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Wednesday, 06 July 2016 - 20:00
 
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Seed Weekly - Peer Groups acting as Benchmarks

The age old discussion surrounding benchmarks will carry on for as long as humans occupy this planet and have money available to invest. Are benchmarks set too low, making them very easy to beat? Are they set too high, making them hard to beat unless fund managers take on excessive risks? Is the frequency of assessment against the benchmark appropriate? In this weekly article we will be focusing on using peer groups as benchmarks and how they can add value to our investors.

The importance of peer groups can be argued endlessly. There will always be investors and investment managers who will argue that peer groups do not meet the complete investable benchmark criteria. Others will argue that we really do not know who has succeeded or failed because success against one peer group can easily be failure against another comparable peer group, so a manager can be both a success and a failure. Another possible disadvantage of peer groups is that they can mislead investors rather than inform them. The sell side knows how to deal with these problems: use the peer group that makes them look best and it’s the buy side (the investor) that suffers most from the problems with peer groups. Furthermore, the compensation of the fund manager typically depends solely on the value of assets under management, as more managers are moving away from a performance fee structure. Therefore, a fund manager’s bread and butter is not dependent on the value added by the fund manager, as there is typically no reward for outperforming the peer group benchmark and no penalty for underperforming these benchmarks.

Our view at Seed Investments is that although peer groups are not the perfect benchmark (if there is even such a thing as a perfect benchmark), peer groups have their place under the “benchmark sun”. Some asset managers take the position that they are going to disregard what other institutions are doing, and simply follow their own vision. This attitude ignores what may well be the best thinking on the topic. Some examples of herd behaviour in investing may exist, but in general, any sound asset manager takes their responsibilities seriously and is highly capable. These professionals have, as their responsibility, the task of thinking about what asset mix is best for their funds and then implementing it.

We believe in what we do, but every now and then we need to measure our performance against our peers to ensure that we have not wandered off and lost the plot completely. While it is good to follow your own ideas and dreams, it is important to respect the conclusions of generally well-informed and well-meaning peers. This does not mean you should not vary from the allocations of your peer group if your mandate or risk tolerance is different from theirs, but you will get in real trouble by thinking you don’t have peers when you most definitely do. Consequently, the long-term success of any fund management house in some way depends on its relative performance against its peer group.

At Seed Investments, we make use of peer groups as benchmarks across the range of our products. Below is a risk adjusted return graph of the Seed Balanced fund compared to the ASISA South African Multi Asset High Equity peer group. The graph illustrates that the Seed Balanced fund has achieved a higher return than the peer group average albeit at taking on a little more risk (standard deviation).

Figure 1: Risk Reward (Time period 01/07/2010 – 31/05/2016)

Source: Morningstar 29 June 2016

This is one of the graphs we use to compare our performance to the peer group. Seed will always, to the best of our ability and knowledge, use the most relevant peer group to compare our funds against. This will ensure that we keep track of our own progress without losing touch with our peer group and will give our clients peace of mind that they can compare our funds with the appropriate funds in the industry.

Kind regards,

Stephan van der Merwe

Tel +27 21 914 4966
Fax +27 21 914 4912
Email info@seedinvestments.co.za

Please click here to view our disclaimer. For more information please visit our website.

Wed, 06 Jul 2016
Top News
[IMAGE]
South African assets fell on Wednesday as risk appetite was subdued by renewed global fears over the economic impact of Britain's eventual departure from the European Union. At 1529 GMT the rand traded 0.6 percent weaker at 14.8410 versus the dollar, compared with Tuesday's close at 14.7550. "  Full story

[IMAGE]
Demand for above-inflation pay rises in South Africa look set to aggravate the central bank's big dilemma: how to keep a lid on inflation - usually by raising interest rates - without snuffing out already slow economic growth.  Full story
Zimbabweans stayed at home on Wednesday and foreign banks and most businesses in the capital shut down operations in one of the biggest protests against high unemployment, an acute cash shortage and corruption for nearly a decade.  Full story
South African Paralympic gold medallist Oscar Pistorius was sent back to jail for six years on Wednesday for murdering Reeva Steenkamp, less than half the 15 year minimum term sought by prosecutors.  Full story
At least six Yemeni troops and around 20 militant attackers were killed on Wednesday in an assault on a military base near the international airport of Yemen's southern city of Aden, security sources said.  Full story
 
