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 The Sharenet Daily 
Tuesday, 03 September 2013 - 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)

Seed weekly - Active and Passive Investment Strategies

Monday’s Business Day had an article on passive investing, with the headline “passive investment relies on getting a free ride from active managers.” The basic emphasis of the article was - only because active investors are performing an invaluable service of price discovery, can passive investors essentially ride on their coat-tails. The article points out, and quite rightly so, that “If the whole world were investing passively, prices would not move.”

Let’s take a cursory view of active, passive, and smart beta managers.

Active Management

Investopedia defines active management as the use of human element to actively manage an investment portfolio, through the use of analytical research, forecasts, judgement and experience, deciding which shares to buy, hold and sell and in what proportions.

The underlying premise that drives active management, is that market prices are not absolutely efficient and so, by employing human skill and ingenuity, a portfolio of shares can be constructed which will outperform a simple index. Investors making use of active management want to capture both beta (i.e. the market returns) and alpha (the additional performance that the manager is able to achieve).

Passive Management

A passive investment management strategy is one where a portfolio of shares is constructed by mirroring an index. Two further subsets of this strategy are – Market Cap Weighted and Smart Beta.

Market Cap
The traditional index – such as the FTSE/JSE All Share index is constructed on the basis of market capitalisation, or relative size of the underlying companies, so that a large company such as Billiton has an 11.8% weight in the index, while a smaller company such as Goldfields has a 0.74% weight in the same index.

The underlying premise that drives investors to make use of market cap weighted index tracking portfolios is the belief that market prices are efficient and therefore over longer periods of time it is impossible for active managers to outperform, especially after taking their higher costs into account. Investors into these passive strategies want to only capture market performance, known as beta, but at low cost.

Smart Beta
Somewhere between a pure index passive and the active management is smart beta. By constructing an index in a different manner to purely the relative sizes of the companies, a smart beta portfolio aims to provide investors with market exposure (i.e. beta) plus the ability to outperform – i.e. some alpha as well.

There are many ways in which smart beta portfolios can be constructed. Three methodologies used include:
Equally weighted approach – this removes the link between share prices and their weights. Shares in a given universe are weighted equally in a portfolio.
Economic weighted – here certain fundamental factors are used to weight the shares. These can include sales, earnings, dividends etc.
Factor tilts – here the weights in the portfolio are constructed by looking at specific return drivers that are typically used by active managers when compiling their portfolios. These would include value factors such as earnings yield and dividend yield, and perhaps also momentum factors such as earnings upgrades.

Over time certain smart beta strategies have shown to deliver superior performance when compared to the pure market cap passive (read FTSE/JSE All Share index) and indeed when when compared against many active managers. All investors looking to generate returns above the benchmark, but at lower costs, should be considering a smart beta component.

The Seed Equity fund is a unit trust that tracks value and momentum factors on a passive approach (i.e. a smart beta fund). If you would like to find out more, please don’t hesitate to give us a call.

Kind regards,

Ian de Lange

021 914 4966

Tue, 03 Sep 2013
Top News
Safe-haven buying lifted the price of gold on Tuesday after an Israeli missile test ahead of a possible U.S. strike on Syria, while investors shrugged off strong U.S. economic data and awaited a non-farm report later in the week.  Full story

South African stocks put in a second straight day of gains on Tuesday, coming within striking distance of recently scaled peaks after global markets overcame a jolt from a U.S.-Israel missile test near Syria.  Full story
President Barack Obama urged Congress on Tuesday to approve U.S. strikes on Syria soon as the United Nations said two million Syrians had fled a conflict that posed the greatest threat to world peace since the Vietnam war.  Full story
U.S. President Barack Obama won the backing of two top Republicans in Congress in his call for limited U.S. strikes on Syria to punish President Bashar al-Assad for his suspected use of chemical weapons against civilians.  Full story
U.S. stocks advanced modestly on Tuesday as an early rally faded after two top Republicans voiced support for U.S. President Barack Obama's call. . .  Full story
World equity markets were higher on Tuesday but pared gains after U.S. Congressional leaders voiced support for military intervention in Syria, while bond yields. . .  Full story
European stocks' week-long rally paused on Tuesday, renewed worries over Syria overshadowing a 34 percent surge in Nokia after Microsoft agreed to buy. . .  Full story
Britain's top share index fell on Tuesday, weighed down telecoms giant Vodafone disappointing with the terms of a sale deal with partner Verizon. . .  Full story

