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 The Sharenet Daily 
Tuesday, 11 September 2012 - 20:00
Top News
SA Business
Company News
Company Results
World Markets (Spot Prices)
JSE Today
JSE Trading Statistics
Major Moves
Index Summary
Latest Consensus Changes / Results Expected
Recent Dividends / Ex Div
Upcoming AGMs
Stock Exchange News Service (SENS)

Active versus Passive Investing

I was recently at an investment conference and a topic that was discussed on more than one occasion was the merits of actively managed funds versus passive investments and ETFs. Indeed, there is a lot of debate around the world on this topic.

When ETFs were first launched in South Africa in 2000 the debate began locally, with advocates of passive investing going to great lengths to show how few global managers beat their passively created benchmarks over time, concluding that investing into low cost passive investments (typically ETFs) beat most managers. The reality is that ETFs in South Africa themselves carried a rather high fee structure and at first only tracked the well known indices. Therefore, on an after fee basis, the early ETFs underperformed their benchmarks and in some cases a large portion of the active managers.

In this environment we felt that doing thorough research, selecting the best active managers AND negotiating lower fees with these managers would offer our clients the opportunity to beat their passive benchmark AND be competitive when comparing fees with the available ETFs and passive funds. There was no guarantee that active managers would outperform their index, but a limited ETF range wouldn’t be able to outperform the indices they were tracking as the cost factor (albeit typically lower than active managers) would result in the performance to the end client being guaranteed to be lower than the index.

Over the past few years, however, the passive investment market has rapidly developed and asset managers now offer so called ‘smart’ passive products. These are strategies that are designed to be different from your typical market cap weighted benchmark (e.g. ALSI) and will, over time, produce a different (hopefully better) return to the regular index. The investor, therefore, now makes an active decision when making a passive investment. As the industry has grown there has also been pressure on the costs charged, with the net effect being investors getting more choice, when investing into passive strategies, at a better price. Investors are now able to research (what is typically done on actively managed unit trusts) the various passive strategies, be they in the form of an ETF or a passive unit trust, and give themselves the opportunity to outperform (after costs) the typical benchmarks (e.g. ALSI).

To illustrate how much the passive environment has changed I have included a chart showing the tracking error of two passive strategies (one ‘Old Generation Passive’ and one ‘Smart Passive’) and one Active Manager (deemed to be quite active in relation to his peers) versus the ALSI. As can be seen, the Smart Passive strategy is actually more active than the Active Manager most of the time!

The Old Generation Passive strategy has a very low tracking error and as such has a similar risk/return profile as the ALSI. Both the Active Manager and Smart Passive have been able to outperform the ALSI over a 10 year period (all strategies shown after costs – ALSI pre costs) with significantly less downside risk.

As multi-managers we understand that active and passive strategies can both play a role in an investor’s portfolio. We therefore look to combine low cost ‘smart’ passive strategies with slightly higher cost active managers. In this way we attempt to choose those smart passive strategies that will beat the market (ALSI) on an after cost basis and combine them with those active managers that we believe are best equipped to deliver alpha over the long term.

There are various ways to access passive strategies, with the most common two being through a unit trust OR a listed ETF. Both access points have their pros and cons, and not all strategies are offered as a unit trust AND a listed ETF. Investors therefore need to do their homework to determine on how they will access the passive portfolio with factors such as availability, cost, and efficiency needing to be considered based on the client’s individual requirements.

The Seed Flexible Fund currently makes use of 1 passive and 2 active local equity strategies.

