PRESCIENT INCOME PROVIDER FUND

PRESCIENT INCOME PROVIDER FUND
MINIMUM DISCLOSURE DOCUMENT
INVESTMENT AND RETURN OBJECTIVE
The Fund aims to generate income and outperform the South African cash and short-term bond market
MAY 2015
through a full interest rate cycle. In addition, the Fund aims to provide some growth in capital. The Fund
is Regulation 28 compliant.
ABOUT THE FUND
INVESTMENT PROCESS
Fund manager:
Guy Toms
Farzana Bayat
Jean-Pierre du Plessis
The Fund invests in cash, short-term, high-quality capital market instruments, preference shares and
property. A number of techniques are used to generate returns, including duration management, yield
enhancements via credit exposure and risk management strategies, where these strategies are designed
to provide downside protection. Risk is also mitigated by applying credit limits of A and A1/F1 or better
for bond and money market instruments respectively. Where appropriate, the Fund may also invest in
offshore markets.
Benchmark:
SteFi Call 110%
RISK INDICATOR
Return Target:
Headline CPI +3%
CONSERVATIVE
Fund size:
R5.5bn
RELATIVE PERFORMANCE
RETURNS (%)
Fund
SteFi Call 1-3 Yr BI
110%
150%
120%
1 Year
10.59
SteFi Call 110%
Minimum investment:
R10 000 lump-sum
R1 000 per month
90%
9.45
5.55
5.88
5 Years (p.a.)
8.95
5.76
7.04
60%
Since inception (p.a.)
9.78
7.57
7.66
30%
140.81
98.83
100.40
Since inception
(total return)
Inception date:
31 December 2005
Fund
6.61
6.00
3 Years (p.a.)
Income distribution (monthly):
6.59 cents per unit for the past
12 months
0%
Nov-05 Jan-08 Apr-11 Dec 14 Jan 15 Apr 15 May 15
RETURNS VERSUS BENCHMARK (%)
SteFi Call
110%
Fund
SteFi Call 110%
1-3 Yr BI
10%
Alpha
2.21%
8%
Sharpe Ratio
6%
Standard deviation
% Positive months
0%
Current Yield
3 Years
(p.a.)
5 Years
(p.a.)
Since inception
(p.a.)
1.08
2.12%
0.65
2.29%
Max gain
2%
1 Year
1.38
-1.16%
Max drawdown
4%
Custodian:
Nedbank
WHO SHOULD INVEST
Investors seeking a low to medium risk
offering, aiming to maximise income via
exposure to primarily the South African
Money and Bond markets. This Fund
is suitable to investors with a short- to
medium-term investment horizon.
28.0%
25%
20%
15%
Total expense ratio:
0.95%
KPMG
7.66%
35%
29.7%
Fee class:
A1
Auditors:
92.11%
PORTFOLIO COMPOSITION
30%
Initial Fee:
0.00%
Annual management fee:
0.86% (incl VAT)
RISK STATS (Since inception)
Fund
12%
Fund classification:
South African - Multi Asset - Income
13.6%
12.3%
10%
1.1%
Property
Preference
Shares
Floating Rate
Bonds
Fixed
Bonds
CLN
Corporate
FRN
FRN
Cash
-5.0
2.5%
1.6%
1.7%
Offshore
(GBP)
1.5%
Offshore
(AUD)
3.3%
-0.6%
Offshore
(ZAR)
0%
Offshore
(USD)
5.2%
5%
Tel: 0800 111 899
Web: www.prescient.co.za
Email: [email protected]
Prescient is a registered Financial Services Provider (FSP no. 612)
PRESCIENT INCOME PROVIDER FUND
MAY 2015
INCOME DISTRIBUTIONS
Declaration
Payment
Amount (c)
Unit Price (c)
2015/05/28
2015/06/01
0.54
130.50
2015/04/30
2015/05/04
0.58
130.50
2015/03/31
2015/04/01
0.60
129.97
2015/02/27
2015/03/02
0.54
129.80
2015/01/30
2015/02/02
0.53
128.74
2014/12/31
2015/01/01
0.58
128.68
2014/11/28
2014/12/01
0.52
127.09
2014/10/31
2014/11/03
0.94
127.30
2014/09/30
2014/10/01
0.34
127.66
2014/08/29
2014/09/01
0.25
126.44
2014/07/31
2014/08/01
0.42
124.80
2014/06/30
2014/07/01
0.68
124.70
FUND COMMENTARY
Janet Yellen said it will be appropriate for the Fed to raise rates at some point this year and remains
confident that inflation will move back to the 2% target over the medium term. Yellen believes that if the
Fed delays monetary policy tightening this year by waiting for inflation and unemployment to reach
objective levels then this would risk overheating the economy. Improving jobs growth, steady core
inflation and a recovery in housing remain evident, however negative headline inflation, low Q1 GDP
and a strong US dollar will maintain uncertainty in the Fed language.