SA Business
South Africa should not underestimate the risk of credit rating downgrades this year if the ailing economy does not improve, Central Bank Deputy Governor Daniel Mminele said on Wednesday.. . .  Full story
South Africa's economy is not growing fast enough to create jobs, but tax cuts or increases in public spending are unlikely to stimulate growth, a senior Treasury official said on Tuesday.. . .  Full story
South Africa's Eskom is paying too much for the coal it buys from one of Anglo American's mines and will shop around for a cheaper source, an executive at the power. . .  Full story

South Africa's business confidence index rose to 95.1 points in June from 91.8 in May, boosted by improvements in export volumes and approved building plans as well as lower inflation, a rebased survey showed on Tuesday.. . .  Full story
South Africa's ruling African National Congress said on Tuesday the public broadcaster, accused by opposition parties of pro-government bias as local elections approach, was practicing censorship by not broadcasting images of violent anti-state protests.. . .  Full story
Company News
Shareholders are advised that due to the extended closed periods into which voluntary quarterly update announcements continue to place the company. . .  Full story
Shareholders are referred to the notice convening the 70th annual general meeting (˘AGM÷) of the shareholders of Altron to be held. . .  Full story
Business Day reported that Attacq has announced a partnership with Equities Property Fund indicating that it appreciates Equities' specialised industrial management. . .  Full story
Shareholders of Imperial are referred to the Company announcement released on Stock Exchange News Service of the JSE Limited on 1. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0050811.66-858.50-1.66%
JSE Top 4017:0044501.22-829.71-1.83%
JSE Gold17:002710.27166.266.54%
JSE Financial17:0038377.41-1067.01-2.71%
JSE Industrial17:0076287.31-1404.19-1.81%
JSE Indust 2517:0068748.61-1280.32-1.83%
JSE Resource17:0030629.04-50.13-0.16%
DJ Futures19:5417792.0030.000.17%
DJ Ind20:0017871.0630.440.17%
SP 50020:002093.094.540.22%
Nasdaq20:004846.1123.210.48%
FTSE 10016:266444.24-101.13-1.55%
DAX18:089373.26-159.35-1.67%
CAC4018:084085.30-78.12-1.88%
Nikkei08:2815378.99-290.34-1.85%
Shanghai09:323017.2910.900.36%
Hang-Seng10:2820495.29-255.43-1.23%
All Ords08:385284.70-28.10-0.53%
NZSE 5009:026977.236.240.09%
NameTimeRPMove% Move
Gold $19:581367.8312.680.94%
Gold R20:0020150.05179.540.90%
Gold R/kg20:00647824-1218-0.19%
Silver $19:5820.11600.19500.98%
Platinum $19:581088.7319.901.86%
Palladium $19:57605.907.901.32%
R18617:418.820.000.00%
R20417:017.95-0.04-0.44%
R20716:578.18-0.02-0.30%
Brent Crude20:0048.50-1.34-2.69%
USD / ZAR19:5814.7314-0.0053-0.04%
GBP / ZAR19:4519.0284-0.1378-0.72%
EUR/ ZAR19:3016.36430.04860.30%
NZD/ ZAR19:5810.4931-0.0373-0.35%
AUD / ZAR19:3011.06900.07130.65%
USD / JPY19:58101.1990-0.5080-0.50%
EUR / USD19:581.10880.00240.22%
GBP / USD19:581.2915-0.0105-0.80%

