The Weekly Focus. A Market and Economic Update 19 February 2018

Transcription

1 The Weekly Focus A Market and Economic Update 19 February 2018

2 Contents Newsflash...3 Market Comment... 3 Other Commentators... 5 Economic Update...7 Rates STANLIB Money Market Fund STANLIB Enhanced Yield Fund STANLIB Income Fund STANLIB Extra Income Fund STANLIB Flexible Income Fund STANLIB Multi-Manager Absolute Income Fund... 12

3 Newsflash The SA market outperformed last week as the rand gained +3.2% against the dollar, +1.6% against the euro and pound and +1.8% against the Aussie dollar, boosted by politics for the first time since the December ANC Elective Conference Market Comment LOCAL MARKETS Boosted by politics for the first time since the December elections, the SA market outperformed last week as the rand gained +3.2% against the dollar, +1.6% against the euro and pound and +1.8% against the Aussie dollar. The JSE All Share Index gained +5.8% in rands last week, or +9.1% in dollar terms! It is now around -4.3% below its record high of 25 th January. The All Bond Index sparkled too, gaining +2.8% in rands or +6.1% in dollar terms, almost at a record high in dollar terms, back at the previous high of over six years ago. It is at a new record high in rand terms, because it includes interest income in its price. The All Bond Index is now leading the pack of SA asset classes in 2018, with a rand return of +5.3% in the first seven weeks of This is because the yield of our bonds has fallen sharply, with the 2026 maturity R186 bond yield down from 8.58% at end 2017 to 8.09% this morning, which is the lowest yield (highest bond price) in over 2.5 years. This is great for foreign investors of course, because this translates into +12% in dollars, possibly the best return of any market so far in The All Share Index has returned -1% so far in rands in 2018, including dividends, or +6.2% in dollars. The SA Listed Property Index would usually be doing well on the back of lower SA bond yields, but sadly has been very negatively impacted by the huge knock taken by the Resilient group of companies so far this year, on the back of some highly critical reports. The SA Listed Property Index has tumbled -18% from its recent high on 29 th December and is almost back at its low reached on the 6 th of February. This is almost entirely due to the huge knocks suffered by Resilient (-50%), NepiRock (- 50%) and Fortress B (-57%). Greenbay has fallen -52%, but is much smaller. Resilient and Fortress B share prices are both back where they were over 3 years ago. Resilient is now trading on an historic dividend yield of 7.9%, which is a 10-year high (and has a dividend still sitting in its price), while Fortress B is on an historic dividend yield of 10.1%. The SA Listed Property Index is now trading on an historic dividend yield of 7%, the highest in almost six years. It is even higher than our STANLIB Money Market s 6.7% yield, so looks attractive purely from a yield point of view. At this stage, STANLIB is still looking for growth of around 8% in dividends over the next 12 months. On the local stock market, Naspers, which had fallen by -27%, jumped +14% last week, although it is down -1.8% at 11am this Monday morning. Despite the strong rand, the JSE Mining Index bounced from its recent correction low, helped by Anglo American bouncing from 270 rand to 287 rand, assisted today by the first dividend in eight years from subsidiary Anglo American Platinum, after it reported a net profit of R1.9bn in 2017 (up from R700m in 2016). The weaker US dollar, coupled with global economic strength, has helped the prices of iron ore and copper rise, amongst others, also gold. The price of palladium, used in the exhausts of petrol engines, jumped +50% in dollars in 2017, before correcting and now picking up again.

