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 The Sharenet Daily 
Tuesday, 28 October 2014 - 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)

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Seed Weekly - Active Share - Are You Getting Value?

Over the past few years there has been an increased focus within the investment industry, by government, and through the media, on costs involved in managing client assets. Naturally these are important questions that need to be addressed, but more important, in our opinion, is to focus on whether investors are getting value for money.

As multi managers, we are acutely aware of the need to monitor manager portfolios and mitigate costs in order to deliver value to our clients. Part of this process is to ensure that any manager or mandate that we include in our Funds has a meaningful value proposition. In this regard we make use of lower cost smart beta products (that have the possibility of outperforming traditional indices) and higher cost active managers.

Here it is important that all active managers have the ability to meaningfully outperform an appropriate benchmark over a full market cycle, after the impact of costs has been taken into account. In doing so, it is crucial that the manager has a completely benchmark agnostic process, that over time will result in his portfolio having meaningful differences from the benchmark/index against which he’s being measured (on top of having a great process).

At Seed, we think that active share is the best measure of how active a fund is, and is superior to tracking error for the following reasons:
• Tracking error is backward looking (whereas active share looks at the current portfolio)
• There can be periods (particularly in broadly trending markets) where a fund can have a low tracking error, while still being completely different to the benchmark index (incorrect conclusions can be drawn from tracking error).
Drawbacks of the active share measure are that it requires holding data that can be tricky to obtain, is much more time consuming to calculate, and can (and does) change over time, but is something that is monitored on all managers used by Seed (we feel a value add as a multi manager).

When looking at local property unit trusts it is interesting to compare the active share across the various funds. For this sample we looked at the largest (non multi managed) funds comprising over 90% of the sector’s assets. While we know that property managers in South Africa are typically quite benchmark cognisant, we were shocked at just how close to the benchmark most of the funds currently are!

Out of the 12 funds investigated, only 2 of them had an active share above 50% (what we’d consider the base level for a manager to be considered active) and have been highlighted in red below. One manager has a stated objective of managing close to the benchmark (yellow) and as a result has the lowest total expense ratio (TER) of those funds surveyed (although at 0.76% is a bit higher than pure tracker, Satrix Property Index at 0.57% - which isn’t cheap in its own right)!

A major reason for the low active share is that 11 out of the 12 funds have Growthpoint (GRT) as their largest holding (with all of their GRT positions at least 5% higher than the second largest holding) and Redefine is in the top 3 holdings in 9 of the funds. The chart below shows the various managers (ranked by AUM), the TER of their fund (as per latest ASISA data), and their active share (as per latest Morningstar data). There are many managers that will tell you just why they don’t like Growthpoint and yet it’s still their largest holding and typically more than 15% of their fund (GRT is 23% of the SA Listed Property Index)!

Active Share Across Funds

When looking to include property mandates in Seed’s multi asset funds (Seed Flexible and Seed Absolute Return) we had 2 options – track the market as cheaply as possible, or pay a bit more, but get an active manager. We chose the latter and further looked to get the manager’s ‘best ideas’ in a concentrated building block, as property only makes up a portion of the Funds’ total assets. It is therefore obvious that the mandates in Seed’s funds have the greatest probability of generating a return that is different from the benchmark. As we have done extensive due diligences on the manager concerned, we feel that there is greater probability of outperformance and therefore wanted to maximise the impact of his skill set.

We feel that paying active manager fees, where active share is above 50%, is justified (although we’d typically like this number in excess of 80%). Furthermore, charging active manager fees (in our view anything above 0.75%) on a portfolio that is less than 20% different from the index is excessive. Judged on these standards a large number of property managers need to have a good look in the mirror! While some managers have been able to outperform even with such low active share, we can only but wonder how much better they would have done had they used a blank slate when constructing their portfolios!

