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STANDARD BANK INDEX FUNDThis fund has 1 524 unitholders and assets under management of R15-million. Launched in February 1995, it is managed by Norman Mackechnie for Standard Bank Fund Managers
OBJECTIVE: To provide a return which best replicates the performance of the JSE all-share index.
TARGET MARKET: Investors seeking a portfolio which is fully invested in shares at all times, subject to the 5% statutory liquid asset requirement. Investors who desire a tax-efficient return (after costs) which tracks the performance of the JSE all-share index.
CHARGES (incl VAT): Compulsory: 0.25%. Initial: 5.46% (on a sliding scale). Annual service fee: Nil.
MINIMUM INVESTMENT: Lump sum: R2 000; monthly: R100.
PAST PERFORMANCE (per Micropal): THREE YEARS Fund: 20.7% Inflation: 23.5% JSE all-share index: 31% Sector average: 25.7% Correlation coefficient: 0.96 (one represents perfect correlation) Performance is calculated on a buy-to-sell basis with income reinvested.
PAST TWO INCOME DISTRIBUTIONS: June 1997: 1.58c (dividends). December 1997: 1.79 (dividends).
TOP 10 HOLDINGS: SAB; Liberty Life; Nedcor; De Beers; Richemont; Absa; Sasol; FNB; Stanbic; Ords.
TOLL-FREE: 0860 123 003
ABOUT THE FUND MANAGER
AGE: 38
QUALIFICATIONS: MSc; MBA; chartered financial adviser
EXPERIENCE: Has 10 years' investment experience. He joined Standard Corporate and Merchant Bank asset management division in 1993 as part of the research and investment strategy team. Has been responsible for the management of the fund since August 1995.
INVESTMENT ATTITUDE: As the investment business becomes more computerised, financial markets will become more efficient, making the task of adding value to a portfolio increasingly difficult. In these circumstances, indexation (the tracking of an index) will continue to gain favour as an investment technique.
VIEW ON PAST PERFORMANCE: The fund is 95% invested in the JSE all-share index with the balance invested in cash. In terms of its objective (to closely track the performance of the JSE all-share index) the fund has achieved a 99.4% correlation since its inception in February 1995. The tracking error of the fund - that is the difference between the fund's performance and the JSE all-share index's performance - over this same period has been 1.8% which is less than the dividend yield of the fund.
THE FUTURE: Indexation is a fairly recent asset management tool. The South African experience is likely to be similar to that seen overseas, where the idea of indexation took some time to establish itself, but once it did its progress was quickly accepted and assets under index fund management started to grow rapidly.
INDEPENDENT ASSESSMENT
This type of traditional index fund - which tracks the JSE all-share index - is the second oldest type of tracker. As with other index funds, the fortunes of the fund are solely dependent on the movements of the index the fund has chosen to track. With index funds the responsibility of the portfolio is substantially reduced as the manager merely has to follow the movements of the index and not make investment decisions of his own. Top of page
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