year the market paired back most of the gains, ending the quarter still with a respectable return, after the yields retraced. The game changer for the market was the significant decline in oil prices which kept a decent bid in the market. The bullish backdrop was premised on a suddenly benign short term inflation trajectory as oil prices had a massive drop to a low of $46/barrel. The local CPI declined over the quarter to a low of 3.9% for February, which is expected to be the low in the cycle. The drop in oil prices led to other emerging market economies cutting interest rates. The ECB also announced aggressive quantitative easing (QE) measures that will see them pumping liquidity of at least 1.1 trillion euros to the market to stave off the threat of deflation. These measures together with an indecisive and often divided FOMC in terms of deciding when interest rates in the USA will lift off has contributed to higher demand for bonds across the globe. A few developed markets in Europe have traded in the negative yield territory as deflation threat cuts through the continent. The accommodative nature of the global measures led to the SARB not increasing the repo rate during the quarter, although the last MPC meeting of the quarter turned very hawkish as the Rand traded weaker to R12.47/$ and oil prices strengthened. 19

24 During the first quarter, the Minister of Finance delivered the budget speech which managed to stave off further threats of a rating downgrade, managing to keep the debt to GDP ratio below 50%, which turned out to be positive for the bond market. US data was mixed during the quarter leaving the FOMC is a conundrum as inflation and wages remained too low but unemployment continued to decline. The gap between the hard forward guidance and actual data has led to huge volatility in the bond market. US treasuries traded a range of 2.25% and 1.65% before ending the quarter at 1.91%. This created some slack in the US economy and contributed to lower inflation overall. The RSA sovereign spread tightened from an intra-quarter high of 241 basis points over US treasuries to end the quarter at 213 basis points as the allure for higher yield carry trade increased, given that developed markets yields remain at near zero level. The US dollar strengthened from 1.20 at the beginning of the year to against the euro at the end of the quarter. The path for monetary policy is still data dependent as stated by the SARB and FOMC; however, with lower growth and inflation, the repo rate may remain unchanged for a considerable length of time although the current tone is firmly hawkish for domestic short term rates. Bond yields are expected to remain supported by QE from Europe and Japan, until such time that the US Fed starts to hike rates, which is expected to be later this year, although at a measured pace. Performance figures (March 2015) Performance Quarter 1 year STANLIB Bond Fund A Quartile Sector Average Fund benchmark BEASSA All Bond 1-3 Year Index 3 years 5 years 1st 2nd 3rd 4th Quartile Source: Morningstar STANLIB Income Fund The STANLIB Income Fund is a fixed interest fund that aims to provide a reasonable level of income as well as capital stability. The Fund invests in high-yielding South African fixed interest assets including government and corporate bonds, fixed deposits and money market instruments. The weighted average maturity of this Fund may not exceed two years. Who should invest? The Fund is targeted at investors requiring: A regular quarterly income that aims to generate returns above money market over a two to three year period A traditional low risk income fund Fund update quarter Fund review The Fund s size reduced from R22.2 billion in the fourth quarter of 2014 to end the first quarter of 2015 at R21.3 billion. The current yield on the portfolio is higher than that of money market. The modified duration of the portfolio reduced from 0.17 years to 0.14 years, which is defensive given the long term outlook for the repo rate. The higher concentration to floating rate notes was maintained, which will benefit the Fund as the SARB indicated the risk for interest rates is firmly on the upside. Looking ahead The bond market got off to a volatile start this year, with the Volatility index (VIX) hitting a high of 22%. Despite this, the All Bond Index (ALBI) benchmark returns remained positive for the quarter. The ALBI returned 3.0% during the quarter as sentiment generally was supportive for bond yields. The return for the first month of the year was as high as 6.50% after the RSA 10 year government bond staged an unrelenting yield decline of 90 basis points, touching a low of 7.04%. Over the next two months of the year the market paired back most of the gains, ending the quarter with a respectable return, after the yields retraced. The game changer for the market was the significant decline in oil prices which kept a decent bid in the market. The bullish backdrop was premised on a suddenly benign short term inflation trajectory as oil prices had a massive drop to a low of $46/barrel. The local CPI declined over the quarter to a low of 3.9% for February, which is expected to be the low in the cycle. The drop in oil prices led to other emerging market economies cutting interest rates. The ECB also announced aggressive quantitative easing (QE) measure that will see them pumping liquidity of at least 1.1 trillion euros to the market to stave off the threat of deflation. These measures together with an indecisive and often divided FOMC in terms of deciding when interest 20