Take care,

Mike Browne

021 914 4966

Tue, 11 Sep 2012
Top News
South African stocks fell for a second straight session on Tuesday after labour troubles hit mining companies such as Impala Platinum and Gold Fields.  Full story

Interest income rose 8% to R41.3 billion (2011: R38.2 billion) whilst income form operations jumped 7% to R46.3 billion (2011: R43.2 billion). Net attributable profit to ordinary equityholders fell 34% to R13.2 billion (2011: R20.1 billion). In addition, headline earnings from continuing ope  Full story
European shares edged higher on Tuesday, with Deutsche Bank leading a rally among euro zone lenders after saying it would not ask shareholders. . .  Full story
U.S. stocks moved higher in quiet trading on Tuesday ahead of a key ruling by a German court and possible policy action from. . .  Full story
Britain's top share index pared early losses to end flat on Tuesday, with uncertainty regarding the outcome of a German court ruling on. . .  Full story
U.S. and European stocks rallied, Treasuries slipped and the dollar weakened on Tuesday on expectations a German court would not interfere with a. . .  Full story

Gold rose toward a six-month high on Tuesday, lifted by a weak dollar following Moody's warning on U.S. creditworthiness and strong investment buying in. . .  Full story
European shares pared losses in thin afternoon trade on Tuesday as euro zone banks resumed their relief rally and Wall Street indexes gained.. . .  Full story
U.S. stocks opened flat on Tuesday as investors exercised caution ahead of possible policy action from the Federal Reserve and a key decision. . .  Full story
The rally in European equities stuttered for a second day on Tuesday, in sight of 13-month highs, with investors concerned about the strings. . .  Full story

Evidence of water contamination would be grounds for South Africa to halt exploration for shale gas in its semi-arid Karoo region,. . .  Full story
South Africa's current account recorded its largest deficit in nearly four years in the second quarter of 2012 as exports fell. . .  Full story
South Africa's manufacturing output grew 5.8 percent year-on-year in volume terms in July, almost in line with market expectations, after a. . .  Full story
Spending growth in South Africa quickened to 4.7 percent in the second quarter from 4.3 percent in the first quarter as. . .  Full story

South Africa's rand steadied against the dollar on Tuesday, trading cautiously ahead of key local data released the day ahead of a constitutional court ruling in Germany on whether Berlin can take part in a permanent euro zone bailout fund.. . .  Full story
South Africa's second-biggest bank, FirstRand posted a 26 percent rise in full-year earnings helped by a strategic push to increase retail customers that has boosted income from lending.. . .  Full story
Company News
Fiuranium announced that it will make an initial distribution (the "Distribution") on October 1, 2012 of CAD0.125 per unit to shareholders. . .  Full story
Shareholders are advised that, at the annual general meeting of the company convened on Tuesday, 11 September 2012 (in terms of. . .  Full story
On 6 August 2012, Coal announced that 115,478,798 new ordinary shares ("placing shares") had been successfully placed at a placing price. . .  Full story
Textainer announced that, subject to market and other conditions, it intends to offer up to 5 000 000 of its common. . .  Full story

Textainer announced that it has entered into two separate agreements to acquire 52 000 TEU (twenty-foot equivalent units) from its managed fleet for approximately USD66 million with the transfer of ownership rights effective as of August 1, 2012. The purchase of. . .  Full story
Implats is in the process of informing all stakeholders that the company has received a wage demand from the Interim Workers Committee (IWC) at Impala Rustenburg. At the end of April 2012 a wage increase was implemented which formed part of. . .  Full story
Company Results
Revenue increased by 10.6% to R8.3 billion (R7.5 billion). Operating profit before capital items was up by 22.8% to R1.4 billion. . .  Full story
Revenue for the year increased to R169.4 billion (2011:142.4 billion). Operating profit grew 23% to R36.8 billion (2011: R30 billion). Earnings. . .  Full story
Interest income increased to R434 million (R359.3 million). Profit from operations rose to R159.1 million (R121.8 million). Net attributable profit improved. . .  Full story
Revenue increased to R7.2 billion (R6.5 billion). Gross profit rose to R2 billion (R1.7 billion) and operating profit improved to R371.2. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0035446.66-77.00-0.22%
JSE Top 4017:0031264.38-78.00-0.25%
JSE Gold17:002337.10.00-0.04%
JSE Financial17:0026689.5879.000.30%
JSE Industrial17:0041399.08-17.00-0.04%
JSE Indust 2517:0035306.427.000.02%
JSE Resource17:0048098.73-402.00-0.83%
DJ Futures19:3813332.0036.000.27%
DJ Ind19:5813352.6045.960.35%
SP 50019:581436.80-1.12-0.08%
FTSE 10017:355792.19-1.01-0.02%
All Ords08:444348.30-9.70-0.22%
NZSE 5007:483744.9618.060.48%
NameTimeRPMove% Move
Gold $19:591733.606.700.39%
Gold R19:5814136.666.210.04%
Gold R/kg19:5845455510130.22%
Silver $19:5933.5100.15900.48%
Platinum $19:591600.7511.250.71%
Palladium $19:59669.501.400.21%
Brent Crude19:58114.60-.04-0.03%
Rand / Dollar19:598.1643-0.0211-0.26%
Rand / Pound19:5513.07500.01450.11%
Rand / Euro19:5510.48780.04140.40%
Rand / NZD19:586.67530.05500.83%
Rand / AUD19:558.52300.05970.71%
Yen / Dollar19:5977.7900-0.4750-0.61%
Euro / Dollar19:550.7774-0.0062-0.79%
Dollar / Euro19:591.28610.01010.79%
Pound / Dollar19:550.6221-0.0032-0.51%