US equities had a volatile month returning 1% despite the weak GDP print and hawkish comments by
the Fed on hiking interest rates. The US 10 year bond remained flat at 2.1% after initially rising to 2.3%
during the month.
In SA, the May MPC meeting resulted in an unchanged repo rate decision with 2 members voting for
a hike whilst 4 members opted for no hike. Reserve bank governor Kganyago sent out a hawkish speech
citing upside inflation risks from the currency, electricity and wages. Headline CPI was seen to breach
the 6% target in Q1 and Q2 of 2016 with average inflation for 2015 adjusted to 4.9% from 4.8%.
Headline SA inflation increased to 4.5% from 4.0%, largely due to increasing food prices, transport fees
from higher fuel levies and alcoholic beverages and tobacco products due to rising sin taxes. The weaker
exchange rate pass-through has been muted given lacklustre consumer demand. Core inflation has
been sticky of late but did decrease to 5.6% from 5.7% whilst PPI decreased to 3.0% from 3.1%.
The R186 sold-off by 23bps to end the month at 8.16% as uncertainty about a Greek default decreased
investors risk appetite together with increased probability of a US interest rate hike in June.
3-month Jibar rose slightly to 6.13% from 6.12% over the month, while 12-month Jibar ticked up by
10bps to 7.5%. The FRA’s (forward rate agreements) shifted higher around 10-30bps over the month
across the curve. Currently, the market is pricing in 50bps worth of rate hikes out to 6 months and 100ps
worth of rate hikes over the next 12 months.
DISCLAIMER
Collective Investment Schemes in
Securities (CIS) should be considered
as medium to long-term investments.
The value may go up as well as down
and past performance is not necessarily
a guide to future performance. CIS’s
are traded at the ruling price and can
engage in scrip lending and borrowing.
A schedule of fees, charges and
maximum commissions is available on
request from the Manager. There is no
guarantee in respect of capital or returns
in a portfolio. A CIS may be closed to
new investors in order for it to be
managed more efficiently in accordance
with its mandate. CIS prices are
calculated on a net asset basis, which
is the total value of all the assets in the
portfolio including any income accruals
and less any permissible deductions
(brokerage, STT, VAT, auditor’s fees,
bank charges, trustee and custodian
fees and the annual management fee)
from the portfolio divided by the number
of participatory interests (units) in issue.
Forward pricing is used. The Fund's
Total Expense Ratio (TER) reflects the
percentage of the average Net Asset
Value (NAV) of the portfolio that was
incurred as charges, levies and fees
related to the management of the
portfolio. A higher TER 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 TER's. During
the phase in period TER’s do not include
information gathered over a full year.
The Manager retains full legal
responsibility for any third-party-named
portfolio. Where foreign securities are
included in a portfolio there may be
potential constraints on liquidity and the
repatriation of funds, macroeconomic
risks, political risks, foreign exchange
risks, tax risks, settlement risks; and
potential limitations on the availability
of market information. The investor
acknowledges the inherent risk
associated with the selected
investments and that there are no
guarantees. Please note that all
documents, notifications of deposit,
investment, redemption and switch
applications must be received by
Prescient by or before 13:00 (SA), to
be transacted at the net asset value
price for that day. Where all required
documentation is not received before
the stated cut off time Prescient shall
not be obliged to transact at the net
asset value price as agreed to. Prices
are published daily and are available
on the Prescient website. Prescient is
a member of the Association for Savings
and Investments SA. Prescient
Investment Management (Pty) Ltd is an
Authorised Financial Service Provider
(FSP No. 612)
The offshore currency exposure has a hedge in place between USDZAR levels of 11.57-12.50, expiring
in June 2015.
The Fund returned 0.44% for May, slightly underperforming the benchmark performance of 0.51%. We
have continued to maintain the short duration position.
Prescient is a registered Financial Services Provider (FSP no. 612)