Sentio Sanlam Collective Investments Hikma Shariah General Equity Fund Report - January 2021

Transcription

1. Sentio Sanlam Collective Investments Hikma Shariah General Equity Fund Minimum Disclosure Document As of 31 /01/2021 MDD Issue Date: Fund Objective 18/02/2021 Top Ten Holdings (%) Mr Price Group Ltd 6.24 Anglo American Plc 5.92 BHP Billiton Plc 5.13 Bidvest Group Ltd 4.85 Fund Strategy Impala Platinum Holdings Ltd 4.73 The Manager shall seek to achieve this objective through active management of a portfolio of assets which comprise a mix of securities (including collective investment schemes in property) that reflect the investment managers view of the relative attractiveness of the different sectors of the Securities Exchange and Companies, assets in liquid form, participatory units in collective investment schemes, listed or unlisted, excluding interests in a collective investment scheme in participation bonds, and any other securities which are considered to be consistent with the portfolio's investment objectives allowed by the Act from time to time. The portfolio shall invest in shariah compliant domestic and global equities, domestic and global property companies and listed equity capital protection instruments that have been approved for investment by the Shariah Supervisory Board (SSB) or Shariah Advisory Committee (SAC) from time to time. Sibanye Stillwater Ltd 4.65 Clicks Group Ltd 4.46 MTN Group Ltd 3.38 AVI Ltd 3.35 Sasol Ltd 3.14 The objective of the Sentio Sanlam Collective Investments HIKMA Shariah General Equity Fund will be to achieve medium to long-term capital growth through investment across a number of sectors of the equity market with a reasonable level of income that complies with Shariah (Islamic Law) and the standards prescribed by he Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Asset Allocation Portfolio Date: 31/12/2020 The portfolio will be predominantly invested in domestic assets, but may also invest internationally, within the statutory investment limitations and prudential investment requirements. The fund may at any time hold a maximum of 25% in offshore assets. The portfolio may also invest in participatory interests of underlying unit trust portfolios. % SA Cash 1.51 Non-SA Cash Why Choose This Fund? 72.87 Non-SA Equity 20.32 SA Property You should choose that fund if you are looking for a fund that generates capital growth over the long term in a Shari'ah compliant way, benefiting from a detailed bottom-up stock picking integrated in a robust risk-management framework. 1.33 SA Equity Total 3.97 100.00 Fund Information Ticker Portfolio Manager ASISA Fund Classification Risk Profile Benchmark Fund Size Portfolio Launch Date* Fee Class Launch Date* Minimum Lump Sum Investment Minimum Monthly Investment Income Declaration Date Income Payment Date Portfolio Valuation Time Transaction Cut Off Time Daily Price Information Repurchase Period Fees (Incl. VAT) SGFB1 Imtiaz Suliman South African - Equity - General Aggressive ASISA Category Avg: SA - Equity - General R 340,484,465 01/06/2016 01/06/2016 R 10,000 R 500 June & December 1st business day of July & January 15:00 15:00 Local media & www.sanlamunittrusts.co.za 2-3 business days B1-Class (%) Maximum Initial Advice Fee — Maximum Annual Advice Fee — Annualised Performance (%) 1 Year 3 Years Since Inception Fund Benchmark 5.13 2.50 1.17 7.35 1.21 2.59 Fund Benchmark 5.13 7.68 5.59 7.35 3.68 12.70 Cumulative Performance (%) 1 Year 3 Years Since Inception Highest and Lowest Annual Returns Time Period: Since Inception to 31/12/2020 Highest Annual % 7.75 Lowest Annual % -2.77 Manager Annual Fee 0.81 Total Expense Ratio 0.94 Transaction Cost 0.31 Risk Statistics (3 Year Rolling) Total Investment Charges 1.25 Standard Deviation 15.27 Sharpe Ratio -0.18 — Performance Fee TER Measurement Period 01 January 2018 - 31 December 2020 Total Expense Ratio (TER) is the percentage value of the Financial Product that was incurred as expenses relating to the administration of the Financial Product. A higher TER does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER may not necessarily be an accurate indication of future TER’s. Transaction Cost (TC) is the percentage value of the Financial Product that was incurred as costs relating to the buying and selling of the assets underlying the Financial Product. Transaction Costs are a necessary cost in administering the Financial Product and impacts Financial Product returns. It should not be considered in isolation as returns may be impacted by many other factors over time including market returns, the type of Financial Product, the investment decisions of the investment manager and the TER. Total Investment Charges (TER + TC) is the total percentage value of the Financial Product that was incurred as costs relating to the investment of the Financial Product. Information Ratio Maximum Drawdown 0.24 -21.84 Distribution History (Cents Per Unit) 31/12/2020 5.01 cpu 30/06/2020 10.08 cpu 31/12/2019 8.91 cpu 30/06/2019 23.82 cpu *These figures will become available once sufficient performance history has been met. Administered by
