Wealth Range Model Portfolios. Snapshot review for the period ended June 2018

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1 Wealth Range Model Portfolios Snapshot review for the period ended June 2018

2 Agenda Cash-Income Solution (Cash+1%) Wealth Preserver Solution (CPI+3%) Wealth Enhancer Solution (CPI+5%) Wealth Accumulator Solution (CPI+7%) Jennifer Henry, CFA, FRM Head of Portfolio Management: Retail Clients Renate Potgieter, CFA Portfolio Manager

3 Return Wealth Range Wealth Accumulator Wealth Enhancer Wealth Preserver Cash-Income Risk Time to achieve return 1 2 years 3 5 years 6 10 years

4 Cash-Income Solution Performance Review Managers Foreign 5,6% Asset allocation Cash 49,1% Bonds 41,0% Other 1,1% Property 2,4% Equity 0,9% Quarter 1 year 3 years p.a. 5 years p.a. Cash Income (Cash+1%) 1,9% 8,3% 8,6% 7,9% Stefi+1% 1,8% 7,6% 7,6% 7,0% Data as at 30 June Source Morningstar, STANLIB Multi-Manager 4

5 Cash-Income Solution Performance Summary Performance Overview The portfolio is comfortably ahead of its Cash+1% benchmark over the past year, with the income orientated Funds producing good performance. The Solution remains comfortably ahead of the peer group over the quarter as well as the year. Coronation Strategic Income lagged the benchmark marginally over the quarter, yet outperformed the peers. It remains the best performing Fund in the Solution over the year. The higher bond exposure detracted as rates rose over the quarter. In addition, the property exposure detracted. The high foreign exposure countered this as the rand weakened over the quarter by almost 16%. STANLIB Money Market has produced a sound 12- month performance and is comfortably ahead of the South African IB Money Market Peer Group Average. It continues to be the defensive Fund in the Solution, taking much lower risk, yet has performed inline with our Cash +1% benchmark. Positioning and outlook The Solution remains appropriately diversified across the managers in the portfolio, with the manager line up remaining unchanged. STANLIB Income has outperformed peers over the quarter and both peers and the benchmark the year to June Their defensive positioning was beneficial over the quarter as bond yields rose. The higher yields were used as an opportunity to increase duration.. Overall, underlying managers remain cautious, albeit with marginally less cash than last quarter, at 49%. The Solution still has over 90% in income oriented assets. Prescient Income Provider s exposure to short duration bonds contributed to the Fund being the best performer in the Solution for the quarter. In addition, the currency option and emerging market hedge contributed to performance in the risk-off environment.

6 Wealth Preserver Solution Performance Review Managers Foreign Asset allocation 25,8% Cash 7,7% Other 0,3% Bonds 34,1% Property 7,1% Equity 25,2% Quarter 1 year 3 years p.a. 5 years p.a. Wealth Preserver (CPI+3%) 3,1% 6,9% 4,8% 6,7% Inflation +3% 2,0% 7,4% 8,3% 8,4% Data as at 30 June Source Morningstar, STANLIB Multi-Manager 6

7 Wealth Preserver Solution Performance Summary Performance Overview The CPI+3% Solution is over 3.5% behind its inflation plus benchmark over a three-year investment horizon. As much as this is disappointing, it is inline with asset class returns, with asset class returns struggling against CPI+3%. Over the past 12 months, the Solution has performed in line with peers. The quarter to June showed good performance, outperforming both the inflation plus target as well as the peer group. Coronation Capital Plus was the best performing Fund in the Solution over the quarter. The Fund s high exposure to rand hedges contributed as the rand weakened extensively over the quarter. In addition, exposure to resource stocks contributed over the quarter. The exposure to British American Tobacco however continued to detract. Investec Cautious Managed had a good quarter, outperforming the peers by over 1% over the three months. The Fund s high allocation to foreign equity contributed. Even though foreign equity was relatively unchanged for the quarter, the rand weakened by over 15%. This resulted in all offshore exposure contributing strongly. In addition, the low allocation to SA property contributed given that property struggled over the quarter. STANLIB Low Equity Tracker underperformed the peers over the quarter and 12 months, being the worst performer in the Solution. The high allocation to inflation linked bonds detracted, as did the low exposure to foreign. Having no local property contributed to relative returns. Prudential Inflation Plus was the worst performing Fund in the Solution over the quarter, and lagged peers by 0.8%. The high allocation to inflation linked bonds detracted. In addition, over 13% in property detracted as the asset class continues to struggle. Positioning and outlook The Solution s equity (SA and foreign) exposure increased over the quarter to over 40%. A large portion of this (19%) comes from foreign equity, which may provide some protection against rand weakness. The Solution remains well diversified across asset classes, with over 40% in income assets and over 20% in foreign.