25 rates in the USA will lift off has contributed to higher demand for bonds across the globe. A few developed markets in Europe have traded in the negative yield territory as deflation threat cuts through the continent. The accommodative nature of the global measures led to the SARB not increasing the repo rate during the quarter, although the last MPC meeting of the quarter turned very hawkish as the Rand traded weaker to R12.47/$ and oil prices strengthened. During the first quarter, the Minister of Finance delivered the budget speech which managed to stave off further threats of a rating downgrade, managing to keep the debt to GDP ratio below 50%, which turned out to be positive for the bond market. US data was mixed during the quarter leaving the FOMC is a conundrum as inflation and wages remained too low but unemployment continued to decline. The gap between the hard forward guidance and actual data has led to huge volatility in the bond market. US treasuries traded a range of 2.25% and 1.65% before ending the quarter at 1.91%. This created some slack in the US economy and contributed to lower inflation overall. The RSA sovereign spread tightened from an intra-quarter high of 241 basis points over US treasuries to end the quarter at 213 basis points as the allure for higher yield carry trade increased, given that developed markets yields remain at near zero level. The US dollar strengthened from 1.20 at the beginning of the year to against the Euro at the end of the quarter. The path for monetary policy is still data dependent as stated by the SARB and FOMC; however, with lower growth and inflation, the repo rate may remain unchanged for a considerable length of time although the current tone is firmly hawkish for domestic short term rates. Bond yields are expected to remain supported by QE from Europe and Japan, until such time that the US Fed starts to hike rates, which is expected to be later this year, although at a measured pace. Performance figures (March 2015) Performance 1st 2nd 3rd Quartile Quarter 1 year STANLIB Income Fund R Quartile Sector Average 3 years 5 years 4th Source: Morningstar Fund benchmark BEASSA All Bond 1-3 Year Index 21

26 ƴƴ Keillen Ndlovu Listed Property Franchise Keillen Ndlovu started his property career in 2004 at Standard Bank Properties working on the Leveraged Listed Property Product and partly doing listed property research. In 2005, Keillen became a full-time listed property analyst after an inter-group move to STANLIB. He took on more responsibility and assisted with managing of listed property funds in October He became co-head of STANLIB Property Fund and a full-time manager in He was appointed Head of Listed Property Franchise in Since joining the group, Keillen has been part of a successful and consistent investment philosophy and process that has led to the property team winning numerous awards. He currently manages about R23 billion of listed property funds. STANLIB Property Income Fund The STANLIB Property Income Fund invests in listed property shares and aims to provide a high level of income in addition to capital growth over time. The Fund uses proprietary research to identify investment opportunities that aim to achieve superior long-term risk-adjusted returns. The Fund aims to be fully invested in property at all times. Who should invest? The Fund is targeted at investors who: Require a high level of income in addition to capital growth with a time horizon of five years to invest Want to include property as part of their diversified portfolio 22