2. Sentio Sanlam Collective Investments Hikma Shariah General Equity Fund Minimum Disclosure Document As of 31 /01/2021 Risk Profile Additional Information Aggressive You can afford to take on a higher level of risk (ie, will have a greater exposure to equities in your portfolio) because of your investment time horizon or your appetite for risk. You know that in taking the risk, you need to be patient if you want to achieve the results. So you are willing to invest for the long-term and are prepared to tolerate some volatility in the short term, in anticipation of the higher returns you expect to receive in five years or beyond. All reasonable steps have been taken to ensure the information on this MDD is accurate. The information to follow does not constitute financial advice as contemplated in terms of the Financial Advisory and Intermediary Services Act. Use or rely on this information at your own risk. Independent professional financial advice should always be sought before making an investment decision. The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium- to long-term investments. Please note that past performances are not necessarily a guide to future performances, and that the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the Manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved Manager in Collective Investment Schemes in Securities. Additional information of the proposed investment, including brochures, application forms and annual or quarterly reports, can be obtained on request from the Manager, free of charge. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in the portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of the portfolio and the investor will differ depending on the initial fees applicable, the actualinvestment date, and the date of reinvestment of income as well as dividend withholding tax. Forward pricing is used. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The performance of the portfolio depends on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-div date. Lump sum investment performances are quoted. The portfolio may invest in participatory interests of other unit trust portfolios. These underlying funds levy their own fees, and may result in a higher fee structure for our portfolio. All the portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No 45 of 2002 (“CISCA”). The Manager may borrow up to 10% the market value of the portfolio to bridge insufficient liquidity. The fund may from time to time invest in foreign countries and therefore it may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information.Investments in foreign instruments are also subject to fluctuations in exchange rates which may cause the value of the fund to go up or down. The fund may invest in financial instruments (derivatives) for efficient portfolio management purposes. The Manager has the right to close any portfolios to new investors to manage them more efficiently in accordance with their mandates. Management of the portfolio is outsourced to Sentio Capital Management (Pty) Ltd, (FSP) Licence No. 33843, an Authorised Financial Services Provider under the Financial Advisory and Intermediary Services Act, 2002. Sanlam Collective Investments (RF) (Pty) Ltd retains full legal responsibility for the co-named portfolio. Standard Bank of South Africa Ltd is the appointed trustee of the Sanlam Collective Investments scheme. Sources of Performance and Risk Data: Morningstar Direct, INET BFA and Bloomberg. The risk free asset assumed for the calculation of Sharpe ratios: STEFI Composite Index. The highest and lowest 12- month returns are based on a calendar year period over 10 years or since inception where the performance history does not exist for 10 years. Obtain a personalised cost estimate before investing by visiting www.sanlamunittrustsmdd.co.za and using our Effective Annual Cost (EAC) calculator. Alternatively, contact us at 0860 100 266. Glossary Terms Annualised Returns Annualised return is the weighted average compound growth rate over the period measured. Asset Allocation Asset allocation is the percentage holding in different asset classes (i.e. equities, bonds, property, etc.). It is used to determine the level of diversification in a portfolio. Capital Growth Capital growth is the profit made on an investment, measured by the increase in its market value over the invested amount or cost price. It is also called capital appreciation. Distributions The income that is generated from an investment and given to investors through monthly, quarterly, bi-annual or annual distribution pay-outs. Derivatives Derivatives are instruments generally used as an instrument to protect against risk (capital losses), but can also be used for speculative purposes. Examples are futures, options and swaps. Feeder Fund A feeder fund is a South African-based fund that feeds exclusively into its primary foreignbased fund. It allows investors easy access to investing in an offshore fund, eliminating complicated tax and other implications. The shares of the feeder fund represent shares in the primary fund (called a master fund). Liquidity The ability to easily turn assets or investments into cash. Information Ratio The Information Ratio measures the market risk-adjusted performance of an investment or portfolio. The greater a portfolio's Information