1. The Senate Group
The role of tax managed funds
in financial planning
15 November 2012
2. We design tax managed income funds
that perform reliably and increase after-
tax returns for employed and retired
individuals, companies and trusts.
1
3. WHERE COULD YOU USE OUR EXPERTISE?
Enhance financial planning for
high net worth individuals & trusts.
Offer solutions for companies.
2
4. WE WILL COVER
• Who we are and what we do
• The opportunity for you
• The challenge
• The solution
• Funds we offer
• The solution for you
• How to access our funds
3
6. WHO WE ARE
• Independent, specialist fund manager
• Pioneers of tax managed funds in South Africa
• Only external manager of Sanlam funds
• Highly experienced and established management team
5
7. WHO WE ARE
Ora/Sanlam has the largest market share
Grindrod, BOE,
Gryphon,
1.77% 1.36%
Fund Size (Rm)
2.35%
Coronation,
3.24%
Sanlam Alternative Income Fund 7 508
Personal Trust, Old Mutual High Yield Opportunity Fund 2 150
5.12%
Satrix DIVI Fund 1 641
Allan Gray,
6.68% Nedgroup Investments Optimal Income Fund 1 246
Allan Gray Optimal Fund 1 182
Personal Trust High Yield Growth Fund 907
Satrix,
7.04%
Sanlam Dividend Income Fund of Funds 810
Grindrod Diversified Preference Share Fund 416
Sanlam Stable Growth Fund 403
Sanlam,
51.02%
Coronation Optimal Income Fund 356
Nedgroup
Investments,
9.27%
Gryphon Dividend Income Fund 314
Sanlam Optimised Income Fund 309
BOE Preference Share Fund 240
Old Mutual, Coronation Preference Share Fund 218
12.15%
Total 17 701
Includes funds that are larger than R200m, as at September 2012, with more than 50% invested in tax efficient instruments (based on exposures from respective fund factsheets).
6
8. WHO WE ARE
Our team
Caylin Christelle Esther Eugene Ian Ian
Conradie Olivier von Maltitz Goosen Donovan Groenewald
Marketing & Personal Portfolio Portfolio Director Director &
CRM Assistant Analyst Manager CEO
Inghe Mark Ockert Shirley Tienie van Wayne Wynand
Schneider Pryce Goosen Rademeyer der Mescht Liebenberg Marais
Sales & Portfolio Director & Sales & Non- Distribution Portfolio
Marketing Manager Portfolio Marketing Executive Manager Administrator
Manager Director
7
10. THE OPPORTUNITY FOR YOU
International trend
• Growing awareness that pre-tax analysis is not adequate.
• SEC (US equivalent of FSB) has required publication of pre-tax and
after-tax returns since 2001.
“We are concerned that the millions of mutual fund investors
who are subject to current taxation may not fully appreciate the
impact of taxes on their fund investments…”
• The demand for tax managed funds is growing internationally.
Source of quote: http://www.sec.gov/rules/final/33-7941.htm
9
11. THE OPPORTUNITY FOR YOU
Be ahead of the trend
• Consider after-tax analysis
• Appropriate use of tax managed income funds
• Create unique income focused solutions for your:
• High net worth individuals,
• Trusts and
• Corporate clients
Treat Customers Fairly (TCF)
10
12. THE OPPORTUNITY FOR YOU
Appropriate use of tax managed funds
Income Growth
Tax rates
Interest and Rental Dividends Capital Gains
Individuals 40% 15% 13.33%
Trusts 40% 15% 26.64%
Companies 28% 0% 18.66%
Focus Income Income & Growth Growth
Choice of
High Medium Low
investments
Efficiency of tax
managed funds
11
16. THE SOLUTION
SOLUTION:
Don’t combine pre-tax and after-tax.