Click here for the Sharenet Spot Price page
The JSE Today

Trading Statistics
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 HULAMIN  4254812.73.%106771
2 ESORFRANK  1451511.54.%505449
3 CLOVER  13451159.35.%833154
4 CONDUIT  12098.11.%224049
5 NEW CPA  11087.84.%260000
6 HOSP-B  300207.14.%204796
7 SASFIN  32002006.67.%1120
8 CROOKES  49503006.45.%3570
9 OCTODEC  1899995.50.%21285
10 BRIMSTON  975485.18.%2230
11 AQUARIUS  510193.87.%431404
12 ASSORE  3100010373.46.%83387
13 PRESCIENT  13942.96.%334143
14 MEDCLIN-N  1200302.56.%1468282
15 GBGOLD  20052.56.%62310
16 SHOPRIT  161054022.56.%998392
17 CBH  32882.50.%24250
18 ALTECH  4170982.41.%61036
19 SOVFOOD  430102.38.%693516
20 WOOLIES  57391292.30.%2361229

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Major Moves Down
SharenameSaleMove% MoveVolume
1 NORTHAM  3093-257-7.67.%850184
2 ONELOGIX  178-11-5.82.%18487
3 RICHEMONT  5281-256-4.62.%10183965
4 ARGENT  650-29-4.27.%148461
5 STEFSTOCK  1044-46-4.22.%9400
6 ATLATSA  140-6-4.11.%68830
7 MARSHALL  610-25-3.94.%21216
8 PETMIN  220-9-3.93.%222558
9 COMAIR  125-5-3.85.%20600
10 GOLDONE  355-14-3.79.%35546
11 IMPLATS  14020-535-3.68.%2091966
12 HOSP-A  1505-55-3.53.%38076
13 ABIL  3192-113-3.42.%4611513
14 JUBILEE  125-4-3.10.%900
15 TRUSTCO  106-3-2.75.%107158
16 SAPPI  2378-65-2.66.%506019
17 JSE  7180-195-2.64.%64338
18 BARWORLD  7400-200-2.63.%545879
19 GROUP-5  2655-70-2.57.%15786
20 RAUBEX  1431-34-2.32.%883132

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New Highs
SharenameSaleHighMove% MoveVolume
1 MEDCLIN-N  12001265302.56.%1468282
2 HCI  907990991792.01.%29319
3 DATATEC  50505164501.00.%337671
4 SPURCORP  2024202840.20.%61538
5 DIPULA-B  6706880.18800

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New Lows
SharenameSaleLowMove% MoveVolume