Take care,

Mike Browne

021 914 4966

Tue, 28 Oct 2014
Top News
Local markets  Full story

South African maize farmers intend to plant 2.6 million hectares of the staple grain in the 2015 season, down slightly from 2.7 million hectares in 2014, the country's Crop Estimates Committee (CEC) said on Tuesday. A CEC spokeswoman said the fall was due to expectations of low pri  Full story
Thousands of mourners packed a church and lined the streets outside it in industrial Hamilton, Ontario, on Tuesday for the funeral of the soldier shot dead in last week’s attack on the nation’s seat of government.  Full story
The U.S. military has isolated soldiers returning from an Ebola response mission in West Africa and Australia imposed a visa ban on the affected countries, policies that critics said would have little benefit but could feed a global panic.  Full story
Iraqi peshmerga fighters left Iraq for the besieged Syrian town of Kobani on Tuesday to help fellow Kurds in their battle against Islamic State militants, a senior Kurdish official said.  Full story
Global equity markets rose and bond prices eased on Tuesday on solid corporate earnings on both sides of the Atlantic and an upbeat. . .  Full story
Gold prices rose on Tuesday as softer than expected U.S. data pressured the dollar, but moves were muted ahead of a closely-watched Federal. . .  Full story
Hong Kong shares rose on Tuesday, underpinned by expectations for a slower pace of U.S. interest rate rises and more reforms at Chinese. . .  Full story
Chinese shares rebounded on Tuesday, breaking a multi-day string of declines, on hopes of more reforms at the country's state-owned enterprises (SOEs).. . .  Full story

Japanese stocks slipped on Tuesday as investors awaited the outcome of the Federal Reserve's two-day policy meeting, but retailers bucked the trend on stronger-than-expected. . .  Full story
. . .  Full story
China and Hong Kong shares rebounded on Tuesday, breaking a multi-day string of declines, on hopes of more reforms to state-owned enterprises (SOEs), analysts. . .  Full story
Global equity markets slipped on Monday, hit by weak German business sentiment and another decline in oil, while Brazil slumped after incumbent Dilma Rousseff. . .  Full story
SA Business
South Africa's rand traded close to a 6-week high versus the dollar on Tuesday, with little domestic impetus to break out of current ranges as investors looked to Wednesday's U.S. Federal Reserve policy statement for direction.. . .  Full story
South Africa's Shoprite Holdings jumped 6 percent on Monday, heading towards its biggest daily gain since 2008, after the retailer's double-digit rise in quarterly revenue relieved some concerns about the impact of weak consumer spending.. . .  Full story

Vietnam-based telecoms operator Viettel plans to invest $1 billion in a new third-generation (3G) mobile phone network in Tanzania, the office of the east African country's president said on Tuesday.. . .  Full story
South Africa's Treasury sold 2.35 billion rand ($215 million) worth of its 2030, 2032 and 2048 bonds on Tuesday. Yields were mostly down from the previous auction.. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0048460.93409.880.85%
JSE Top 4017:0043181.63365.470.85%
JSE Gold17:001055.76-5.81-0.55%
JSE Financial17:0038074.02606.031.62%
JSE Industrial17:0065993.20389.700.59%
JSE Indust 2517:0058293.22342.030.59%
JSE Resource17:0047962.91406.950.86%
DJ Futures19:5816830.0074.000.44%
DJ Ind19:5816912.9595.010.56%
SP 50019:581974.8413.210.67%
FTSE 10018:296406.4542.990.68%
All Ords07:395434.00-7.90-0.15%
NZSE 5006:285338.334.500.08%
NameTimeRPMove% Move
Gold $19:591228.703.100.25%
Gold R19:5813345.55-70.60-0.53%
Gold R/kg19:58429003-3281-0.76%
Silver $19:5917.2290.14400.84%
Platinum $19:591264.7012.450.99%
Palladium $19:59793.809.701.24%
Brent Crude19:5885.94.110.13%
Rand / Dollar19:5910.8601-0.0865-0.79%
Rand / Pound19:5517.4975-0.1135-0.64%
Rand / Euro19:5513.8347-0.0616-0.44%
Rand / NZD19:588.6184-0.0200-0.23%
Rand / AUD19:559.6211-0.0162-0.17%
Yen / Dollar19:59108.05300.20200.19%
Euro / Dollar19:550.7844-0.0029-0.37%
Dollar / Euro19:591.27390.00430.34%
Pound / Dollar19:550.6190-0.0012-0.19%