Offer separate income solutions for
Discretionary Compulsory
Savings Savings
15
17. THE ORA SOLUTIONS
We offer unique tax managed income focused funds
Conservative Cautious Moderate Aggressive
RETURN E quity
Growth
OUR BUILDING BLOCKS:
P roperty
v
4
Income &
Sanlam Stable
Growth
Growth Fund
Income v
3
Sanlam Optimised
4
Income Fund
3
E nhanced
2 C ash
Sanlam Dividend M oney
Income Fund of Funds M arket
Income
2
1
Sanlam Alternative 1
Income Fund
RISK
Pre-tax funds After-tax After-tax
(compulsory funds returns of
savings) (discretionary pre-tax funds
savings)
16
19. THE SOLUTION FOR YOU
2% 3% 5%
Volatility Volatility Volatility
Sanlam Sanlam
Sanlam Stable
Optimised Optimised
Growth Fund
Income Fund Income Fund
55%
35% 43%
Coronation
Sanlam Stable Satrix Dividend
Optimal Income
Growth Fund Plus Portfolio
Fund
37% 35%
33%
Sanlam
Sanlam Stable Satrix Dividend
Optimised
Growth Fund Plus Portfolio
Income Fund
30% 20%
10%
PSG Preferred
Dividend Fund
2%
Notes: Fee classes used for solutions (excl. VAT)
Sanlam Optimised Income Fund 0.40%
Sanlam Stable Growth Fund 0.80%
Coronation Optimal Income Fund 0.85%
18 PSG Preferred Dividend Fund 0.85%
22. FUNDS WE OFFER
• Funds with different risk and after-tax reward profiles.
Sanlam Stable Growth Fund
RETURN
Sanlam Optimised Income Fund
Sanlam Dividend Income Fund of Funds
Sanlam Alternative Income Fund
RISK
Conservative
Cautious
21
23. FUNDS WE OFFER
Sanlam Sanlam Dividend Sanlam
Sanlam Stable
Alternative Income Optimised
Growth Fund
Income Fund Fund of Funds Income Fund
Individuals who have Individuals who have Individuals who have Individuals who have
used their interest used their interest used their interest used their interest
exemption, companies exemption, companies exemption, companies exemption, companies
Target client and trusts who would like and trusts who would like and trusts who would like and trusts who would like
a higher after-tax return a higher after-tax return a higher after-tax return a higher after-tax return
than money market than enhanced cash than listed pref or than absolute return
funds. funds. income funds. funds.
Fund size:
R7 508m R810m R309m R403m
September 2012
SAIF by 1% over any 1 SAIF by 2% over any 1 SAIF by 3% over any 1
Target to Money market funds by
year period, after-tax year period, after-tax year period, after-tax
outperform 1% after tax.
basis. basis. basis.
Redeemable prefs
Redeemable prefs: 85%- High dividend and high
SAIF: 75% (incl. corporate prefs):
90% liquidity listed shares: 80%
40%
Investment
Listed perpetual prefs:
mandate Hedging: 60% -100%
Money market funds: 40%
Income and
10%-15% money market funds: 25% Income and Cash and
money market funds: 20% money market funds: 20%
Risk profile Conservative Conservative Cautious Cautious
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24. FUNDS WE OFFER
Sanlam Sanlam Dividend Sanlam
Sanlam Stable
Alternative Income Optimised
Growth Fund
Income Fund Fund of Funds Income Fund
Rated AA- (zaf) by Fitch
Ratings. Available via Glacier. Available via Glacier.
Liquid investments.
Unique features Liquid investments. Lower volatility than
Stable unit price (no Low TER and volatility. listed pref funds.
CGT).