4 Investors in many local equity funds and also most local balanced funds are frustrated because they are struggling to see appreciation in their funds over the past six or so months. Why? The strong rand and various cross currents are two major factors. The strong rand is causing havoc, affecting the rand value of the 25% or so that is invested offshore in their particular fund (both equity and balanced funds). Plus the strong rand is causing havoc on the big offshore companies that trade on the JSE and comprise part of the top 10 shares of most local equity portfolios. We re talking about British American Tobacco, now down -21.4% from its recent high in November and at a 2.5 year low. Its stable mate, Reinet, is -33% from its high in May 2016 and is trading where it was 4 years ago. Richemont is -19% since early November and is trading where it was 4 years ago. Anheuser Busch Inbev is down a whopping -37% from May What a pity we lost SAB from our market. The strong rand is also hurting Aspen, with all its offshore operations; also various property companies like NepiRock, as well as Intu, Capital & Counties and Hammerson. Others with substantial offshore operations include Mediclinic, Netcare, Mondi, MTN, Trencor, Woolies in Australia and of course Sasol and all the mining companies who sell their minerals for dollars. Many South Africans are secretly hoping for a weaker rand to boost the values of their equity and balanced portfolios. Of course the happier bottom line is that the stronger rand means that all our local assets, including our homes, money markets/income funds, the bulk of our pension funds and retirement annuities etc. have all risen in global terms over the past two years. After all, the rand is essentially the share price of our country. So we re better off in global terms than we were when the rand was at 17 to the dollar in early One needs to appreciate that factor. Also the big bank shares have risen to record highs in strong rand terms, as have certain other specific shares like Shoprite, AVI, Bidvest, Clicks, Dis-Chem, Hudaco, RMB Holdings, Spar Group (despite offshore investments), Discovery (despite offshore businesses) and the big retailers have had fantastic appreciation of late, including Truworths, Mr Price and Foschini. The cross-currents that have hurt portfolios of course refer to the disaster that is Steinhoff International, at least so far, to a much lesser extent the attack on Capitec and of course recent highly critical reports on the Resilient Group. Hopefully the big fall in the Resilient group shares is now finally abating as some value emerges, including dividend yields and as Resilient management responds positively to the harsh criticism meted out to them. SBG Securities, the stockbroker in the Standard Bank Group, notes this morning that foreign ownership of the JSE, including the dual-listed shares, rose to 33.4% in January from 31.2% in December Within the SA industry groups, Consumer Services, which includes Retailers and Media (Naspers), has the highest foreign ownership at 54.3% in January 2018, up from 51.4% in December Dis-Chem (+2.8%) and Pick n Pay (+2.3%) saw the largest increases in foreign ownership within the Retailers in Q4 2017, while Naspers showed an increase of 2.6%. Foreign ownership of SA Financials rose to 26.9% in January from 24% in December OFFSHORE MARKETS The US stock market led the global bounce-back from the recent sharp correction, as US shares gained for six consecutive days, led by technology shares. Today is a holiday in the US (Presidents Day). The US S&P 500 Index gained +5.8% from its recent low and is now -4.9% from its record high in January. The tech-laden Nasdaq gained +6.8% from its low to be -3.5% from its record high.

5 The MSCI World Index is -4.7% from its peak, while the MSCI Emerging Markets Index is - 5.8% from its recent peak. The chart below of the rand to the dollar shows the rand gaining from 17 to the dollar two years ago to the current 11.63, back at early 2015 levels. So, where to now? I have no idea, other than that the current trend remains firmly intact. Other Commentators US Market Analyst, Elaine Garzarelli Source: I-Net Bridge Garza s quantitative model actually rose by two points last week to 73.5% (out of a maximum of 100%), due to the upgrade of her sentiment indicator, as the number of bullish US investment advisors fell to 51.9% because of the correction. Corrections in bull markets are fairly common and Garza continues to recommend buying on dips. Fourth quarter US earnings estimates continue to rise, now pointing to impressive +20% year-on-year gains. Garza then expects first quarter 2018 earnings to be up +24% year-onyear. She calculates fair value for the S&P 500 Index at 2,736, slightly higher than the current 2,732 level, although shares normally rise 20-50% above fair value when her quants model is as bullish as it is now. US monetary policy is still very easy, despite all the interest rate hikes to-date, with the Fed Funds rate at only 1.4% and the US balance sheet still over $4 trillion. The European Central Bank s interest rate is still zero and its balance sheet is over $5 trillion. Corporate cash in the US is now over $2.4 trillion and this cash will likely go to buybacks, dividends, wage increases and capex. Most recently, Cisco will repatriate $67 billion of its foreign cash holdings to the US this quarter and spend $44 billion of it on share buybacks and dividends. Historically, shares rally as US bond yields rise, since a rising bond yield reflects an improving economy. A rising bond yield is helping the Fed tighten matters a bit. Although investors are worried about rising inflation, Garza sees some headwinds to rising inflation, such as record US shale output and Amazon is expanding its medical supplies marketplace. So far in 2018, Consumer Discretionary is leading the S&P 500 sectors with +6.6%, while Information Technology is next with +5.8% (the S&P is +2.8% in 2018). Real estate has the worst return with -7.1%, then Energy/oil with -5.5%. Garza recommends an overweight in IT, health care, financials, consumer discretionary, industrials and materials.