U.S. stocks pared gains in late morning trading on Tuesday after Republican leaders in the House of Representatives voiced support for a U.S.. . .  Full story
U.S. stocks rose at the open on Tuesday after U.S. President Barack Obama opted to seek congressional authorization for military action against Syria,. . .  Full story
Heavyweight Vodafone, the UK's fifth largest stock by market capitalisation, led British shares lower on Tuesday after the terms of its sale deal. . .  Full story
Hong Kong shares posted a fourth straight daily gain, as Chinese cyclical counters rose again on Tuesday after favourable economic data, helping benchmark indexes. . .  Full story
SA Business
Business confidence in South Africa edged lower to 90.5 in August from 90.7 in July as labour unrest, fragile economic growth, rising inflation and a weaker rand have hit sentiment, a business chamber said on Tuesday.. . .  Full story
South Africa's rand was steady against the dollar on Tuesday ahead of a strike in the gold sector and a week of key data releases in the United States.. . .  Full story

Vodafone's plan to boost investment in broadband and superfast mobile networks after its $130 billion deal with Verizon could force its European competitors to increase their own spending and even prompt further deal-making.. . .  Full story
South Africa's Treasury sold a total 2.35 billion rand of its 2037, 2041 and 2048 government bonds on Tuesday.. . .  Full story
Discovery Holdings, South Africa's largest health insurer, posted a 19 percent rise in full-year earnings on Tuesday after writing new business.. . .  Full story
Company News
The directors of Adrenna announced the appointment of Mr Robert Sephton Watson as an independent non-executive director of the company with. . .  Full story
Further to the announcement released by Evraz on SENS on 22 August 2013 on its group unaudited results for the six. . .  Full story
Further to the cautionary announcement released by Evraz. ("the company") on SENS on 27 March 2013, the further cautionary announcement dated. . .  Full story
Shareholders are advised that the annual report for the year ended 30 June 2013, has been dispatched to shareholders and contains. . .  Full story

Unitholders are advised that independent non-executive directors Peter Cook and Mlungisi Hlongwane, having retired by rotation at the annual general meeting. . .  Full story
The table below provides guidance for the increases in the Group's HEPS, EPS and diluted normalised EPS. As previously communicated to. . .  Full story
Anglo announced the appointment to its Board of Dr Judy Dlamini as a non-executive director, with effect 1 January 2014.. . .  Full story
Shareholders were advised that caution is no longer required to be exercised by shareholders when dealing in Ansys's securities.. . .  Full story
Company Results
Revenue grew to R20.5 billion (R18.1 billion) and gross profit rose to R6.7 billion (R6.1 billion). Profit from operations before exceptional. . .  Full story
The operating loss widened to GBP1.7 million (loss of GBP1.6 million). The net attributable loss was also larger at GBP1.9 million. . .  Full story
Revenue for the interim period plunged to R7 billion (2012: R18.8 billion). Earnings before interest, taxation, depreciation and amortisation lowered to. . .  Full story
Revenue from gold sales decreased to AUD185.8 million (AUD189.2 million). Gross profit declined to AUD10.8 million (AUD38.5 million). An operating loss. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0042892.25166.550.39%
JSE Top 4017:0038513.85167.600.44%
JSE Gold17:001297.6512.550.98%
JSE Financial17:0030532.45-5.31-0.02%
JSE Industrial17:0055598.0183.510.15%
JSE Indust 2517:0048729.5534.340.07%
JSE Resource16:5050848.33575.041.14%
DJ Futures19:2214770.00-135.00-0.91%
DJ Ind19:5814783.82-26.49-0.18%
SP 50019:581634.821.850.11%
FTSE 10017:356468.41-37.78-0.58%
All Ords08:455188.9010.900.21%
NZSE 5007:484606.7110.350.23%
NameTimeRPMove% Move
Gold $19:591414.8021.851.57%
Gold R00:0014275.9224.590.17%
Gold R/kg19:5846884293142.03%
Silver $19:5924.3400.18500.77%
Platinum $19:591534.0019.801.31%
Palladium $19:59714.002.000.28%
Brent Crude19:58115.771.761.54%
Rand / Dollar19:5910.30710.04780.47%
Rand / Pound19:5516.01800.09020.57%
Rand / Euro19:5513.57760.03280.24%
Rand / NZD00:008.03770.08901.12%
Rand / AUD19:559.33010.08730.94%
Yen / Dollar19:5999.2720-0.0950-0.10%
Euro / Dollar00:000.75800.00110.15%
Dollar / Euro19:591.3172-0.0022-0.17%
Pound / Dollar19:550.6420-0.0010-0.16%