Ratio, the better its risk-adjusted performance has been compared to the market in general. Maximum Drawdown The maximum drawdown measures the highest peak to trough loss experienced by the fund. Money Market Instruments A money market instrument is a low risk, highly liquid, short-term (one year or less) debt instrument, issued by financial institutions or governments, that tend to have lower returns than high-risk investments. Participatory Interests When you buy a unit trust, your money is pooled with that of many other investors. The total value of the pool of invested money in a unit trust fund is split into equal portions called participatory interests or units. When you invest your money in a unit trust, you buy a portion of the participatory interests in the total unit trust portfolio. Participatory interests are therefore the number of units that you have in a particular unit trust portfolio. Regulation 28 Regulation 28 of the Pension Funds Act sets out prudent investment limits on certain asset classes in investment funds. It applies specifically to investments in Retirement Annuities and Preservation Funds. The allowed maximum exposures to certain asset classes is: 75% for equities; 25% for property; 30% for foreign (offshore) and 10% African assets. Investment Manager Information Sentio Capital Management (Pty) Ltd (FSP) License No. 33843 Physical Address: Illovo Edge, Building 3, 1st floor, 5 Harries Road, Illovo, Johannesburg, South Africa, 2196 Postal Address: Illovo Edge, Building 3, 1st floor, 5 Harries Road, Illovo, Johannesburg, South Africa, 2196 Email: Info@sentio-capital.com Website: www.sentio-capital.com Manager Information Sanlam Collective Investments (RF) (Pty) Ltd Physical Address: 2 Strand Road, Bellville, 7530 Postal Address: P.O. Box 30, Sanlamhof, Bellville, 7532 Tel: +27 (21) 916 1800 Email: service@sanlaminvestments.com Website: www.sanlamunittrusts.co.za Trustee Information Standard Bank of South Africa Ltd Tel: +27 (21) 441 4100 Email: compliance-sanlam@standardbank.co.za Sharpe Ratio The Sharpe Ratio measures total risk-adjusted performance of an investment or portfolio. It measures the amount of risk associated with the returns generated by the portfolio and indicates whether a portfolio’s returns are due to excessive risk or not. The greater a portfolio’s Sharpe ratio, the better its risk-adjusted performance has been (i.e. a higher return with a contained risk profile, where the portfolio manager is not taking excessive risk to achieve those returns). Standard Deviation Standard deviation (also called monthly volatility) is a measure of how much returns on an investment change from month to month. It is typically used by investors to gauge the volatility expected of an investment. Administered by
3. Sentio Sanlam Collective Investments Hikma Shariah General Equity Fund Minimum Disclosure Document As of 31 /01/2021 Portfolio Manager Comment As at 31 December 2020 2020 saw many equity markets finishing at record highs with the S&P index closing at fresh record highs while the Nikkei saw its highest level since 1990. When the pandemic spread globally in Mar-20, the MSCI All Country World Index fell -32% before rallying +68% over the course of the year to finish up +14.3% in 2020. The swift recovery in equity markets was driven by accommodative monetary and fiscal policy throughout the year and the rapid development of multiple vaccines. Towards the end of the year, the recovery in earnings surpassed expectations and the policy-led re-rating turned into an earnings-led rally. Happy New Year? While a spreading virus and tensions between US/Iran and US/China sound eerily familiar, perhaps the largest difference to 2020 is the contrast of financial conditions/monetary policy, as well as overall market valuations. SPX trailing P/E is now on 29.5x (same as peak valuation during dotcom) versus 21x in Jan’20, whilst both the 1yr forward and 2yr forward P/E differential between SPX and everything else stands at the highest level since at least 2005. The pandemic in 2020 has triggered the deepest recession since the Second World War, while the US equity market has achieved historical highs multiple times. The disconnect between markets and fundamentals is not only global in its scale, but also unprecedented in its magnitude. Economic reality is harsh. The asynchronous timetable to return to pre-COVID GDP is a headwind to recovery, and inoculation challenges could further drive economic divergence. The recent flare-up in COVID-19 cases has warranted another round of lockdowns in Europe and Asia, indicating a bumpy road to recovery. Political turbulence continues, and recent the Brexit deal provides limited relief on economic woes. A significant rise in the Covid case count globally has meant a return to lockdown measures and another slowdown in economic activity. However, with the roll-out of public vaccination programs the stage seems set for more normal activity levels to resume sooner or later. A question mark over the speed of vaccine roll-outs across populations, however, remains. AstraZeneca, Pfizer and Moderna total estimated production capacity for 2021 is a little over 5 billion doses, which could cover between 2.6 billion and 3.1 