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Index Summary
Index NameRPMove% Move
Top 4031,264.00-78.00-0.25%
Mid Cap50,937.00-51.00-0.10%
Small Cap37,804.0042.000.11%
Resource 2048,098.00-402.00-0.83%
Industrial 2535,306.007.000.02%
Financial 159,933.0036.000.37%
Financial & Ind. 3038,640.0033.000.09%
All Share35,446.00-77.00-0.22%
Oil & Gas 28,567.00-465.00-1.60%
Mining 30,587.00-215.00-0.70%
Gold Mining2,337.00.00-0.04%
Platinum Mining50.00.00-1.55%
GENERAL MINING7,898.00-43.00-0.55%
Oil & Gas Producers 15,360.00-249.00-1.60%
Basic Materials 26,172.00-170.00-0.65%
Chemicals 15,430.00-59.00-0.38%
Forestry & Paper 14,426.00-94.00-0.65%
Industrial Metals 26,375.00116.000.44%
Industrials 34,888.00-122.00-0.35%
General Industrials
Consumer Goods 35,868.00-293.00-0.81%
Automobiles & Parts 6,680.00-112.00-1.66%
Household Goods174.0000.06%
Health Care 48,596.00581.001.21%
Index NameRPMove% Move
Food Producers 63,873.00356.000.56%
Personal Goods 527.00-25.00-4.62%
Consumer Services 72,312.00404.000.56%
General Retailers 60,036.00646.001.09%
Travel & Leisure 4,364.00-37.00-0.85%
Support Services 2,117.00-9.00-0.47%
Telecommunications 75,631.00716.000.96%
Financials 26,689.0079.000.30%
Banks 47,737.00175.000.37%
Non-life Insurance 45,429.00260.000.58%
Life Insurance 22,427.00124.000.56%
General Financial 2,432.00-21.00-0.89%
Technology 31,786.00106.000.34%
SHARIAH TOP40 3,098.00-27-0.88%
FTSE/JSE SHARIAH ALL3,215.00-24-0.77%
COAL MINING20,613.002841.40%
FTSE JSE Fledgling 5,541.0090.16%
FTSE/JSE Alt X 1,080.000-0.07%
RESOURCE 26,494.00-224-0.84%
DIVIDEND PLUS196.0000.09%
FTSE/JSE RAFI 407,261.00-20-0.28%
Capped Top 4016,506.00-44-0.27%
Capped All Share17,932.00-39-0.22%
JSE TABACO 5,319.001092.10%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
12/09/2012ASPENJune 2012 (Final)
12/09/2012ASPENPREFJune 2012 (Final)
12/09/2012EOHJuly 2012 (Final)
12/09/2012MMI HLDGSJune 2012 (Final)
12/09/2012MMIPREFJune 2012 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
SASFIN10/09/201205/10/201215/10/2012R 0.8800
SASOL10/09/201205/10/201215/10/2012R 11.8000
A-V-I10/09/201205/10/201215/10/2012R 1.8000
A-V-I10/09/201205/10/201215/10/2012R 1.2000
SASFIN-P10/09/201228/09/201208/10/2012R 3.5155
Ex Div**
Share NameDec-DateLDTPay-DateAmount
GRINDROD PREF22/08/201207/09/201217/09/2012R 3.9500
STANBANK16/08/201207/09/201217/09/2012R 2.1200
SHOPRIT21/08/201207/09/201217/09/2012R 1.9400
GFIELDS23/08/201207/09/201217/09/2012R 1.6000
DISTELL22/08/201207/09/201217/09/2012R 1.5200

Upcoming AGMs**
CodeCompany NameDateStatus
AMEAfrican Media Entertainment Ltd.11/09/2012Confirmed
MIXMiX Telematics Ltd.11/09/2012Confirmed
ILEImbalie Beauty Ltd.12/09/2012Confirmed
WGRTSXWitwatersrand Consolidated Gold Resource...12/09/2012Confirmed
WGRWitwatersrand Consolidated Gold Resource...12/09/2012Confirmed

