Blue Chip Journal - June 2019 edition

ADVERTORIAL
How well do you know the
Satrix Balanced Index Fund?
What kind of fund is the Satrix
Balanced Index Fund?
As the name implies, the Satrix Balanced
Index Fund is a multi-asset index tracking
fund which is also Regulation 28 compliant.
It is a well-diversified unit trust which
invests across asset classes (ie equities,
bonds, property and cash), both locally
and globally. This means you don’t have to
decide how to allocate your investment,
the fund does it for you.
What does it invest in?
The fund has a strategic asset allocation, which
simply means each asset class has a set weight
which is rebalanced at set intervals. For the
Satrix Balanced Index Fund, these intervals
are semi-annually in March and September.
The fund invests in local assets (75%)
and international assets (25%).
Seventy percent of the fund is
invested in equities (49% domestic and
21% international), giving it a moderate
risk profile. The graph below shows the
allocation between the seven asset classes
as well as which index is being tracked for
each asset class. The fund has a unique
multi-factor equity component called the
Satrix SmartCore.
What is the Satrix SmartCore?
The local equity exposure (49%) of the
fund is represented by what we call the
Satrix SmartCore. The SmartCore is a
proprietary Satrix equity index, launched
Satrix Balanced Index Fund Asset Allocation
in 2013. Its composition is researched
and periodically reviewed by Satrix. Three
factor signals are combined to make up the
SmartCore, representing the 49% local SA
equity exposure of the fund:
• 33.3% Momentum factor
• 33.3% Value factor
• 33.3% Quality factor
Each factor brings complementary but
differing equity exposure to the core of the
fund. This ensures the SmartCore captures
the type of returns we are targeting from the
SA equity market.
What returns can I expect?
The Satrix Balanced
Index Fund has
delivered a strong
performance track
record over all periods.
Over the three- and
five-year periods to
May 2019, the fund has
placed 13th out of 154
and 11th out of 100
funds respectively, while
since inception the fund
is in the top quartile in
its category. There are
currently 200 balanced funds available in
the multi-asset or balanced fund category, of
which 11 are index-tracking balanced funds.
The chart above shows you what the
actual returns have been in this fund since
inception and also
compares it to the
median return of
funds in the same
category.
Who should
invest in
this fund?
This is a moderaterisk,
diversified
fund with both
local and global exposure. Investors with
a long-term time horizon and who don’t
want to manage a portfolio across asset
classes should consider this fund.
The fund is suitable for people saving
towards retirement or who are in retirement
and drawing an annuity because it adheres
to Regulation 28.
You can use the fund in your taxfree
savings account either as your total
exposure or as part of your portfolio.
Long-term after-tax money can also be
invested in this fund.
This fund is a well-diversified moderaterisk
fund and can be held over long periods
of time. Because it is suitable for retirement
savings, you can invest in the fund while
you are saving for retirement and keep the
fund while you are drawing an income.
How much does it cost?
The fund’s annual management fee is
0.35% (+ VAT) for direct individuals and
0.25% (+ VAT) on LISPS.
What is the best way to
access the fund?
The Satrix Balanced Index Fund is available
online via SatrixNOW.co.za.
The fund can be accessed via LISPs (eg
Glacier, Allan Gray, Investec) as well as directly
through Sanlam Collective Investments.
34 www.bluechipjournal.co.za