This is the Minimum Disclosure Document as required by Board Notice 92
OLD MUTUAL STABLE GROWTH FUND
FUND PERFORMANCE as at 31/01/2016
FUND INFORMATION
RISK RATING
1
2
3
January 2016
4
5
% PERFORMANCE (ANNUALISED)
FUND OBJECTIVE
The fund aims to outperform inflation and provide a modest level of income
while aiming not to lose money over any 18-month period. The portfolio
manager actively manages asset allocation to take advantage of changing
market conditions.
Fund (Class A)
Benchmark
14%
RECOMMENDED MINIMUM INVESTMENT TERM
10%
3 years+
5 years+
12%
6%
REGULATION 28 COMPLIANCE
The fund complies with retirement fund legislation. It is therefore suitable as
a stand-alone fund in retirement products where Regulation 28 compliance
is specifically required.
0%
Jun-10
PERFORMANCE TARGET: CPI + 2% to 3% p.a. (net of fees)
Performance is targeted over the recommended minimum investment term
and is not guaranteed.
RISK OBJECTIVE:
This fund aims to avoid losses over rolling 18-month periods.
ASISA CATEGORY: South African - Multi-Asset - Low Equity
FUND MANAGER(S):
John Orford (Old Mutual Investment Group - MacroSolutions)
LAUNCH DATE: 01/07/2007
DISTRIBUTIONS (Half-yearly)*:
Date
DividendInterest Total
31/12/20150.47c 4.81c 5.28c
30/06/20150.61c 4.78c 5.39c
* Class A fund distributions
Since
Inception*
8.4
6.1
10-Yr
6.1
Old Mutual Stable Growth Fund (3-Year Annualised Rolling)
Fund
CPI + 2% p.a.
CPI
4%
2%
May-11
Apr-12
Mar-13
Feb-14
Jan-15
Dec-15
Past performance is no indication of future performance.
Risk Statistics (3 Years p.a.)
Fund
JSE All Share
Annual Standard Deviation
4.1%
11.5%
8.9%
% Positive 18-Month Returns
96.5%
84.9%
100.0%
Fund (Since Inception)
Highest
Average
Lowest
Rolling 12-Month Return
18.6%
9.1%
-5.3%
16%
14%
All Bond
Performance vs Risk Objective (18-Month Annualised Rolling)
Fund
10%
8%
6%
4%
Tax Reference Number: 9153/631/17/2
2%
OTHER INVESTMENT CONSIDERATIONS
0%
MINIMUM INVESTMENTS:
Monthly: R500 • Lump sum: R10 000 • Ad hoc: R500
-2%
Dec-08
INITIAL CHARGES (All fees are VAT inclusive):
There is no initial administration charge for investment transactions of R500
and above. Initial adviser fee will be between 0% and 3.42%.
Investment transactions below the R500 fund minimum incur a 2.28% administration charge.
ONGOING:
Class A
Class B1#
1.48%
1.08%
1.68% - 1.98% 1.28% - 1.58%
* Range of fees based on exposure to the underlying offshore asset classes, i.e. fees are
higher for equities when compared to money market assets.
Total expenses
Total Expense Ratio (TER)
Performance Fee*
Transaction Cost (TC)
Total Investment Charge
7-Yr
10.0
5.3
12%
SIZE OF FUND: R4.9bn
Annual service fees
Local (incl. VAT)
Offshore* (incl. VAT)
5-Yr
9.5
5.5
8%
INVESTMENT MANDATE
The fund invests in cash, bonds, property and shares. The fund may invest
up to 40% of its portfolio in equities. The fund may also invest up to 25% of
its portfolio offshore in line with Treasury guidelines. Derivatives may be used
for risk management purposes.
BENCHMARK: CPI
3-Yr
7.9
5.3
* Performance since inception of the fund.
Performance measurements over periods shorter than the recommended investment term may not be appropriate.
Past performance is no indication of future performance.
WHO IS THIS FUND FOR?
This fund is suited to investors who want their investment to grow in real terms
and deliver a moderate level of income, with controlled risk of capital loss
in the short term. It is typically suited to investors close to, or in retirement.
1 year+
1-Yr
3.2
5.7
Class A
2.01%
0.54%
0.08%
2.09%
Class B1#
1.64%
0.06%
0.08%
1.72%
* The Class A Fund and Class B1 Fund ceased charging performance-related service fees
with effect from 1 January 2015. As TERs are calculated over rolling 36-month periods,
a portion of performance fees earned during 2013 and 2014 will be included in the
calculation of the class’s TER in 2016.