27 Fund update quarter Fund review The fund delivered 13.22% during the quarter relative to its benchmark of 13.69%. The fund has outperformed its benchmark by 1.43% over a 12 month period, delivering a gross total return of 42.85%. The fund continued to keep its exposure to cash to a minimum. The distribution for the first quarter will be higher than the second quarter because most companies have December or June year-ends and pay out their distributions in the first and third quarters of the year. It is important to look at the total distribution over the full year. Market review The listed property sector ended up delivering a total return of 13.7%. Listed property had a very good quarter with the majority of the total return occurring in the month of January as listed property re-rated relative to bonds. The total return performance of listed property was ahead of equities (5.8%), bonds (3.0%) and cash (1.5%). Listed property has in fact delivered a total return of 41.4% over a rolling 12 month period. This is considerably ahead of equities (12.5%), bonds (12.4%), and cash (6.1%) over the same period. The sector s performance was aided by falling government bond yields during the quarter and stronger than expected distribution growth and forward management guidance. The 10 year SA government bond yield declined by 19 basis points to end the quarter at 7.7%. Lower inflation was the primary driver of the 10 year SA government bond yield declining, as CPI retraced to 3.9% year-on-year in February The lower inflation print in February was mainly driven by a falling oil price lower. The inflation outlook has deteriorated somewhat given the National Energy Regulator South Africa s (NERSA) subsequent request for a 25% increase in electricity. Redefine released an announcement stating that following an approach from the largest of the institutional unitholders that did not support the previous transaction, Redefine has reached agreement with them in terms of which they have irrevocably undertaken to vote in favour of the acquisition by Redefine of all of Fountainhead s assets in exchange for new Redefine shares. This should hopefully pave the way for a successful transaction. New Frontier Properties listed on the Alternative exchange (Alt-x) of the JSE on the 26 March New Frontier Properties is focused on retail opportunities in the United Kingdom. New Frontier Properties currently owns two dominant retail properties, one in Middlesborough and another in Burton Upon Trent. Management believe these centres will perform in an improving UK economy. Furthermore the company offers investors a rand hedge. A number of the major property counters reported results during the quarter such as Growthpoint, Resilient and Hyprop. Fortress, Resilient and Hyprop were the stand out performers delivering distribution growth of 19.6%, 16.3% and 13.7% respectively. Growthpoint, the largest property company by market capitalisation, managed to deliver respectable distribution growth of 7.5%. Looking ahead We are expecting income growth of around 8.5% over the next 12 months. This results in a forward yield for the listed property sector of 6.2% which is below 10 year bond yields (7.7%) and considerably ahead of cash (6%). SA listed property is highly correlated to bond yields. Our base, bull and bear case for the one year total return of listed property assumes bond yields, one year from now, at 7.5%, 7.0% and 8.0% respectively. Listed property is therefore expected to deliver a one year total return of 8.8% under our base case, 16.2% under our bull case and 2.3% under our bear case. Performance figures (March 2015) Performance Quarter 1 year 3 years STANLIB Property Income Fund A Quartile Sector Average Fund benchmark FTSE/JSE SA Listed Property Index 5 years 1st 2nd 3rd 4th Quartile Source: Morningstar 23

28 STANLIB Global Property Feeder Fund The STANLIB Global Property Feeder Fund adopts a bottomup approach to stock selection. The investment process is very research intensive, based on thorough analysis of companies assets, the quality of their property tenants, the track record of their management team and the environment in which they operate. Emphasis is placed on holdings with high-quality rental returns. Who should invest? The Fund is targeted at investors seeking: Exposure to international property markets Exposure to different sectors of the property market Currency diversification Market review The S&P Developed REIT Index returned around 8.3% in ZAR for the first quarter of It is important to note that the benchmark of the portfolio has changed due to the pending retirement of the UBS Global Real Estate Indices later this year. The best performing regions were Europe, US and UK with Japan, Australia and Hong Kong lagging. Performance was driven by firmer treasury yields early in the quarter, good earnings results for REITs in the US, quantitative easing announced by the ECB and policy easing in Australia and China. However a change of expectation of rate hikes in the US weighed on performance in February. Although Europe and Japan are trading at hefty premiums to net asset value, these valuations are palatable at the moment due to quantitative easing and the fact that listed property provides a relatively stable dividend yield with modest growth. Fundamentals in Japan continue to improve. It is also interesting to note that there has been a notable pick-up in interest from general equity investors in REITs globally. Fund review The fund only invests in STANLIB Global Property Fund units and holds minimal cash. The underlying portfolio outperformed the benchmark during the quarter largely due to good stock selection in the US and Singapore and the overweight allocation to Europe and the UK. The underweight allocation to Japan also made a significant contribution to portfolio relative return. Changes in allocations from the previous quarter in US and Europe were largely as a result of the change in benchmark. The best performing stocks during the quarter were SM Prime holdings (Phillipines), Klepierre (France) and Extra Space Storage (US) while Host Hotels & Resorts (US), Iguatemi Emp De Shopping (Brazil) and Boardwalk REIT (Canada) were the biggest laggards. The positions in Philippines and Brazil were closed during the quarter as the STANLIB Emerging Markets Property Feeder Fund provides exposure to these countries. Looking ahead There may be increased volatility in global listed property as the world probably nears a rate hike in the US this year. However the timing and quantum of such rate hike remains uncertain and unfortunately the market takes its cue from the US Federal Reserve even though history shows that REIT prices can rise during rate hikes in a growing economic environment. According to UBS Global Research, global REITs traded at a premium to NAV of about 8.5% with a 3.6% dividend yield and estimated earnings growth of 7.9% for the year as at the end of March. Low double digit total returns for the year is possible but it is also important to recognise that there is currently a strong inverse correlation between US treasury yields and REIT prices. Performance figures (March 2015) Performance Quarter 1 year 3 years STANLIB Global Property Feeder Fund A Quartile Sector Average (South Africa) Fund benchmark UBS Global Real Estate Investors Index 5 years 1st 2nd 3rd 4th Quartile Source: Morningstar 24