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The JSE Today

Trading Statistics
DateAdv.Decl.Unch.ActivesVolumeValueTradesOrders
06/07/20168727255414333,030,043R26,299,680,5183078232545367
05/07/201611224950411284,488,033R21,368,831,1212555692404014
04/07/201620817156435219,781,136R14,562,287,4841866962087985
01/07/201619115276419291,075,890R20,045,351,7332698312778621
30/06/201624112848417332,765,708R26,046,295,076296629203542
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 YORK  2754017.02.%32500
2 KAYDAV  1301816.07.%9499
3 DRDGOLD  112514114.33.%3130139
4 HARMONY  64575789.83.%3316547
5 PAN-AF  424379.56.%4792100
6 LONMIN  46253939.29.%1142668
7 ANGGOLD  3030719346.82.%3170493
8 SIBANYE  57843145.74.%6451903
9 GFIELDS  81263965.12.%5527740
10 KIBO  11054.76.%11067
11 BOWCALF  1025454.59.%21098
12 Cognition  12554.17.%100000
13 INVICTA  53622064.00.%2140
14 METAIR  1968633.31.%71745
15 DIPULA-A  975252.63.%44000
16 SEREIT  2400451.91.%13035
17 MRPRICE  205593591.78.%1805593
18 HULAMIN  53991.70.%43947
19 THARISA  1065151.43.%27941
20 EMIRA  1424140.99.%942903

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Major Moves Down
SharenameSaleMove% MoveVolume
1 FINBOND  300-30-9.09.%4380
2 QUANTUMF  230-19-7.63.%94905
3 ONELOGIX  293-24-7.57.%2730
4 STENPROP  2130-157-6.86.%64224
5 NVEST  280-20-6.67.%30000
6 OCTODEC  2113-135-6.01.%97215
7 ARCMITTAL  800-50-5.88.%279639
8 PETMIN  113-7-5.83.%568194
9 BRAIT  12450-757-5.73.%1837409
10 CIL  2551-151-5.59.%531228
11 TRADEH  2700-159-5.56.%7585
12 TRANSCAP  1077-62-5.44.%185988
13 BIDCORP  26250-1390-5.03.%1325608
14 IMPERIAL  13778-710-4.90.%1595899
15 NEPI  15600-787-4.80.%982178
16 BELL  1025-50-4.65.%53900
17 ROCKCASTL  3340-158-4.52.%1627966
18 CURRO  3566-169-4.52.%1291823
19 GRINDROD  1098-51-4.44.%420922
20 CAPCO  5022-228-4.34.%6473645

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New Highs
SharenameSaleHighMove% MoveVolume
1 DRDGOLD  1125112814114.33.%3130139
2 HARMONY  645765495789.83.%3316547
3 PAN-AF  424432379.56.%4792100
4 ANGGOLD  303073069919346.82.%3170493
5 GFIELDS  812682183965.12.%5527740
6 BATS  9370098739-2711-2.81.%1222101

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New Lows
SharenameSaleLowMove% MoveVolume
1 CAPCO  50224986-228-4.34.%6473645
2 INVPLC  81988198-286-3.37.%5503818
3 RIPLC  789783-26-3.19.%1128163
4 INTUPROP  50014994-154-2.99.%4718753
5 INVLTD  82478232-253-2.98.%1142434
6 WOOLIES  77517695-204-2.56.%5421843
7 RICHEMONT  82698209-190-2.25.%4761208
8 CAPREG  1100959-16-1.43.%6178