Other charges incurred by the fund, and deducted from its portfolio, are included in the TER. A
portion of Old Mutual Unit Trusts’ annual service fees may be paid to administration platforms.
TER is a historic measure and includes the annual service fee. 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 Costs (TC) are a necessary
cost in administering the fund and impacts fund 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 fund, the investment decisions of the investment manager and the TER.
#
Please note: The Class B1 Fund is only available through investment platforms such as
Old Mutual Wealth.
May-10
Oct-11
Mar-13
Aug-14
Jan-16
FUND COMPOSITION
100
90
80
70
60
50
40
30
20
10
0
SA Equities
SA Property
Preference Shares
Convertible Bonds
Nominal Bonds
SA Cash
International Equities
International Bonds
International Property
7.1%
3.1%
2.3%
1.1%
19.4%
43.2%
20.4%
0.4%
3.0%
PRINCIPAL HOLDINGS as at 31/12/2015
HOLDING*
Naspers Ltd
Dipula Income Fund-A
Fortress Income Fd Ltd A
Standard Bank Pref Share
British American Tobacco
PSG Fin Pref
Nedbank Non-Cumulative Pref
Old Mutual plc
Mondi Plc
Sasol Ltd
* The fund has exposure to African Bank instruments.
Funds are also available via Old Mutual Wealth and MAX Investments.
Helpline 0860 234 234 Fax +27 21 509 7100 Internet www.omut.co.za Email unittrusts@oldmutual.com
SECTOR
Media
Real Estate
Real Estate
Preference Shares
Personal & Household Goods
Preference Shares
Preference Shares
Life Insurance
Forestry & Paper
Chemicals
% OF FUND
1.1
0.6
0.6
0.6
0.5
0.5
0.4
0.4
0.4
0.4
OLD MUTUAL STABLE GROWTH FUND
FUND MANAGER INFORMATION
outside their target range of 3% to 6%. While we expected the SARB to hike rates,
we welcomed the Monetary Policy Committee (MPC)’s independent stance shown
by a 0.5% increase. South African bonds responded positively to this news and
JOHN ORFORD
QUALIFICATIONS:
BA (Hons)
MBA
MSc (Development Economics)
were the best performing asset class for the month, with the JSE All Bond Index
gaining 4.6%, offsetting some of December’s underperformance.
The performance of the fund over the past year has been disappointing, with real
returns below the fund’s medium-term real return target. Over three years or more,
though, the fund continues to meet or exceed its real return target. In the last year,
CURRENT RESPONSIBILITY:
the fund benefited from its significant offshore allocation and from its underweight
John joined MacroSolutions in June 2014 as a portfolio manager. As a member of
allocation to equities. However, this was offset by a significant allocation to local
the MacroSolutions team, he is responsible for managing conservative funds including
government bonds, which detracted from the fund’s performance. Looking forward,
the Profile Capital and Stable Growth Funds and the Old Mutual Real Income and
we remain relatively cautiously positioned, with a below-benchmark allocation to
Stable Growth Funds.
total equities and a very underweight allocation to local equities − offset by a
John’s background as an investment strategist enables him to integrate top-down and
big overweight allocation to cash. Within equities, we continue to favour global
bottom-up analysis into portfolio construction.
equities over local equities. Local equities are more expensive than global equities
and face slowing growth, rising inflation and rising interest rates – an environment
PREVIOUS EXPERIENCE:
in which companies are likely to struggle to grow earnings significantly. Global
Prior to joining MacroSolutions, John was the Investment Strategist for South Africa at
equities also face concerns about growth, but monetary policy in developed
UBS South Africa for nine years. In his last two years at UBS, he was also responsible
markets outside the US should remain supportive of equity markets; and in Europe
for the emerging EMEA Equity strategy.
we expect growth to improve modestly in 2016.
John has 12 years of work experience in financial markets in South Africa and London.
The rapid depreciation of the rand, rising inflation and an increased chance
In addition, he has seven years of experience as an economist in public and private
of a sovereign ratings downgrade to junk status have seen South African bond
sector capacities in Namibia and South Africa.
yields and interest rates rise over the last year. At current levels, bond yields have
priced in much of the risk of a downgrade to junk status. Higher interest rates and
FUND COMMENTARY as at 31/01/2016
It has been a volatile start to 2016, with January being a month of two halves: Initially
growth assets were weak, with both local and global equities down over 9.5% in local
currency terms, and the rand hit an all-time closing high of R16.94 to the US dollar.
a potentially prudent government budget should support government bonds at
current levels. Within government bonds, we favour nominal government bonds
over inflation-linked bonds, which reflect, in our view, too much pessimism about
the likely inflation path over the medium term.