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 RCL  168015951876.47.%12588
2 RANGOLD  2605426.21.%800
3 KELLY  1953521.88.%17040
4 MMG  5506212.70.%75648
5 DAWN  8888710.86.%14833
6 TIMES  20861859.73.%813
7 KEATON   205157.89.%60647
8 AMECOR  203136.84.%15010
9 DELTA  801516.80.%126000
10 AVENG  28901656.06.%473922
11 BASREAD  849445.47.%159770
12 MRHLD  27451405.37.%2806350
13 METROFILE  525255.00.%79237
14 S-OCEAN  13264.76.%30000
15 WBHO  154566894.67.%99929
16 GROUP-5  44851854.30.%177589
17 VALUE  625243.99.%6000
18 GRANPRADE  430163.86.%1436875
19 BUILDMX  280103.70.%130959
20 CLOVER  1700603.66.%256804

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Major Moves Down
SharenameSaleMove% MoveVolume
1 ROCKWELL  250-30-10.71.%52000
2 TOWER  820-60-6.82.%16511
3 CARGO  1400-100-6.67.%909
4 FINBOND  160-9-5.33.%14855
5 GOLDONE  190-10-5.00.%38175
6 PALLINGHT  220-10-4.35.%270051
7 WESCOAL  154-6-3.75.%5534
8 OCTODEC  2013-76-3.64.%14100
9 RESILIENT  4940-160-3.14.%301748
10 REDEFINE  930-29-3.02.%3690651
11 BRIMSTON  1310-40-2.96.%10000
12 GROWPNT  2371-70-2.87.%3883078
13 CAPITAL  987-27-2.66.%1085634
14 DIGICOR  156-4-2.50.%453771
15 ALTRON  2176-49-2.20.%18497
16 FONEWORX  225-5-2.17.%11085
17 CAPCO  5075-106-2.05.%256681
18 ASCEN B  245-5-2.00.%73420
19 FPT  760-15-1.94.%445457
20 CML  6601-129-1.92.%331889

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New Highs
SharenameSaleHighMove% MoveVolume
1 MMG  5505756212.70.%75648
2 DELTA  801801516.80.%126000
3 MRHLD  274527781405.37.%2806350
4 GROUP-5  448546001854.30.%177589
5 GRANPRADE  430450163.86.%1436875
6 BEE-SASOL  36800368008002.22.%785
7 NASPERSN  86300877503000.35.%1289974

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New Lows
SharenameSaleLowMove% MoveVolume
1 TOWER  820810-60-6.82.%16511