29 Global Solutions STANLIB Global Equity Feeder Fund ƴƴ Neil Robson The STANLIB Global Equity Feeder Fund is a rand denominated feeder fund which aims to maximise long-term total return. The manager may invest in all global stocks with a market cap of over $1 billion, and average daily volume of at least $5 million. Given the vast investable universe, the manager s research team has standardised the process of analysing each of the companies. When analysing a company, the analyst will take into account each of the following factors: capital management, current valuations compared to the market, share price trends and earnings revisions. The manager s investment process enables them to build portfolios in a highly disciplined and systematic fashion. Who should invest? The Fund is targeted at investors: Seeking exposure to growth assets to meet financial needs Seeking exposure to global equity markets Looking to broaden their equity exposure by investing in a wide array of opportunities outside of South Africa Wanting to add offshore diversification benefits to their portfolio Requiring a currency hedge against the rand Fund update quarter Fund review The fund delivered a good return in the first quarter of 2015 of 1.5% in dollars or 7.4% in rands, as the rand lost 5.6% to the dollar, 0.1% to the pound, but gained 6.5% versus the euro. Over the year to end September 2014, the fund did 21.3% in rands, or 5.7% in dollars. The return was good because the dollar was once again allpowerful in the quarter. The euro lost an astonishing 10.5% against the dollar in the quarter, while the pound lost 4.9%. Regional allocation added value as Japan, where the fund is nicely overweight (12.2% versus 7.7% for the benchmark), outperformed. The fund s Japanese shares did 4.8% in dollars in the quarter, while the American shares did 1.8%. Sector allocation was supportive as consumer discretionary, where the fund is overweight, outperformed too. Being underweight in energy and utilities also added value. Share selection was mixed and was best in technology and financials. The fund manager Columbia Threadneedle has upped the weighting to Emerging Markets to 10.9% of fund versus 10.3% for the benchmark, overweight for the first time since they started managing the fund for us. They cut the US allocation from 57% at end December to 54% now (benchmark 51.6%) and raised Europe, excluding the UK, to 12.5% from 10.8% (still underweight the 16% of the benchmark though). Apple Inc is the biggest share in the portfolio at 2.7%, followed by Google at 2.5%. There are three Healthcare shares and two Financial shares in the top ten, including China s Ping An Insurance. Looking ahead The fund manager, Columbia Threadneedle Investments in London, remains constructive on equities relative to other asset classes, as markets are supported by accommodative central banks, the sharp fall in energy costs and a low inflation and interest-rate outlook; but they are wary of risks, including rate hikes in the US, political instability in Europe and issues in Russia and Brazil. In Japan, they are very encouraged by the shareholderfriendly developments that are taking place. Columbia Threadneedle favours secular-growth companies and high-quality franchises over cyclical areas of the market, because of the higher risks out there. Performance figures (March 2015) Performance Quarter 1 year 3 years STANLIB Global Equity Feeder Fund A Quartile Sector Average Fund benchmark 95% MSCI World Index 5% STeFI Call Deposit Rate Index 5 years 1st 2nd 3rd 4th Quartile Source: Morningstar 25