billion people (depending on whether AstraZeneca’s vaccine is administered in two doses or one and a half). Much of this production is already accounted for in pre-orders from Developed Economies and hence it is largely these markets where more normal consumer behaviour is likely to get underway sooner. A new Covid-19 variant that is thought to be more infectious has two implications. First, health impact and lockdown risks rise. Second, the threshold to achieve herd immunity by mass inoculation is higher. But overall, we think these are short term risks to our view that envisages a positive risk environment in 2021. consensus multiple for the All Share index sits at 11.8x, down 7% on the month and 18% below the 5 year average. MSCI SA is trading on a consensus 10.6x 12 month forward, down 2% on the month and 22% below its 5 year average. Relative to EM, the MSCI SA forward multiple has opened up to a 29% discount, which is the largest relative discount to EM since mid-July 2000. SA bond valuations still look reasonably attractive (as measured by real yields, FX-hedged yields and the shape of the yield curve) albeit less egregiously so than 8 months ago. In summary, cross-asset reflation trades should continue to work this year, as positioning remains modest, while real rates remain low, money on the side-lines ample and macro stimulus forceful. These factors suggest further upside in equities, commodities and fiat currency alternatives while weighing on the USD and real rates. Shallower pullbacks are of course possible, as investors take profit or get more concerned with virus-related challenges, which are set to get worse in coming weeks. Thus, the fund remains focused on analysing any potential investment proposition not only for its return potential but also weighing it against the risk it is bringing to the overall portfolio. This we deem necessary in order to generate optimal risk-adjusted returns for our clients, which are sustainable and repeatable. Portfolio Managers Mohamed Mayet BCOM (Wits), BCOM Hons (Adv Fin), NASD (USA) Rayhaan Joosub BSc Chemical Engineering (Wits) , BCom (Unisa) Imtiaz Suliman CFA: CFA Institute , BSc: Financial Mathematics, University of Pretoria Olwethu Notshe B.Bus Sci, CFA, CAIA Sanveer Hariparsad CFA, CAIA, MSc (Fin Eng), BSc (Hons) (Fin Math) (Cum Laude), BSc (Act Sci) For most emerging markets, including South Africa, the ratio of vaccine pre-orders (as measured by doses per head of population) looks very low. The SA government has said that South Africa is expected to start receiving vaccine supplies to cover 10% of the population through the Covax initiative by the beginning of Q2 21, but in an announcement on 3 January, Health Minister Mkhize noted that government departments were working urgently to secure vaccines through bilateral deals with manufacturers, albeit no agreements had yet been reached. And even in the DM region, inoculation has been slow. The race to vaccinate vulnerable populations against coronavirus continues as production limitations and distribution bottlenecks hamper efforts to prevent the conditions which will necessitate renewed economy threatening lockdowns across the world. Economic activity plummeted over the Christmas holidays in many Western economies. Governments are targeting to receive vaccines for more than 70% of the population by 2Q21 (the US, UK and Japan) and 3Q21 (EU and others). Governments are striving to accelerate the pace of vaccination for priority groups in 1Q21-2Q21 and the general public in 2Q21-3Q21. Higher transmissibility of the new variant of SARS-CoV-2 from UK could imply a higher minimum requirement of vaccine coverage. In the EM region, vaccine supply would vary over the size of population and bilateral deals. Israel and Chile could finish vaccination as early as 2Q21. Russia and EU members (Poland, Hungary) would procure vaccines for herd immunity by 3Q21 (or later). Hong Kong, Mexico, South Korea, Singapore, Morocco, Malaysia, Brazil, El Salvador, Argentina, Kuwait, Dominican Republic, Taiwan and UAE may secure enough vaccines by 4Q21. Other EM economies may need to wait till 1H22 (or later). Notwithstanding the above challenges, the pickup in global growth should not only lead to some right tail inflationary pressures but also see some regional diversification - aided by the fact that a Biden administration will adopt a softer approach to globalisation. This will benefit the more cyclical and value orientated regions such as Europe and Emerging Markets, including South Africa. Global vaccine potential coupled with ample QE-sourced liquidity suggests a supportive international backdrop for SA exports, the terms of trade and JSE aggregate earnings given the high percentage of earnings driven from abroad. SA domestically-driven earnings look weak but there is a re-rating opportunity given the starting point on equity and bond valuations, continued strong balance of payments support from the trade and current accounts, and government progress (albeit still slow) on the fiscal front. South African strong price action but positive revisions has capped the relative re-rating on equity multiples against history and compared to the rest of EM. The 12 month forward Administered by