Stock Exchange News Service
11/09/201217:15FIRST URANIUM CORPORATION - Initial Distribution to Shareholders
11/09/201217:14STEINHOFF INTERNATIONAL HOLDINGS LD - Dealing in securities by a director
11/09/201216:33ANGLO AMERICAN PLC - Share Incentive Plan - Award of Shares
11/09/201216:24ELEMATICS LIMITED - Results of annual general meeting
11/09/201216:22ANGLO AMERICAN PLC - Treasury Share - Transfers
11/09/201216:21INVESTEC BANK LIMITED - Dividend Announcement- FSRIHI
11/09/201216:19THE STANDARD BANK OF SA LTD - Interest Rate Announcement
11/09/201216:16THE STANDARD BANK OF SA LTD - Interest Rate Announcement
11/09/201216:16T INVESTMENTS S.C.A - Reinet Annual General Meeting of shareholders approves ful...
11/09/201216:03THE STANDARD BANK OF SA LTD - Interest Rate Announcement
11/09/201216:00COUNTRY BIRD HOLDINGS LIMITED - Country Bird Holdings Financial Results
11/09/201216:00NEW CORPCAPITAL LIMITED - Posting of circular and revised listing particulars to...
11/09/201215:50PROP INDEX TRACKER COL INV SCHEME - Listing Of 200 000 Additional Proptrax Ten S...
11/09/201215:49PROP INDEX TRACKER COL INV SCHEME - Delisting Of 200 000 Proptrax Sapy Securitie...
11/09/201215:23SASFIN HOLDINGS LIMITED - Dealing in securities by a director
11/09/201215:20INDWA INVESTMENTS LIMITED - New Instrument Listing
11/09/201215:05THE STANDARD BANK OF SA LTD - Interest Rate Announcement
11/09/201214:58THE STANDARD BANK OF SA LTD - Interest Rate Announcement
11/09/201214:46COAL OF AFRICA LIMITED - Results of the EGM
11/09/201214:25THE SPAR GROUP LIMITED - Dealing in securities
11/09/201214:13VERIMARK HOLDINGS LIMITED - Correction To Notice Of Annual General Meeting
11/09/201213:25ESORFRANKI LIMITED - Preliminary trading update
11/09/201213:09RMB CIS MANCO (PTY) LIMITED - Distribution Announcement - Salient Dates
11/09/201213:07RMB CIS MANCO (PTY) LIMITED - Distribution Announcement - Salient Dates
11/09/201213:06RMB CIS MANCO (PTY) LIMITED - Distribution Announcement - Salient Dates
11/09/201212:42OLDINGS LIMITED - Trading Update
11/09/201212:30O RESOURCES LIMITED - Trading of Exxaro ordinary shares on behalf of the Exxaro ...
11/09/201211:10MVELAPHANDA GROUP LIMITED - Disclosure Of Acquisition Of Securities
11/09/201211:10A RESOURCES NL - Financial report for the half-year ended 30 JUNE 2012
11/09/201211:06ADVTECH LIMITED - Directors Dealings
11/09/201211:00R LIMITED - Audited abridged group results for the year ended 30 June 2012
11/09/201210:54NEW GOLD ISSUER LIMITED - Listing Of Additional Newgold Debentures
11/09/201210:30LLER PLC - Change in particulars of non-executive director
11/09/201210:00METAIR INVESTMENTS LIMITED - Dealing in securities by a director
11/09/201209:45RCS INVESTMENT HOLDINGS (PTY) LTD - Interest Rate Reset
11/09/201209:28ELLIES HOLDINGS LIMITED - Dealing in securities by a director
11/09/201209:11Nedbank Limited - Dividend Distribution
11/09/201208:55REDEFINE PROPERTIES LIMITED - Further Cautionary Announcement
11/09/201208:45Palabora Mining Company Limited - Update On The Production Shaft Guide Rope
11/09/201208:35OR LIMITED - Announcement relating to Trencor's beneficiary interest in Textaine...
11/09/201208:24OR LIMITED - Trencors Textainer To Acquire 52 000 Teu From Managed Container Por...
11/09/201208:00FIRSTRAND LIMITED - Audited results and cash dividend declaration for the year e...
11/09/201207:15CLOVER INDUSTRIES LIMITED - Abridged audited consolidated results for the year 3...
11/09/201207:05A PLATINUM HOLDINGS LIMITED - Implats Labour Relations Update
11/09/201207:05BRITISH AMERICAN TOBACCO PLC - Transaction in own shares
11/09/201207:05TELKOM SA LIMITED - Change to the board of directors - Retirement of Director

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