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Index Summary
Index NameRPMove% Move
Top 4038,513.85167.600.44%
Mid Cap55,332.6849.200.09%
Small Cap46,244.93200.390.44%
Resource 2050,848.33575.041.14%
Industrial 2548,729.5534.340.07%
Financial 1511,544.6030.420.26%
Financial & Ind. 3051,582.2255.630.11%
All Share42,892.25166.550.39%
Oil & Gas 36,553.84236.110.65%
Mining 30,924.16371.851.22%
Gold Mining1,297.6512.550.98%
Platinum Mining48.86-.03-0.06%
GENERAL MINING8,898.54125.501.43%
Oil & Gas Producers 19,654.32126.940.65%
Basic Materials 27,337.49337.201.25%
Chemicals 22,251.18-42.34-0.19%
Forestry & Paper 26,948.14634.002.41%
Industrial Metals 24,045.7497.610.41%
Industrials 41,554.65110.130.27%
General Industrials 123.77-.37-0.30%
Consumer Goods 52,748.51-1.95-0.00%
Automobiles & Parts 7,898.43-27.17-0.34%
Household Goods199.3600.10%
Health Care 68,816.32-254.63-0.37%
Beverages 169.63-.27-0.16%
Index NameRPMove% Move
Food Producers 68,237.77207.360.30%
Personal Goods 1,004.56.700.07%
Consumer Services 9,438.6317.250.18%
General Retailers 58,899.1145.810.08%
Travel & Leisure 5,461.79-9.36-0.17%
Media 188.67.760.40%
Support Services 2,657.0643.301.66%
Telecommunications 8,688.2713.310.15%
Financials 30,532.45-5.31-0.02%
Banks 51,795.09430.680.84%
Non-life Insurance 47,011.91-285.85-0.60%
Life Insurance 29,094.61116.570.40%
General Financial 2,858.87-9.07-0.32%
Technology 42,513.6596.860.23%
SHARIAH TOP40 3,684.10310.85%
FTSE/JSE SHARIAH ALL3,784.26290.77%
COAL MINING20,756.38180.09%
FTSE JSE Fledgling 5,771.08490.85%
FTSE/JSE Alt X 1,026.1800.02%
CAPPED PROPERTY 403.59-1.86%
RESOURCE 27,805.853081.12%
DIVIDEND PLUS204.3710.32%
FTSE/JSE RAFI 408,512.89500.59%
Capped Top 4020,331.98820.40%
Capped All Share21,701.79800.37%
JSE TABACO 6,693.6350.07%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
04/09/2013AFGRIJune 2013 (Final)
04/09/2013EQSTRAJune 2013 (Final)
04/09/2013EQSTRADAJune 2013 (Final)
04/09/2013EQSTRADBJune 2013 (Final)
04/09/2013MUSTEKJune 2013 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
GRINDROD PREF02/09/201319/09/201330/09/2013R 3.7100
PSGFIN PREF02/09/201319/09/201330/09/2013R 3.5706
WBHO02/09/201311/10/201321/10/2013R 2.3300
GRANPRADE02/09/201319/09/201330/09/2013R 0.1500
GRINDROD02/09/201319/09/201330/09/2013R 0.2000
Ex Div**
Share NameDec-DateLDTPay-DateAmount
MTN GROUP14/08/201330/08/201309/09/2013R 3.7000
STANBANK-P15/08/201330/08/201309/09/2013R 3.2456
AECI24/07/201330/08/201309/09/2013R 1.0500
BHPBILL20/08/201330/08/201325/09/2013R 0.5900
FORTRESSA14/08/201330/08/201309/09/2013R 0.5601

Upcoming AGMs**
CodeCompany NameDateStatus
MRIMine Restoration Investments Ltd.04/09/2013Confirmed
CDZCadiz Holdings Ltd.05/09/2013Confirmed
SSKStefanutti Stocks Holdings Ltd.06/09/2013Confirmed
DTCDatatec Ltd.10/09/2013Confirmed