After-tax return of SIM After-tax return of SIM After-tax return of STeFI After-tax return of STeFI
Benchmark
Money Market Fund Money Market Fund Composite Index Composite Index
Launch date May 2007 March 2009 October 2011 August 2012
48 hours
30 days’ notice for
Liquidity 24 hours 48 hours 48 hours
repurchases greater than
R5million
Annual management
0.85% 0.75% 1.15% 1.17%
fee, excl. VAT
Annual trailer fee
included, 0.25% 0.25% 0.35% 0.35%
excl. VAT
23
26. FUNDS WE OFFER
Sanlam Alternative Income Fund (SAIF)
• SAIF has the lowest risk-return profile
Sanlam Stable Growth Fund
RETURN
Sanlam Optimised Income Fund
Sanlam Dividend Income Fund of Funds
Sanlam Alternative Income Fund
RISK
Conservative
Cautious
25
27. FUNDS WE OFFER: SAIF
Fund objective
The objective of the fund is to offer a
liquid, mainly dividend
yielding investment that will track the
South African short-term
interest rate cycle.
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28. FUNDS WE OFFER: SAIF
Investment mandate
Money
Redeemable
market
prefs SAIF
funds
85%-90%
10%-15%
• No exposure to
• Non-cumulative or fixed rate preference shares
• Perpetual preference shares
• Swap transactions
• Structured redeemable preference shares
27
29. FUNDS WE OFFER: SAIF
Key fund facts
• Stable unit price (no CGT)
• External rating of AA–(zaf) by Fitch Ratings
• Low capital risk (high quality, variable rate investments only)
• 24 Hour liquidity
• Returns
• Mainly in the form of dividends and some interest
• Will track short term interest rates
• Monthly income distributions
• Conservative risk profile
• Benchmark: after tax return of SIM Money Market Fund
28
30. FUNDS WE OFFER: SAIF
Invested in highly rated SA financial services
companies
Investment Portfolio 30 September 2012
Nedbank Limited 19.76%
Sanlam Limited 16.68%
FirstRand Limited 12.46%
Preference
shares Standard Bank of South Africa Limited 9.29%
Nedbank Group Limited 9.02%
ABSA Bank Limited 7.96%
Investec Bank Limited 7.96%
SIM Money Market Fund 11.34%
Cash &
money Standard Bank Corporate Money Market Fund 4.88%
market funds
Standard Bank Cash Account 0.46%
Investec Money Market Fund 0.21%
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31. FUNDS WE OFFER: SAIF
Liquidity profile
< 48 hours
48 hours to 30 days
31 days to 90 days
91 days to 12 months
> 12 months
0% 5% 10% 15% 20% 25% 30%
30
32. FUNDS WE OFFER: SAIF
Indicative returns – 31 October 2012
Sanlam Alternative Income Fund
B1 (0.85% Annual Management Fee)
Effective 7 day rolling average
Net Fund Return 4.39%
Interest 0.27%
Dividends 4.13%
Capital Gain n/a
COMPANY INDIVIDUAL
Tax 0.23% -0.42%
Income tax -0.07% -0.11%
DWT n/a -0.31%
CGT n/a n/a
Benefit of STC credit portion 0.31% n/a
Total After Tax Return 4.63% 3.98%
Pre Tax Equivalent Return 6.43% 6.63%
SIM Money Market Fund Return 5.03% 5.03%
Pre Tax Yield Pick-Up 1.40% 1.60%
31
33. FUNDS WE OFFER: SAIF
Performance – Individuals
SAIF compared to Benchmark
6.00%
5.50%
5.00% SAIF After Tax
4.50%
SIM MMF After
Tax
(Benchmark)
4.00%
3.50%
3.00%
32 Effective 7 day rolling returns, net of fees.
34. FUNDS WE OFFER: SAIF
Performance – Companies
SAIF compared to Benchmark
6.20%
5.70%
SAIF After Tax
5.20%
SAIF After Tax &
STC
SIM MMF After
Tax (Benchmark)
4.70%
4.20%
3.70%
33 Effective 7 day rolling returns, net of fees.
35. FUNDS WE OFFER
Sanlam Dividend Income Fund of Funds (SDIFoF)
34
36. FUNDS WE OFFER
Sanlam Dividend Income Fund of Funds (SDIFoF)
Sanlam Stable Growth Fund
RETURN
Sanlam Optimised Income Fund
Sanlam Dividend Income Fund of Funds
Sanlam Alternative Income Fund
RISK
Conservative
Cautious
35
37. FUNDS WE OFFER: SDIFoF
Fund objective
The objective of the fund is to offer a low
risk, liquid,
mainly dividend yielding investment
that will substantially track the South
African
short-term interest rate cycle.