6 BCA Research BCA thinks it is too soon for investors to be worried about higher inflation. Investors are, however, still uneasy that either the age of the current expansion (the 2 nd longest ever) or a bubble will trigger the next recession. The latest Household Debt and Credit Report from the NY Fed suggests that the odds of a consumer debt-led recession remain low. Latest earnings per share and sales growth of US companies are well ahead of consensus expectations at the start of January. Average earnings growth year-on-year (Q over Q4 2016) is outstanding at +15%, with revenue growth at +8%. Earnings per share have increased in 10 out of 11 sectors. Earnings per share results are particularly strong in Energy (+119%), Materials (+35%), Information Technology (+20%) and Financials (+15%). Excluding Energy, S&P 500 profits are still up a robust +13% year-on-year. Share buybacks, surging capital spending by companies, tax cuts and strong global growth are all contributing to this stronger-than-expected earnings growth in Four months ago earnings estimates for 2018 were +11%. Now they re up to +19%! Expectations are that earnings will grow by +10% next year, in BCA expects inflation to hit the Fed s 2% target by year-end and then to exceed that in BCA thinks the Fed will then over-tighten in 2019 as it finds itself behind the inflation curve. At this stage banks remain prudent on mortgage lending and the amount lent to sub-prime borrowers remains well below levels of Prudent lending in the auto sector suggests there are low odds of a bubble forming in subprime lending to buy autos. Student loan delinquency rates are stable, although they are elevated relative to other types of consumer debt. BCA recommends staying overweight in shares versus bonds for now, but recommends scaling back exposure to shares later this year in advance of a recession starting in late 2019 or Paul Hansen Director: Retail Investing

7 Economic Update 1. SA unemployment rate improved to 26.7% in the final quarter of 2017, but this was due to a decline in the size of the labour force rather than an increase in employment. 2. SA retail sales declined a little more than expected in December after a spectacular boost in November as a result of Black Friday. For 2017 as a whole, SA retail sales grew by a respectable 3.0%. 3. US confidence indicators remain exceptionally strong at the start of 2018, partly helped by recent tax cuts. This could extend the US economic upswing unless inflation and interest rates rise faster than expected. 4. SA State of the Nation Address - a positive message overall that focused on eradicating corruption and reforming SOEs. Specifics on economic policy have been deferred to a jobs summit as well as an investment summit. 5. Nigeria Inflation shows signs of improvement. 1. Stats SA released the Labour Force Survey (LFS) for Q The LFS is a quarterly household survey specifically designed to measure the dynamics of employment and unemployment in South Africa, including the informal sector as well as small-scale subsistence farmers. The following is a summary of the key trends in the labour market as at Q In Q4 2017, there were million people aged between 15 and 64 years in SA (up relative to Q3 2017, and up over the past year). The number of employed people fell by in the final quarter of 2017, while the labour force contracted by a massive The net result was that South Africa s official rate of unemployment improved to 26.7% in Q down from 27.7% for the third quarter. This is despite the fact that the number of people employed declined. In other words, the improvement in the unemployment rate was due to a decline in the size of the labour force and not due to an increase in employment. The total number of people unemployed was recorded at million in the fourth quarter of 2017, which is down from a peak of million in the beginning of According to the expanded definition of unemployment, which includes discouraged workers, the unemployment rate is a very worrying 36.3%, down from 36.8% in Q In addition, the unemployment rate for the youth (younger than 25), using the expanded definition, is a shockingly high 63.9%. Clearly, the rate of youth unemployed has become a national crisis, with significant social, economic and political implications. The Q quarterly decline in employment of is consistent with the overall performance of the South African economy (SA GDP grew by an estimated 1.0% in 2017). It is, however, concerning to see that the formal sector shed jobs in Q4 2017, especially considering the current tax revenue shortfall. In contrast, the informal sector added jobs. Overall, South Africa s labour market has failed to gain any meaningful traction over the past few years with the unemployment rate (especially for the youth) remaining exceedingly high by global standards. Fundamentally, this reflects the lack of fixed investment spending by the private sector, as well as the sustained low business confidence. Furthermore, the high rate of unemployment contributes too much of the social tension and anguish experienced in South Africa on a daily basis, especially among the youth. Increasing employment in South Africa has to be the number one economic/political/social objective, and can only be resolved meaningfully through a concerted and sustained effort to improve skills development as well as encourage private sector fixed investment spending, business development and entrepreneurship.