Stock Exchange News Service
03/09/201317:45WINHOLD LIMITED - Announcement to Shareholders regarding the Proposed Disposal o...
03/09/201317:38CITY LODGE HOTELS LIMITED - Directors' dealings in securities
03/09/201317:00DISCOVERY LIMITED - Dealings in securities by directors
03/09/201317:00TOYOTA FIN SERVICES (SA) LTD - New Listing of a Financial Instrument - TFS117
03/09/201316:44HUGE GROUP LIMITED - Dealing in Securities by an Associate Director
03/09/201316:40JSE LIMITED - Tax implications of the offer to Sable shareholders
03/09/201316:33ADRENNA PROPERTY GROUP LIMITED - Changes to the Board of Directors
03/09/201316:15FIRSTRAND BANK LIMITED - Listing of New Finanncial Instrument - FRC181
03/09/201315:45BK ONE LIMITED - Announcement regarding the Companys acquisition of Pure Ocean A...
03/09/201315:30SABMILLER PLC - Change in Particulars of an Executive Director
03/09/201315:06AFRICAN EAGLE RESOURCES PLC - TR-1: Notification of major interest in shares
03/09/201315:05ARGENT INDUSTRIAL LIMITED - Dealing in Securities by a Director
03/09/201315:04HUGE GROUP LIMITED - Amended Announcement - Director's Dealing in Securities
03/09/201315:01ARGENT INDUSTRIAL LIMITED - Dealing in Securities by a Director
03/09/201314:55EVRAZ HIGHVELD STEEL & VANADIUM LTD - Update on wage negotiations
03/09/201314:45BIDVESTCO LIMITED - New Instrument Listing - BIDC34
03/09/201314:43EVRAZ HIGHVELD STEEL & VANADIUM LTD - Renewal of existing cautionary announcemen...
03/09/201314:33SHOPRITE INVESTMENTS LIMITED - Interest Payment - Shoprite Investements Limited ...
03/09/201314:30BIDVESTCO LIMITED - Full Capital Redemption - BIDC31
03/09/201314:20INDWA INVESTMENTS LIMITED - New Instrument Listing - INA348
03/09/201313:25STANDARD BANK OF SOUTH AFRICA LD - SCIB: The Standard Bank Of South Africa Limit...
03/09/201313:00MAZOR GROUP LIMITED - Disclosure of acquisition of securities
03/09/201313:00INVESTEC BANK LIMITED - Declared dividend announcement on BHP Billiton PLC Hot E...
03/09/201312:30OLD MUTUAL PLC - Notification of Transactions of Directors/Persons Discharging M...
03/09/201312:26ADAPT IT HOLDINGS LIMITED - No Change Statement and Notice of Annual General Mee...
03/09/201311:58RMB HOLDINGS LIMITED - Trading statement: year ended 30 June 2013
03/09/201311:54VUKILE PROPERTY FUND LIMITED - Changes to the board of directors
03/09/201311:41PROP INDEX TRACKER COL INV SCHEME - Listing of 100 000 Proptrax Sapy Securities
03/09/201311:31REDEFINE PROP INTERNATIONAL LTD - Redefine International - Annex DTR3 Notificati...
03/09/201311:30REDEFINE PROP INTERNATIONAL LTD - Redefine International PLC - TR-1: Notificatio...
03/09/201311:29FIRSTRAND LIMITED - Trading statement in respect of the 12 months to June 2013
03/09/201311:27LITHA HEALTHCARE GROUP LIMITED - Disclosure of significant holding of Litha ordi...
03/09/201311:10FIRSTRAND BANK LIMITED - Interest Rate Reset - FRC107
03/09/201311:00ANGLO AMERICAN PLC - Anglo American appoints Judy Dlamini to the Board
03/09/201310:45ANSYS LIMITED - Financial effects on the Tedaka Technologies acquisition and wit...
03/09/201310:24INVESTEC BANK LIMITED - Variable Strikes- Adjusted Strike Prices
03/09/201309:31NEW GOLD ISSUER LIMITED - NGPLT - Listing of additional NewGold platinum debentu...
03/09/201309:30NEW GOLD ISSUER LIMITED - GLD - Partial de-listing of NewGold debentures
03/09/201309:30INTERWASTE HOLDINGS LIMITED - Directors dealings in securities
03/09/201309:20INTERWASTE HOLDINGS LIMITED - Directors Dealings in Securities
03/09/201309:04INGUZA INVESTMENTS (RF) LIMITED - Listing of New Instruments - ING223 and ING224
03/09/201309:04RBA HOLDINGS LIMITED - Resignation of Company Secretary
03/09/201309:00DISCOVERY LIMITED - Summary of audited results and cash dividend declaration for...
03/09/201308:00BRITISH AMERICAN TOBACCO PLC - Transaction in own shares
03/09/201308:00BLACKSTAR GROUP SE - Disposal of Investment
03/09/201308:00SATRIX COLLECTIVE INVESTMENT SCHEME - Listing of additional 1 million SATRIX IND...
03/09/201308:00OLD MUTUAL PLC - Old Mutual Africa Update on Acquisition of Majority Stake in P...
03/09/201307:05METROFILE HOLDINGS LIMITED - Preliminary audited group results for the year ende...

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