This was one of the worst starts to the year for equities and was driven by continued
Overall, the fund has a high allocation to cash and is focused on capital preservation.
concern from investors around the level of global growth. Weaker than expected global
The advantage of a high cash allocation, aside from increasing the fund’s ability
growth, in turn, led to earnings expectations being downgraded. As such, equity markets
to weather volatile markets, is that it means we are ready to take advantage of
came off and global bond yields moved lower as investors sought safe-haven assets.
attractive opportunities when they present themselves. Within our cash allocation,
This partially reversed during the second half of the month, with the local equity market
we are focused on maximising yield, with a large allocation to 12-month money
(FTSE/JSE Shareholder Weighted Index) ending only 2.3% down, while the global
market instruments offering yields well over 8%.
equity market (MSCI All Country World Index) was down 6.0% in US dollar terms and
3.6% in rand terms. The rand retraced to R15.89/US$ to end the month 2.7% weaker.
The key local event during the month was the South African Reserve Bank (SARB)’s bold
0.5% interest rate hike on the 28th of January. Given the negative events in December
concerning the replacement of Finance Minister Nene, and the subsequent weakness
in the currency, the local inflation outlook had significantly deteriorated. The SARB’s
own average CPI expectations are now at 6.8% for 2016 and 7.0% for 2017 − well
Funds are also available via Old Mutual Wealth and MAX Investments.
Helpline 0860 234 234 Fax +27 21 509 7100 Internet www.omut.co.za Email unittrusts@oldmutual.com
We aim to treat our customers fairly by giving you the information you need in as simple a way as possible, to enable you to make informed decisions about your investments.
• We believe in the value of sound advice and so recommend that you consult a financial planner before buying or selling unit trusts. You may, however, buy and sell without the help of a financial planner. If you do use a
planner, we remind you that they are entitled to certain negotiable planner fees or commissions.
• You should ideally see unit trusts as a medium- to long-term investment. The fluctuations of particular investment strategies affect how a fund performs. Your fund value may go up or down. Therefore, we cannot guarantee
the investment capital or return of your investment. How a fund has performed in the past does not necessarily indicate how it will perform in the future.
• The fees and costs that we charge for managing your investment are disclosed in the relevant fund’s Minimum Disclosure Document (MDD) or table of fees and charges, both available on our public website or from our
contact centre.
• Our cut-off time for client instructions (e.g. buying and selling) is at 15:00 each working day for all our funds, except the Money Market Funds, the price of which is set at 13:00. These are also the times we value our
funds to determine the daily ruling price (other than at month-end when we value the Old Mutual Top 40 Fund and the Old Mutual Multi-Managers Equity Fund of Funds at 17:00). Daily prices are available on the OMUT
public website and in the media.
• Unit trusts are traded at ruling prices, may borrow to fund client disinvestments and may engage in script lending. The daily price is based on the current market value of the fund’s assets plus income minus expenses
(NAV of the portfolio) divided by the number of units on issue.
• This fund holds assets 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. Please contact us for risks specific to each country.
• Income funds derive their income primarily from interest-bearing instruments as defined. The yield is a current yield and is calculated daily.
• The Net Asset Value to Net Asset Value figures are used for the performance calculations. The performance quoted is for a lump sum investment. The performance calculation includes income distributions prior
to the deduction of taxes and distributions are reinvested on the ex-dividend date. Performances may differ as a result of actual initial fees, the actual investment date, the date of reinvestment and dividend
withholding tax. Annualised returns are the weighted average compound growth rates over the performance period measured. Performances are in ZAR and as at 31 January 2016. Sources: Morningstar and
Old Mutual Investment Group.
Old Mutual Unit Trust Managers (RF) (Pty) Ltd (OMUT) is a registered manager in terms of the Collective Investment Schemes Control Act 45 of 2002. Old Mutual is a member of the Association for Savings and Investment
South Africa (ASISA). OMUT has the right to close the portfolio to new investors in order to manage it more efficiently in accordance with its mandate.
Registration number: 1965 008 47107. Trustee: Standard Bank, PO Box 54, Cape Town 8000. Tel: +27 21 401 2002, Fax: +27 21 401 3887.
Issued: February 2016