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 DIAMONDCP  1996953.08.%321
2 OANDO  1301917.12.%97750
3 SANTOVA  2503214.68.%767749
4 CSG  2112111.05.%53974
5 YORK  2992910.74.%61448
6 DAWN  720609.09.%17717
7 PINNACLE  1226968.50.%341851
8 FONEWORX  278186.92.%17779
9 FORTRESSB  1410906.82.%31139
10 HOSP-A  1725996.09.%349406
11 ADAPTIT  665355.56.%261037
12 ATLATSA  290155.45.%5835
13 WESCOAL  18495.14.%183298
14 CAPITEC  2700012885.01.%211458
15 JDGROUP  25991194.80.%31850
16 CENRAND  13664.62.%114
17 PETMIN  17374.22.%756041
18 POYNTING  250104.17.%33236
19 NET1UEPS  130004953.96.%50
20 FORTRESSA  1720603.61.%229481

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Major Moves Down
SharenameSaleMove% MoveVolume
1 ELLIES   117-6-4.88.%454767
2 DELTA  385-15-3.75.%8000
3 TRNSHEX  320-12-3.61.%3656
4 DIGICOR  260-9-3.35.%139303
5 VUNANI  155-5-3.12.%16
6 ROCKWELL  320-10-3.03.%384
7 RHODES  1102-33-2.91.%29462
8 PAN-AF  210-6-2.78.%116114
9 LIFEHC  4090-113-2.69.%4634516
10 HARMONY  1926-50-2.53.%2502890
11 DRDGOLD  342-8-2.29.%174396
12 CONVERGE  230-5-2.13.%45581
13 MIXTEL  392-8-2.00.%271828
14 MAZOR  110-2-1.79.%122550
15 MRHLD  2284-39-1.68.%315607
16 RICHEMONT  9007-140-1.53.%9645828
17 ASTRAPAK  675-10-1.46.%17900
18 TRENCOR  6610-93-1.39.%106286
19 ADVTECH  789-11-1.38.%50737
20 WBHO  13150-179-1.34.%180571

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New Highs
SharenameSaleHighMove% MoveVolume
1 SANTOVA  2503003214.68.%767749
2 FORTRESSB  14101410906.82.%31139
3 CAPITEC  270002720612885.01.%211458
4 FORTRESSA  17201739603.61.%229481
5 TRUSTCO  20522563.02.%137119
6 HYPROP  952395502382.56.%194231
7 MRPRICE  22085223775352.48.%486448
8 ASPEN  37500377028502.32.%1017985
9 RESILIENT  803080971602.03.%516568
10 SUNINT  12603130002451.98.%104126
11 ARROW-B  820833151.86.%258973
12 VUKILE  17871797321.82.%412085
13 RMIH  37003737601.65.%1179419
14 EMIRA  16161619261.64.%209715
15 TIGBRANDS  32705329994851.51.%554179
16 CAPPROP  12581271181.45.%1530220

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New Lows
SharenameSaleLowMove% MoveVolume
1 HARMONY  19261921-50-2.53.%2502890
2 NORTHAM  33653201-9-0.27.%1287080