36
38. FUNDS WE OFFER: SDIFoF
Investment mandate
Income and
money
SAIF
market SDIFoF
75% funds
25%
• No exposure to equity funds
37
39. FUNDS WE OFFER: SDIFoF
Key fund facts
• Low volatility (only 25% income fund exposure)
• Highly liquid investments
• Low TER
• 48 Hour liquidity
• Returns
• Mainly in the form of dividends with some capital gains and interest
• Will track short term interest rates
• Monthly income distributions
• Target to outperform SAIF by 1% over any 1 year period
• Conservative risk profile
• Benchmark: after tax return of SIM Money Market Fund
38 • Available via Glacier
40. FUNDS WE OFFER: SDIFoF
Investment portfolio
Investment Portfolio 30 September 2012
Sanlam Alternative Income Fund 73.81%
Standard Bank Corporate Money Market Fund 8.65%
SIM Money Market Fund 6.97%
Coronation Strategic Income Fund 4.45%
Coronation Money Market 3.72%
SIM Active Income Fund 1.23%
Stanlib Income Fund 1.16%
Cash 0.02%
39
42. FUNDS WE OFFER: SDIFoF
Indicative returns – 31 October 2012
Sanlam Dividend Income Fund of Funds
A3 (0.75% Annual Management Fee)
Effective 3 month rolling average
Net Fund Return 4.64%
Interest 0.40%
Dividends 2.92%
Capital Gain 1.32%
COMPANY INDIVIDUAL
Tax -0.13% -0.54%
Income tax -0.11% -0.16%
DWT n/a -0.21%
CGT -0.25% -0.18%
Benefit of STC credit portion 0.23% n/a
Total After Tax Return 4.51% 4.10%
Pre Tax Equivalent Return 6.27% 6.83%
SIM Money Market Fund Return 5.21% 5.21%
Pre Tax Yield Pick-Up 1.06% 1.62%
41
43. FUNDS WE OFFER: SDIFOF
Performance – Individuals
SDIFoF compared Benchmark
5.50%
5.00%
SDIFoF After-Tax
4.50%
SIM MMF After-Tax
(Benchmark)
4.00%
3.50%
3.00%
Effective 3 month rolling returns, net of fees.
42
45. FUNDS WE OFFER:
Sanlam Optimised Income Fund (SOIF)
Sanlam Stable Growth Fund
RETURN
Sanlam Optimised Income Fund
Sanlam Dividend Income Fund of Funds
Sanlam Alternative Income Fund
RISK
Conservative
Cautious
44
46. FUNDS WE OFFER: SOIF
Fund objective
The objective of the fund is to offer an
optimised total return by
focusing on maximising after tax income
and capital returns,
while actively managing downside risk.