8 Wealth Enhancer Solution Performance Review Managers Asset allocation Foreign 26,6% Cash 3,9% Other 0,4% Bonds 26,5% Property 8,3% Equity 34,3% Quarter 1 year 3 years p.a. 5 years p.a. Wealth Enhancer (CPI+5%) 3,7% 7,3% 6,3% 8,6% Inflation +5% 2,5% 9,4% 10,3% 10,4% Data as at 30 June Source Morningstar, STANLIB Multi-Manager 8

9 Wealth Enhancer Solution Performance Summary Performance Overview The CPI+5% Solution is ahead of the peers the quarter, one-year and longer periods which is pleasing given the tough environment over the past few years. Unfortunately, given the drought of inflation beating returns, the Solution is behind the inflation plus objective. Prudential Inflation Plus had a disappointing quarter, being the worst performing Fund in the Solution. The high allocation to inflation linked bonds as well as property both detracted, as did the exposure to global fixed income. Coronation Balanced Plus is the best performing Fund in the Solution over the year, and has outperformed peers by over 2% over the 12 months. Stock selection contributed extensively. The good performance was marginally offset by the property exposure. Investec Opportunity was the best performing Fund in the Solution over the quarter. This good performance has resulted in the 12 month performance being ahead of the peers as well. The Fund has the maximum permissible exposure to Offshore, which contributed over the quarter. In addition, rand-hedge and resource counters contributed in the risk off environment. STANLIB High Equity Tracker performed well over the quarter and year. This is pleasing given that we expect the passive Fund to underperform it s active peers as volatility increases. Positioning and outlook We remain happy with this model portfolio s overall performance and the portfolio construction framework. The Solution has over 55% exposure to equity, which has increased from previous quarters. The global exposure is important as the political risks increase.

10 Wealth Accumulator Solution Performance Review Managers Asset allocation Foreign 27,2% Cash 5,6% Other 0,2% Bonds 17,1% Property 5,6% Equity 44,3% Quarter 1 year 3 years p.a. 5 years p.a. Wealth Accumulator (CPI+7%) 5,1% 9,0% 5,8% 9,7% Inflation +7% 3,0% 11,4% 12,3% 12,4% Data as at 30 June Source Morningstar, STANLIB Multi-Manager 10

11 Wealth Accumulator Solution Performance Summary Performance Overview Given the drought of inflation beating returns, the CPI+7% Solution continues to disappoint relative to the inflation plus objective over 3 and 5 years. However, the Solution is ahead of the ASISA SA High-Equity Peer Group Average over all periods. Prudential Balanced was the best performer over the year. The strong performance came from good stock selection, with SA Equity exposure being the largest contributor. Coronation Balanced Plus has performed well over the year. Although the Fund had a reasonable quarter, it was the worst performing Fund of the Solution. The 13% in property detracted, however, the exposure to offshore property counters will have contributed given the rand weakness. Foord Balanced performed exceptionally well over the quarter, outperforming the peers by 3.2% and the inflation plus objective by over 3.5%. The high exposure to rand hedges as well as offshore holdings contributed over the quarter. The returns over one year remain disappointing, with Steinhoff exposure still detracting over the 12 months. STANLIB High Equity Tracker performed well over the quarter, outperforming the Solution s benchmark and peers. This is pleasing given that we expect the passive Fund to underperform it s active peers as volatility increases. Positioning and outlook We remain happy with this Solution s overall performance and the portfolio construction framework.

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