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Index Summary
Index NameRPMove% Move
Top 4043,181.63365.470.85%
Mid Cap64,606.92522.160.81%
Small Cap55,834.34557.781.01%
Resource 2047,962.91406.950.86%
Industrial 2558,293.22342.030.59%
Financial 1514,542.62237.931.66%
Financial & Ind. 3062,176.03497.110.81%
All Share48,460.93409.880.85%
Oil & Gas 41,636.90-39.35-0.09%
Mining 27,736.45282.581.03%
Gold Mining1,055.76-5.81-0.55%
Platinum Mining35.90.110.31%
GENERAL MINING8,280.24103.601.27%
Oil & Gas Producers 22,387.39-21.16-0.09%
Basic Materials 24,947.84263.501.07%
Chemicals 24,016.44-68.25-0.28%
Forestry & Paper 31,109.69510.931.67%
Industrial Metals 16,386.95323.782.02%
Industrials 45,898.62505.811.11%
General Industrials
Consumer Goods 58,666.42-112.88-0.19%
Automobiles & Parts 7,984.48217.392.80%
Household Goods376.08-0-0.02%
Health Care 9,580.6695.261.00%
Beverages 205.28.810.40%
Index NameRPMove% Move
Food Producers 8,274.8798.721.21%
Personal Goods 899.59-13.98-1.53%
Consumer Services 12,170.56126.651.05%
General Retailers 67,010.09850.811.29%
Travel & Leisure 6,136.4397.881.62%
Media 275.063.591.32%
Support Services 2,816.4027.660.99%
Telecommunications 11,448.22149.831.33%
Financials 38,074.02606.031.62%
Banks 65,737.161438.472.24%
Non-life Insurance 50,391.05786.091.58%
Life Insurance 35,644.32434.011.23%
General Financial 3,689.2635.350.97%
Technology 46,886.87845.671.84%
SHARIAH TOP40 3,827.98370.99%
FTSE/JSE SHARIAH ALL4,002.69340.86%
COAL MINING15,106.902201.48%
FTSE JSE Fledgling 6,522.41280.43%
FTSE/JSE Alt X 1,300.84120.90%
RESOURCE 26,091.592050.79%
DIVIDEND PLUS218.9321.11%
FTSE/JSE RAFI 409,387.08880.95%
Capped Top 4022,959.621970.86%
Capped All Share24,563.992080.85%
JSE TABACO 7,651.87100.13%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
29/10/2014CARAugust 2014 (Interim)
29/10/2014CILAugust 2014 (Final)
29/10/2014FREEDOMAugust 2014 (Interim)
29/10/2014IMUNITI-PAugust 2014 (Interim)
29/10/2014JUBILEEJune 2014 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
FAMBRANDS27/10/1428/11/1408/12/14ZAR 1.5500
OANDO27/10/1407/11/1417/11/14NGK 0.3000
MAS24/10/1407/11/1421/11/14EUR 0.0124
CLICKS23/10/1416/01/1526/01/15ZAR 1.3650
CMH22/10/1405/12/1415/12/14ZAR 0.3250
Ex Div**
Share NameDec-DateLDTPay-DateAmount
NTC PREF01/10/1424/10/1403/11/14ZAR 3.7651
EOH17/09/1424/10/1403/11/14ZAR 1.2000
PHUMELELA03/10/1424/10/1403/11/14ZAR 0.6000
BOWCALF29/09/1424/10/1403/11/14ZAR 0.1660
DCENTRIX07/10/1424/10/1403/11/14ZAR 0.0809

Upcoming AGMs**
CodeCompany NameDateStatus
ARTArgent Industrial Ltd.28/10/2014Confirmed
PNCPinnacle Holdings Ltd.28/10/2014Confirmed
IRAInfrasors Holdings Ltd.28/10/2014Confirmed
AFHAlexander Forbes Group Holdings Ltd.28/10/2014Confirmed
MRIMine Restoration Investments Ltd.29/10/2014Unconfirmed