30 STANLIB Global Balanced Feeder Fund The STANLIB Global Balanced Feeder Fund s assets are managed in order to minimise risks but at the same time expose the investor to assets within regions that have the most potential. The Fund has the second highest equity weighting compared to the other two global solution funds giving it a higher potential for capital growth than the STANLIB Global Balanced Cautious Fund, but at a higher risk rating. Who should invest? The Fund is targeted at investors: Seeking capital growth and income derived from global markets Seeking a diversified exposure to global markets and assets Requiring a currency hedge against the rand Fund update quarter Fund review ƴƴ Alex Lyle The fund did +5.7% in rands and -0.3% in dollars during the first quarter of 2015, slightly behind the benchmark s 0.5% dollar return, as the rand lost 5.6% to the dollar, 0.1% to the pound, but gained 6.5% versus the euro; so another difficult quarter on the currency front, as assets in euros and many other currencies struggled against the mighty dollar. The euro lost an astonishing 10.5% against the dollar in the quarter, while the pound lost 4.9%. Over the twelve months to end March the fund did 16.8% in rands or +1.4% in dollars, despite the dollar gaining 23% against the euro. The fund has been managed by Columbia Threadneedle Investments of London since early The equity portion of the fund (54.1% of fund) is identical to the STANLIB Global Equity Feeder Fund portfolio. During the quarter to end March, the property (11.5% of fund) and equity portfolios (54.1% of fund) did best with returns of 4.1% and 3% in dollars respectively. Both Fixed Interest (-1.2%) and Cash (-3.8%) had negative dollar returns, although both beat the benchmark. Looking ahead The fund manager, Columbia Threadneedle Investments in London, prefers equities to government bonds, as share markets are supported by accommodative central banks, the sharp fall in energy costs and a low inflation and interest-rate outlook; but they are wary of risks, including rate hikes in the US, political instability in Europe and issues in Russia and Brazil. In Japan, they are very encouraged by the shareholder-friendly developments that are taking place. The fund s rand unit price reached an all-time record high in mid- March and is only slightly below that as of 15th April. The uptrend remains intact. The dollar price of the fund is just 2% below its July 2014 record high. Performance figures (March 2015) Performance Quarter 1 year 3 years STANLIB Global Balanced Feeder Fund A Quartile Sector Average Fund benchmark 5 years 50% MSCI AC World Index 30% Barclays Capital Global Aggregate Bond Index 10% UBS Global Real Estate Investors Index 10% JPM Global Cash (1m) Index Quartile Source: Morningstar 26

31 STANLIB Global Balanced Cautious Feeder Fund The STANLIB Global Balanced Cautious Feeder Fund is managed on a cautious basis with a main objective of long-term growth in capital and income. The Fund has the lowest weighting in equities compared to the other two global solution funds, offering the investor a more conservative level of capital growth than would otherwise be expected from a fund with a higher equity component. Who should invest? The Fund is targeted at investors: Seeking a conservative level of capital growth and income Seeking diversified exposure to global markets and assets Requiring a currency hedge against the rand Fund update quarter Fund review ƴƴ Alex Lyle The fund returned 3.6% in rands in the first quarter of 2015, or -2.3% in dollars as the rand lost 5.6% to the dollar, 0.1% to the pound, but gained 6.5% versus the euro; so another difficult quarter on the currency front, as assets in euros and many other currencies struggled against the mighty dollar. In pound terms, for example, the fund did +3.5% in the quarter. The euro lost an astonishing 10.5% against the dollar in the quarter, while the pound lost 4.9%. Over the twelve months to end March the fund did 10.2% in rands or -4.4% in dollars as the dollar gained a phenomenal 23% against the euro. In pound terms, the twelve month return was +7.7% while in euro terms the return was 21.7%. The fund has been managed by Columbia Threadneedle Investments of London since early The equity portion of the fund (24.3% of fund) is identical to the STANLIB Global Equity Feeder Fund portfolio. During the quarter to end March, the property (9.2% of fund) and equity portfolios did best with returns of +4.2% and +3.1% in dollars respectively, both beating their benchmarks. Fixed interest (-1.2%) and Cash (-4.6%), both in dollars, struggled under the booming dollar, albeit that both also beat their benchmarks. Looking ahead The fund manager, ColumbiaThreadneedle Investments in London, prefers equities to government bonds, as share markets are supported by accommodative central banks, the sharp fall in energy costs and a low inflation and interest-rate outlook; but they are wary of risks, including rate hikes in the US, political instability in Europe and issues in Russia and Brazil. In Japan, they are very encouraged by the shareholder-friendly developments that are taking place. The fund s rand unit price reached an all-time record high in mid-march and is a little below that as of 15th April. The uptrend remains intact. The euro price of the fund also hit a record high in March, while the pound sterling price is just 1.6% below its record high of last May. Performance figures (March 2015) Performance Quarter 1 year 3 years 5 years STANLIB Global Balanced Cautious Feeder Fund A Quartile Sector Average Fund benchmark 20% MSCI AC World Index 40% Barclays Capital Global Aggregate Bond Index 8% UBS Global Real Estate Investors Index 32% JPM Global Cash (1m) Index 1st 2nd 3rd 4th Quartile Source: Morningstar 27

32 A broad investment offering designed to deliver our investment promise to clients. 28