8 Under these circumstances the number of social grants paid will continue to increase, putting further strain on the government s fiscal position. Back in the year 2000, a social grant was paid to million people. This increased to million in 2010 with the extension of the age for child grants. By 2015 the number of social grant recipients was up at million and was budgeted at million in Stats SA released the retail sales data for December According to the latest survey, retail sales fell by a fairly substantial -2.6%m/m, after recording impressive growth of 3.8%m/m in November The November boost in sales was largely due to Black Friday. The month-on-month sales performance was worse than market expectations, which was for spending to fall by only -0.1%m/m. In the past three months from October to December (Q4 2017) retail sales rose by a solid 2.2%q/q. The latest retail sales data will clearly boost SA s Q4 GDP estimate and could mean that South Africa achieved an average annual growth rate of around 1% for 2017 as a whole. Despite the larger than expected monthly decline in sales during December 2017, the annual growth in retail spending help-up very well at 5.3%y/y. Furthermore, the 12- month moving average of the annual growth rate remains firmly positive at +2.8%, suggesting that on a trend basis the retail sector is still showing signs of improving. Stated differently, the improvement in retail sales during that past few months cannot be ascribed to only the Black Friday event in November For 2017 as a whole, SA retail sales grew by around 3% in real terms, with a noticeable acceleration in the second half of the year. While the recent acceleration in retail spending has been fairly broad-based, the stand-out categories include clothing and footwear, household appliances and on-line retailing. In recent months many retailers have offered bargains/specials, enticing the consumers with great deals. Furthermore, these sales have largely been purchased with cash, as reflected in the fact that the growth in consumer credit remains very modest and trending only modestly higher. In summary, during 2015, South African consumers were helped by relatively low inflation (4.6%) compared with an average wage increase of 7.7%. This systematically changed in 2016 as inflation moved noticeably higher, and the Reserve Bank continued to hike rates. In addition, the banks became much more circumspect in the granting of credit. The net result was that at the start of 2017 the consumer had less discretionary income available for general retail activity. At the same time consumer confidence had fallen and is still well below the long-term average. Fortunately, in recent months inflation has moved back well inside the target range and is likely to remain relatively low in the months ahead. This coupled with the reduction in interest rates (July 2017) and the discounting of retail goods has provided some support to the household sector, especially in the second half of 2017, helping retail sales gain some momentum - despite the still weak labour market. 3. Over a year-ago in early 2017 we introduced an economic research product that scores US confidence, especially business confidence, on a monthly basis. This has been done as part of our ongoing evaluation of the effectiveness of President Trump s policy initiatives and the relative strength of the US economy. In that regard, we have become increasingly focused on the possibility that US private sector fixed investment activity will gain momentum. A pick-up in private sector investment, boosted by recent tax cuts, could lift the overall economic growth rate of the US, including an improvement in productivity, which has slowed appreciably in recent years. Many media stories still focus on the negative social and political aspects associated with President Trump for good reason - but don t monitor the sustained rise in US confidence levels that occurred consistently after Trump was elected. It is clear that the initial boost in US business confidence was linked to Trump s promises regarding tax cuts, less business regulation, greater trade protection and increased spend on economic infrastructure.

