A fund for the cautious investor


Fund manager insights:

With emerging market equities continuing to face increased tail risks such as tightening financial regulations and ripples from US-China trade tensions, finding value is proving to be a challenge for asset managers in the wake of increased volatility.

The Satrix Low Equity Balanced Index Fund sets out to firstly understand the sources and nature of the market risks that it is exposed to, in order to get a clearer line of sight into the extent and nature of the potential returns available. 

For instance, the fund says economic mood swings tend to be exaggerated – like the expectation that President Cyril Ramaphosa will, in one fell swoop, reverse years of maladministration and corruption, which is unrealistic.

The Satrix investment team goes about curtailing these market risks through a diversification strategy that, at first glance, appears as though it’s meant to assume more risk than curb it. 

The fund is exposed to all local and international asset classes i.e. equity, bonds, property and even cash. 

The weight of its local and international equity component totals 35%.

The balanced fund satisfies the need for some exposure to the equity market, with excellent volatility management. 

Local equities account for 25% of the fund; local bonds 20% and local cash 20%, while international equities, bonds and cash each have holdings below 10%. 60.5% of the holdings are in Africa, followed by 17.35% in the US and 9.03% in the UK. 

Fund performance has been below the benchmark, which was mainly due to fees and costs associated with the management of the fund. 

The fund however outperformed the SA Multi-asset Low Equity peer group median for the 1 year to 30 June 2018.

The fund is also more suited to investors who, for instance, are close to retirement age or have a low appetite for risk and are in the market for a portfolio with cautious exposure. 

Satrix, which is 100%-owned by Sanlam since May 2012, launched the fund back in 2014 to meet a strong demand for a passive product of this sort. 

Why finweek would consider adding it:

The preservation of capital is prioritised. 

The fund aims to steadily grow capital, while providing income over the medium to longer term. 

Because the fund is also exposed to multi-asset classes, and is not a pure equity fund, its returns are less volatile. 


The exposure to multiple asset classes, both in South Africa and abroad, affords investors the benefit of significant local and global diversification.

This article originally appeared in the 16 August edition of finweek. Buy and download the magazine here or subscribe to our newsletter here

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