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Index Summary
Index NameRPMove% Move
Top 4044,501.22-829.71-1.83%
Industrial76,287.31-1404.19-1.81%
Mid Cap74,657.96-590.01-0.78%
Small Cap58,950.61-723.04-1.21%
Resource 2030,629.04-50.13-0.16%
Industrial 2568,748.61-1280.32-1.83%
Financial 1513,795.10-402.26-2.83%
Financial & Ind. 3070,304.78-1508.98-2.10%
All Share50,811.66-858.50-1.66%
Oil & Gas 7,195.69.000.00%
Mining 23,126.52138.830.60%
Gold Mining2,710.27166.266.54%
Platinum Mining26.75.260.98%
GENERAL MINING5,369.62-103.04-1.88%
Oil & Gas Producers 38,689.88.000.00%
Basic Materials 21,865.44-1.16-0.01%
Chemicals 19,731.50-231.44-1.16%
Forestry & Paper 46,251.89-809.72-1.72%
Industrial Metals 8,342.85-123.28-1.46%
Industrials 43,038.57-1131.63-2.56%
General Industrials 165.70-4.56-2.68%
Consumer Goods 73,034.19-1041.15-1.41%
Automobiles & Parts 4,456.45142.663.31%
Household Goods549.23-13-2.28%
Health Care 10,069.45-86.47-0.85%
Beverages 283.74-.70-0.25%
Index NameRPMove% Move
Food Producers 9,110.83-150.07-1.62%
Personal Goods 825.88-18.97-2.25%
Consumer Services 17,554.00-408.81-2.28%
General Retailers 7,300.17-104.23-1.41%
Travel & Leisure 5,942.17-26.51-0.44%
Media 459.84-11.28-2.39%
Support Services 2,177.64-20.90-0.95%
Telecommunications 7,703.26-173.41-2.20%
Financials 38,377.41-1067.01-2.71%
Banks 6,127.86-176.05-2.79%
Non-life Insurance 56,322.41-847.34-1.48%
Life Insurance 35,373.41-1047.66-2.88%
General Financial 3,857.88-137.30-3.44%
Technology 49,118.13-1135.85-2.26%
SHARIAH TOP40 3,014.20-29-0.96%
FTSE/JSE SHARIAH ALL3,381.95-21-0.62%
COAL MINING8,416.88-305-3.49%
FTSE JSE Fledgling 7,182.7440.06%
FTSE/JSE Alt X 1,490.06-25-1.64%
SA LISTED PROPERTY 631.85-13.76-2.13%
CAPPED PROPERTY 524.45-2.35%
RESOURCE 17,446.40-1-0.01%
DIVIDEND PLUS192.35-4-2.06%
FTSE/JSE RAFI 409,189.54-156-1.66%
Capped Top 4023,700.74-457-1.89%
Capped All Share25,927.26-442-1.68%
JSE TABACO 11,973.21-346-2.81%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
FSRFIRSTRAND LIMITEDHOLD05/07/2016
SGLSIBANYE GOLD LIMITEDHOLD04/07/2016
MNDMONDI LIMITEDBUY04/07/2016
BVTTHE BIDVEST GROUP LIMITEDHOLD04/07/2016
S32SOUTH32 LIMITEDHOLD04/07/2016
Results Expected**
ExpectedCompany NameFin. Date
08/07/2016ANGLDMarch 2016 (Q)
08/07/2016ANGLD-AMarch 2016 (Q)
08/07/2016ANGLD-BMarch 2016 (Q)
08/07/2016ANGLD-EMarch 2016 (Q)
08/07/2016TAWANADecember 2015 (Final)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
HUDACO01/07/1608/08/1615/08/16ZAR 1.7000
TELEMASTR30/06/1619/07/1625/07/16ZAR 0.0050
AEG CONV30/06/1619/07/1625/07/16ZAR 362.5000
ILRPREF130/06/1619/07/1625/07/16ZAR 14.5978
ILPREF230/06/1619/07/1625/07/16ZAR 14.5978
Ex Div**
Share NameDec-DateLDTPay-DateAmount
IVT PREF10/06/1601/07/1611/07/16ZAR 6.3093
FAMBRANDS30/05/1601/07/1611/07/16ZAR 2.1500
ECSP C17/06/1601/07/1611/07/16ZAR 1.1123
ECSP C217/06/1601/07/1611/07/16ZAR 1.1123
ECSP B1217/06/1601/07/1611/07/16ZAR 1.1123

Upcoming AGMs**
CodeCompany NameDateStatus
GAMGlobal Asset Management Ltd.13/07/2016Confirmed