9 Importantly, there is a strong and positive correlation between US confidence and economic growth; hence a sustained rise in business confidence should lead to a noticeable improvement in GDP growth. Furthermore, as mentioned above, the recent approval of a package of tax cuts including the sharp reduction in the US corporate tax rate should also help to lift US growth to some extent. The confidence indicators we have chosen to monitor each month include the following: ISM manufacturing index ISM non-manufacturing index NFIB Business Confidence NFIB Hiring Plans Wells Fargo Small Business Confidence US consumer confidence (Conference Board) US prospective home buyers US leading indicator Each of the above indicators is scored (subjectively) on a scale of 1 to 10, with 10 being extremely high confidence. Currently (mid-february 2018), the average of all eight indicators scored a very impressive 8.4 out of 10, which is above the previous month s score of 7.9, and the highest score since we started scoring confidence in February A score of 8.4 would suggest that the US is experiencing a very high level of confidence overall. Interestingly the NFIB Research Foundation highlighted that according to their research a record number of small business owners Say Now is a Good Time to Expand. In fact the expansion reading set a 45-year high in the NFIB Optimism Index during January Other key US confidence indicators we measure also remained strong this month. In particular, the ISM manufacturing index, traffic of prospective home buyers, the intention to hire more workers and the leading economic indicator. If the current level of confidence can be sustained, US economic growth would be expected to improve relative to an estimate of 2.3% in However, there is also a growing anxiety about the risk of higher inflation that could force the Federal Reserve to hike interest rates more aggressively. A significant increase in US interest rates (i.e. more than 3 hikes of 25bps each in 2018) could start to dampen economic activity, signaling an end to one of the longest economic upswings in the history of the US economy. Fortunately, at this stage a very broad range of economic data continues to support the upside scenario, but we need to monitor inflation and interest rates carefully. 4. On Friday, 16 February 2018, the newly elected President of South Africa, Cyril Ramaphosa, delivered his first State of the Nation Address (SONA) since taking office on 15 February Ahead of the event there was a lot of discussion and debate about the likely content and tone of Ramaphosa s speech. In particular, we highlighted the need for the incoming President, together with a newly appointed leadership structure, to urgently start to address five key challenges facing the country namely, clarify key economic and social policies, restore fiscal discipline, start to reform the State Owned Enterprises (SOEs), lift business confidence, and embark on a process of eradicating corruption in both the public and private sectors. We have argued that, in combination, addressing these five challenges will help to lift South Africa s economic growth meaningfully, leading to a sustained rise in employment. The South African economy has struggled to gain any momentum since the global financial market crisis in 2008/2009, despite a relatively positive global economic backdrop. Instead, the South African economy has decoupled from the performance of the world economy, averaging growth of a mere 1.5% over the past nine years and a mere 0.8% in the past three years.

10 This underperformance is reflected in rising levels of unemployment, increasing tax revenue shortfalls, depressed levels of consumer and business confidence, a protracted fixed investment recession in the private sector and credit rating downgrades. Without a sustained pick-up in economic growth, the fiscal authorities are going to find it increasingly difficult to meet their budget projections and the country will continue to face the risk of additional credit rating downgrades, rising unemployment and further social tension. Moody s remains the only major credit rating agency to assign South Africa an investment grade rating for both its long-term foreign debt as well as its long-term domestic debt, but they have South Africa on a negative outlook and have placed the country on a rating review that will be assessed in March Fortunately, President Ramaphosa delivered a positive message, focusing extensively on the need to create jobs, improve governance and achieve social transformation. The President, at least to some extent, addressed all of the five key challenges facing South Africa, especially the need to eradicate corruption and reform the SOEs. Although Ramaphosa highlighted some of the key policy uncertainties facing the economy and the need to lift business confidence and encourage investment, he did not provide much detail on how this was going to be achieved. Instead, he announced that government would hold a series of economic summits, including a jobs summit as well as an investment summit within the next few months. Presumably, these summits will be tasked with identifying practical measures that can be implemented in order to lift economic growth sustainably. The President also announced that he will be appointing a Presidential Economic Advisory Council to advise on economic policy on an on-going basis. Realistically, although this lack of detail on economic policy might disappoint some analysts, this is the best that could have been expected given that Ramaphosa has not yet appointed his cabinet and has probably had little time to consult with a broader group of senior advisors given the political turmoil since the ANC National Conference in December and the uncertainty about when Ramaphosa would become president. Other positive announcements included the promotion of youth employment, the deregulation of small business, the encouragement of manufacturing activity, the development of agricultural production and the promotion of the tourism sector. The President also emphasised the need to reform and strengthen key institutions such as the South African Revenue Services, but also reduce the size of the cabinet and improve the efficiency of government. Overall, the specific points the President chose to emphasis in the speech together with the tone, and the style of delivery should, on balance, help improve consumer and business confidence. The focus will now shift to the announcement of a new cabinet within the next few days as well as the content of the National Budget that is scheduled to be presented on Wednesday, 21 February. In particular, will the National Budget provide the type of policy certainty and growth initiatives that the country desperately needs? 5. Inflation in Nigeria moderated to 15.1% in January 2018 from 15.4% in December Although inflation is still moving sideways, the data was promising, particularly in food. What was most encouraging is that food price increases finally started to slow to 18.9% from 19.5% in the previous month. Food inflation has been stubbornly high even though most other price increases have been moderating. This kept the overall headline inflation figure higher. Food producers were recovering lost margins and volumes by increasing prices. This pressure is expected to moderate in Core inflation was flat at 12.1% and does not look to be moderating any further. Election campaigning towards the second half of 2018 poses some upside risk to inflation numbers. So this means the overall figure are likely to remain in the double digits for the remainder of the year albeit at lower levels.

