Satrix SWIX

By: Satrix  11-11-2011
Keywords: Financial Advisor, Asset Manager, Portfolio Diversification


The Satrix SWIX Top 40 endeavours to replicate the performance of the FTSE/JSE SWIX Top 40 index. This shareholder weighted Top 40 index makes use of the share register of the top forty companies to reduce the constituent weights for foreign shareholders in these stocks. In addition, the SWIX Top 40 is adjusted for cross-holdings and strategic holdings. The impact is to reduce the weightings of mainly resource and dual-listed stocks in the Top 40 index by approximately half.

The asset manager of the Satrix SWIX Top 40 accurately replicates the FTSE/JSE SWIX Top 40 index, by holding the exact weighting and number of shares that constitute this index. Any dividends that are paid by the top forty companies are paid out to Satrix SWIX Top 40 shareholders payable on a quarterly basis. In this way the holders of Satrix SWIX top 40 securities replicate the total performance (capital plus dividend yield) of the top 40 companies listed on the JSE.

Buy one security (the Satrix SWIXTop 40) and own the market!!

WHY YOU SHOULD OWN THE SATRIX SWIX TOP 40?

The reweighting of the SWIX Top 40 index relative to the normal Top 40 index results in less volatility in the SWIX Top 40 index and smoothes out its performance over time. The foreign participation in South Africa´s main companies contained in the Top 40 index can result in sharp price fluctuations from time to time, as these offshore investors react to exogenous factors affecting global stockmarkets and to fluctuations in the rand exchange rate. By down-weighting the top 40 shares held in the foreign share registers, the SWIX Top 40, to a significant extent, eliminates the impact of such fluctuations on the local index.


Portfolio Diversification

The Satrix SWIX Top 40 provides a balanced portfolio of the top 40 companies in South Africa measured by market capitalisation, liquidity and free float, adjusted to reduce the impact of such shares held in non-SA shareholder registers. It therefore provides an index of the stocks available to trade on local shareholder registers, which shares are normally more stable and less likely to short-term trading fluctuations for the top 40 shares held on foreign registers. The SWIX Top 40 thereby provides a diversified portfolio of the top 40 companies on the JSE, but with reduced price volatility and short-term market fluctuations.

Performance
1 year return 25.01% 25.91%
3 year return 4.27% 4.93%
4 year return 10.71% 11.36%
** Fund established February 2002. Returns calculated for lump sum investments. All dividends reinvested.


Low Cost

Satrix Swix Top 40 does not charge substantial management fees or other advisory and ongoing costs, common to other managed investments. The income Satrix earns from scrip lending activities further reduces the cost to the investor.

There are two levels of costs that will be incurred by the investor. The first being portfolio expenses and the second being fees that you will incur depending on the investors preferred channel of investment.

Portfolio expenses
Portfolio expenses include fees incurred to run the Satrix Swix Top 40 portfolio such as management fees paid to Satrix Managers, custodian fees, brokerage, auditor’s fees, bank charges and taxes.
All these fees are permissible deductions from the portfolio and are paid from the dividends that accrue to the portfolio (from the underlying shares in the portfolio) and the other income that accrues to the portfolio (interest and scrip lending income). The balance of the income remaining in the fund after deduction of the permissible fees and costs referred to above is distributed to the holders of the Satrix securities. This distribution is done on a quarterly basis.

Therefore the portfolio expenses are incurred by the investor when the distribution is paid out. For investors to be informed of this cost on a quarterly basis, the unit trust industry uses the concept of a total expense ratio (TER). TER is used to illustrate the costs of portfolios on a comparative basis. Its objective is to endeavour to satisfy the requirement of transparency and to establish an industry standard. The TER of the Satrix Swix Top 40 for the quarter ended 30 June 2011 is 0.456% (incl. VAT).

In accordance with the industry standard, brokerage and scrip lending income are excluded from the TER. Satrix accordingly also publishes an actual expense ratio (AER), which includes brokerage expenses and scrip lending income.  The AER is therefore the actual cost to the investor. The AER for the quarter ended 30 June 2011 is 0.4625% (incl.VAT)

Satrix Investment Plan and broker fees
Broker fees, financial advisor fees (applicable if a financial advisor has been consulted) and Satrix Investment Plan fees are costs that will be incurred by the investor depending on the investors preferred channel of investment and does not include the portfolio expenses as set out above.

Broker fees and financial advisor fees could vary depending on the broker and/or financial advisor being consulted.

In the case of the Satrix Investment Plan, which is administered by Automated Outsourcing Services (AOSL), transaction costs (brokerage) of 0,1% is levied on purchases and sales of Satrix securities. Annual management fees, charged by AOS, are as follows:


Investment Plan Administration Fees (for both lump sum and debit order investments)
Annual administration fee: (calculated daily and deducted quarterly)

 
R0 to R100 000 0.80%
R100 000 to R250 000 0.75%
R250 000 to R1 000 000 0.70%
R1 000 000 to R3 000 000 0.50%
R3 000 000 or more 0.45%


Transaction Fees
Debit order fee: R3.50
Stock brokerage fees: 0.10% (buying and selling)
Nominal Strate and Investor Protection levies will also be charged.
Where a financial adviser is used, commissions will be charged (as scheduled in Section 8).
All fees quoted are exclusive of VAT. VAT will be levied where applicable

Satrix SWIX Top 40 is traded all day on the JSE and its price is subject to trading in the marketplace. The price of Satrix securities can be obtained from any media publication that reports JSE prices.

All settlement, registration, recording and guarantee of trade are done through the normal JSE market systems.

Official market makers have been appointed by Satrix to ensure that investor´s transactions will be accommodated in the market.



Regulation and Disclosure

Satrix SWIX top 40 is subject to the same regulations, reporting and compliance requirements of any listed company on the JSE. Satrix SWIX Top 40 is also registered as a Collective Investment Scheme and is therefore subject to the regulation of the Financial Services Board. Satrix Managers (Pty) Ltd is registered as a Financial Services Provider.

Keywords: Asset Manager, Financial Advisor, Portfolio Diversification

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