Stock Exchange News Service
28/10/201417:45FOUNTAINHEAD PROPERTY TRUST - Changes to the board of directors
28/10/201417:45OLD MUTUAL PLC - Form 8.3 Disclosure
28/10/201417:30OLD MUTUAL PLC - Form 8.3 Disclosure
28/10/201417:27CARGO CARRIERS LIMITED - Trading Statement
28/10/201417:27OLD MUTUAL PLC - Form 8.3 Disclosure
28/10/201417:26OLD MUTUAL PLC - Form 8.3 Disclosure
28/10/201417:25OLD MUTUAL PLC - Form 8.3 Disclosure
28/10/201417:10DIGICORE HOLDINGS LIMITED - No Change Statement and Notice of Annual General Mee...
28/10/201417:08ATTACQ LIMITED - Dealings in securities by an associate of a director of Attacq
28/10/201417:07OCTODEC INVESTMENTS LIMITED - Finalisation of the Special Distributions payable ...
28/10/201417:00PINNACLE HOLDINGS LTD - Results of annual general meeting and change in director...
28/10/201416:45HYPROP INVESTMENTS LIMITED - Dealings in securities by an associate of a directo...
28/10/201416:05INDWA INVESTMENTS LIMITED - INA503-Listing of Tap Issue
28/10/201415:55SHOPRITE HOLDINGS LIMITED - Dealing in securities by a non-executive director
28/10/201415:19ASSORE LIMITED - No change statement and notice of annual general meeting
28/10/201415:13METROFILE HOLDINGS LIMITED - No change statement and notice of annual general me...
28/10/201415:00CAMAC ENERGY INCORPORATED - CAMAC to present at 21st Africa Oil Week conference
28/10/201414:58TRENCOR LIMITED - Trencors Textainer announces the pricing of US$301,4 million ...
28/10/201414:29SASFIN HOLDINGS LIMITED - No change statement and Notice of Annual General Meeti...
28/10/201414:15METROFILE HOLDINGS LIMITED - Dealing in securities by directors
28/10/201412:48SYNTHESIS FUNDING LIMITED - SY1187 - Synthesis Funding Limited - New Financial I...
28/10/201412:30DEUTSCHE BANK AG - Deutsche Bank AG - New Listing
28/10/201412:00SACOIL HOLDINGS LIMITED - Transaction Completion
28/10/201412:00TIMES MEDIA GROUP LIMITED - No Change Statement, Publication Of Integrated Annua...
28/10/201411:29ADAPT IT HOLDINGS LIMITED - Acquisition Of AspiviaUnison And Withdrawal Of Cauti...
28/10/201411:26REMGRO LIMITED - Dealing in securities by a director
28/10/201411:01NEWFUNDS COLLECTIVE INVEST SCHEME - RAFIND - Listing of additional Newfunds eRAF...
28/10/201410:00NEDBANK GROUP LIMITED - Pillar III Quarterly Report on Capital Adequacy at 30 Se...
28/10/201410:00KIBO MINING PLC - Positive Rukwa Definitive Mining Feasibility Study supports co...
28/10/201409:56MONEYWEB HOLDINGS LIMITED - Dealings in securities by a Director
28/10/201409:30MICROMEGA HOLDINGS LIMITED - Further Trading Statement
28/10/201409:30A E C I LIMITED - Presentations: AECIs strategy unpacked
28/10/201409:15NEWFUNDS COLLECTIVE INVEST SCHEME - NFSH40-Additional Listing of NewFunds Shari'...
28/10/201408:12BSI STEEL LIMITED - Changes to the composition of the Companys Audit Committee
28/10/201408:00SIBANYE GOLD LIMITED - Operating update for the quarter ended 30 September 2014
28/10/201408:00PRECINCT FUNDING 1 (RF) LTD - Interest rate reset - PRE1A1/2/3, PRE1B1, PRE1C1, ...
28/10/201408:00METMAR LIMITED - Unaudited interim financial results for the six months ended 31...
28/10/201408:00FERRUM CRESCENT LIMITED - Quarterly activities and cash flow report for period e...
28/10/201408:00GREENHOUSE FUNDING (RF) LIMITED - Interest rate reset - GRH1A1/2/3, GRH1B, GRH1C
28/10/201407:05FAMOUS BRANDS LIMITED - Appointment of non-executive director

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