11 Inflation in Nigeria averaged 9% in 2015 but shot up to 15.6% in This was as foreign currency shortages pushed up prices throughout the economy. Inflation then continued upwards to an average of 16.6% in 2017 however it started to moderate as the year progressed. Inflation is off to a good start in 2018 and could hit single digits by the beginning of What this means for monetary policy is that the easing bias is maintained even though no rate cuts have been implemented yet. Although the Central Bank of Nigeria will most likely be targeting inflation they would also consider stimulating economic growth which at the moment is still weak. Please follow our regular economic updates on Kevin Lings, Laura Jones & Kganya Kgare (STANLIB Economics Team)

12 Rates These rates are expressed in nominal and effective terms and should be used for indication purposes ONLY. STANLIB Money Market Fund Nominal: 6.80% Effective: 7.02% STANLIB is required to quote an effective rate which is based upon a seven-day rolling average yield for Money Market Portfolios. The above quoted yield is calculated using an annualised seven-day rolling average as at 16 February This seven- day rolling average yield may marginally differ from the actual daily distribution and should not be used for interest calculation purposes. We however, are most happy to supply you with the daily distribution rate on request, one day in arrears. The price of each participatory interest (unit) is aimed at a constant value. The total return to the investor is primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of reducing the capital value of the portfolio. STANLIB Enhanced Yield Fund Effective Yield: 7.85% STANLIB is required to quote a current yield for Income Portfolios. This is an effective yield. The above quoted yield will vary from day to day and is a current yield as at 16 February The net (after fees) yield on the portfolio will be published daily in the major newspapers together with the all-in NAV price (includes the accrual for dividends and interest). This yield is a snapshot yield that reflects the weighted average running yield of all the underlying holdings of the portfolio. Monthly distributions will consist of dividends and interest. Interest will also be exempt from tax to the extent that investors are able to make use of the applicable interest exemption as currently allowed by the Income Tax Act. The portfolio s underlying investments will determine the split between dividends and interest. STANLIB Income Fund Effective Yield: 8.40% STANLIB Extra Income Fund Effective Yield: 8.00% STANLIB Flexible Income Fund Effective Yield: 6.73% STANLIB Multi-Manager Absolute Income Fund Effective Yield: 5.64% 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. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. CIS can engage in borrowing and scrip lending. Commission and incentives may be paid and if so, would be included in the overall costs. The above quoted yield will vary from day to day and is a current yield as at 16 February For the STANLIB Extra Income Fund, Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down.

13 Disclaimer The price of each unit of a domestic money market portfolio is aimed at a constant value. The total return to the investor is primarily made up of interest received but, may also include any gain or loss made on any particular instrument. In most cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of reducing the capital value of the portfolio. 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. A schedule of fees and charges and maximum commissions is available on request from STANLIB Collective Investments (RF) (Pty) Ltd (the Manager). Commission and incentives may be paid and if so, would be included in the overall costs. A fund of funds is a portfolio that invests in portfolios of collective investment schemes, which levy their own charges, which could result in a higher fee structure for these portfolios. Forward pricing is used. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. 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. Portfolios are valued on a daily basis at 15h00. Investments and repurchases will receive the price of the same day if received prior to 15h00. Liberty is a full member of the Association for Savings and Investments of South Africa. The Manager is a member of the Liberty Group of Companies. As neither STANLIB Wealth Management (Pty) Limited nor its representatives did a full needs analysis in respect of a particular investor, the investor understands that there may be limitations on the appropriateness of any information in this document with regard to the investor s unique objectives, financial situation and particular needs. The information and content of this document are intended to be for information purposes only and STANLIB does not guarantee the suitability or potential value of any information contained herein. STANLIB Wealth Management (Pty) Limited does not expressly or by implication propose that the products or services offered in this document are appropriate to the particular investment objectives or needs of any existing or prospective client. Potential investors are advised to seek independent advice from an authorized financial adviser in this regard. STANLIB Wealth Management (Pty) Limited is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 37 of 2002 (Licence No. 26/10/590). Compliance No.: HX Melrose Boulevard, Melrose Arch, 2196 P O Box 202, Melrose Arch, 2076 T: (SA Only) T: +27 (0) E: contact@stanlib.com Website: STANLIB Wealth Management (Pty) Limited Reg. No. 1996/005412/07 Authorised FSP in terms of the FAIS Act, 2002 (Licence No. 26/10/590) STANLIB Collective Investments (RF) (Pty) Limited Reg. No. 1969/003468/07