Stock Exchange News Service
DateTimeHeadline
06/07/201617:39THE THEKWINI FUND 9 (RF) LIMITED - Redemption of Notes
06/07/201617:32THE THEKWINI FUND 9 (RF) LIMITED - Notice of Noteholders Meeting
06/07/201617:30FREEDOM PROPERTY FUND LIMITED - Renewal of cautionary announcement
06/07/201617:20ASHBURTON MANAGEMENT COMPANY RF (PTY) LIMITED - Re-balancing of fund
06/07/201617:20ASHBURTON MANAGEMENT COMPANY RF (PTY) LIMITED - Re-balancing of fund
06/07/201617:20ASHBURTON MANAGEMENT COMPANY RF (PTY) LIMITED - Re-balancing of fund - ASHT40
06/07/201617:05JSE LIMITED - CBH offer to acquire the entire ordinary share capital of Sovereig...
06/07/201617:00NASPERS LIMITED - Dealings in securities by director
06/07/201616:14INVICTA HOLDINGS LIMITED - Notification in terms of section 122(3) of the Compan...
06/07/201616:12GLOBE TRADE CENTRE S.A. - Approval of the secondary listing of the shares in Glo...
06/07/201615:45TRANSNET SOC LIMITED - TSP214;TSP215 Short Term Issue
06/07/201615:35BSI STEEL LIMITED - dealing in securities
06/07/201615:15IVUZI INVESTMENTS LIMITED - IVA640-New Instrument Listing
06/07/201615:05OLD MUTUAL PLC - Form 8.3 - Public Opening Position Disclosure - RPC Group Plc
06/07/201615:04ABSA BANK LIMITED - ASN138 - Interest Rate Reset
06/07/201614:56ABSA BANK LIMITED - ASN132 - Interest Rate reset
06/07/201614:55OLD MUTUAL PLC - Form 8.3 - Public Opening Position Disclosure - Deutsche Boerse...
06/07/201614:49ABSA BANK LIMITED - ASN132 - Interest Rate Reset
06/07/201614:45ABSA BANK LIMITED - ASN111 - Interest Rate reset
06/07/201614:44ABSA BANK LIMITED - ASN084 - Interest Rate Reset
06/07/201614:25ABSA BANK LIMITED - ASN081 - Interest Rate Reset
06/07/201614:20ABSA BANK LIMITED - ASN066 - Interest Rate Reset
06/07/201614:06ABSA BANK LIMITED - ASN006 - Interest Rate Reset
06/07/201614:00REDINK RENTAL (RF) LIMITED - RED203 - New Financial Instrument Listing
06/07/201614:00REDINK RENTAL (RF) LIMITED - RED202 - New Financial Instrument Listing
06/07/201614:00MIDDLE EAST DIAMOND RESOURCES LIMITED - Corrective announcement regarding the pr...
06/07/201612:45EASTERN PLATINUM LIMITED - Eastplats Announces Results Of Shareholder Meeting, P...
06/07/201612:39TRUSTCO GROUP HOLDINGS LIMITED - Cessation of voluntary quarterly update announc...
06/07/201612:00LODESTONE REIT LIMITED - Dealings in securities by an associate of a director of...
06/07/201611:59ABSA BANK LIMITED - ASN157 - New Financial Instrument Listing
06/07/201611:15ALLIED ELECTRONICS CORPORATION LIMITED - Withdrawal of resolution re-electing Mr...
06/07/201610:40SATRIX COLLECTIVE INVESTMENT SCHEME - Partial Delisting of Satrix 40 Securities ...
06/07/201610:30SIRIUS REAL ESTATE LIMITED - Appointment Of Non-Executive Director
06/07/201609:59INVESTEC BANK LIMITED - The issue of Hot Enhanced Dividend Securities - BTIIHF, ...
06/07/201609:33IMPERIAL HOLDINGS LIMITED - Acquisition by Imperial of Palletways Group Limited ...
06/07/201609:30STANDARD BANK OF SOUTH AFRICA LD - SCIB: The Standard Bank Of South Africa - iss...
06/07/201609:27NU-WORLD HOLDINGS LIMITED - Disclosure of an acquisition of securities
06/07/201609:00SABMILLER PLC - Rule 2.10 announcement
06/07/201608:53REDEFINE PROPERTIES LIMITED - Interest Rate Reset: RDFC26
06/07/201608:43TAWANA RESOURCES NL - Request for Trading Halt
06/07/201608:00COMAIR LIMITED - Further Renewal Of Cautionary Announcement

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