45
47. FUNDS WE OFFER: SOIF
Investment mandate
Income and
Redeemable Perpetual money
prefs (incl. prefs market SOIF
corporate) funds
40% 40%
20%
46
48. FUNDS WE OFFER: SOIF
Key fund facts
• Lower volatility than listed pref funds
• 48 Hour liquidity
• Investments >R5m (30 days’ notice)
• No exit fee
• Returns
• Mainly in the form of dividends and some capital gains and interest
• Will track medium term interest rates
• Monthly income distributions
• Target to outperform SAIF by 2% over any 1 year period
• Cautious risk profile
• Benchmark: 60% of STeFI Composite Index
47
• Available via Glacier
49. FUNDS WE OFFER: SOIF
Investment portfolio
Investment Portfolio 30 September 2012
Redeemable Steinhoff International Holdings Ltd* 8.71%
preference Nampak Ltd* 8.16%
shares Ned Investment Trust 6.49%
23.36%
Standard Bank Group Ltd 9.53%
First Rand Ltd 9.66%
Listed ABSA Bank Ltd 4.94%
preference
shares Nedbank Ltd 5.71%
Investec Ltd 3.55%
PSG Group Ltd 1.62%
35.02%
Cash 2.69%
Stanlib Income Fund 0.66%
Coronation Strategic Income Fund 5.59%
Income funds, 5.34%
Coronation Money Market Fund
money market
funds & cash Standard Bank Corporate Money Market Fund 13.91%
SIM Active Income Fund 0.60%
Sanlam Alternative Income fund 2.63%
SIM Money Market Fund 10.20%
41.62%
* Redeemable preference share covered by listed shares.
48
50. FUNDS WE OFFER: SOIF
Liquidity profile
< 48 hours
48 hours to 30 days
31 days to 90 days
91 days to 12 months
> 12 months
0% 10% 20% 30% 40% 50%
49
51. FUNDS WE OFFER: SOIF
Indicative returns – 31 October 2012
Sanlam Optimised Income Fund
B1 (1.15% Annual Management Fee)
1 Year returns
Net Fund Return 6.42%
Interest 0.41%
Dividends 4.59%
Capital Gain 1.43%
COMPANY INDIVIDUAL
Tax 0.02% -0.64%
Income tax -0.11% -0.16%
DWT n/a -0.29%
CGT -0.27% -0.19%
Benefit of STC credit portion 0.40% n/a
Total After Tax Return 6.44% 5.78%
Pre Tax Equivalent Return 8.95% 9.63%
STeFI Composite Index 5.62% 5.62%
Pre Tax Yield Pick-Up 3.32% 4.01%
50
56. FUNDS WE OFFER:
Sanlam Stable Growth Fund (SSGF)
Sanlam Stable Growth Fund
RETURN
Sanlam Optimised Income Fund
Sanlam Dividend Income Fund of Funds
Sanlam Alternative Income Fund
RISK
Conservative
Cautious
55
57. FUNDS WE OFFER: SSGF
Fund objective
The objective of the fund is to create long
term stable growth.
56
58. FUNDS WE OFFER: SSGF
Investment mandate
Cash and
Hedged money
equity market funds SSGF
80%
20%
• Share selection criteria
• Universe: Top 70
1. High dividend yields
2. High liquidity
• Hedging
• Share in positive movement
• Protect against negative market movement
• Net equity exposure: 0%-30%
57
59. FUNDS WE OFFER: SSGF
Key fund facts
• Share selection with input from Sanlam Investment Management
• Hedging done by specialists (Sanlam Structured Solutions)
• Highly liquid investments
• 48 Hour liquidity
• Returns
• Mainly in the form of capital gains and dividends with some interest
• Driven by a combination of medium term interest rates and the
performance of high dividend yielding shares
• Bi-annual income distributions
• Target to outperform SAIF after-tax by 3% over any 1 year period
• Cautious risk profile
• Benchmark: 60% of STeFI Composite Index
58
60. FUNDS WE OFFER: SSGF
Investment portfolio
Investment Portfolio 30 September 2012
Cash and SIM Money Market Fund 14.94%
money market
funds Cash 4.43%
Other Equity 34.30%
SAB Miller PLC 6.32%
MTN Group Ltd 5.83%
Naspers Ltd 5.54%
Hedged Compagnie Financiare Richemont SA 5.22%
equity
Kumba Iron Ore Ltd 4.77%
British Amercian Tobacco PLC 4.73%
Sanlam Ltd 4.67%
Woolworths Holdings Ltd 4.65%
The Bidvest Group Ltd 4.61%
59
64. HOW TO ACCESS OUR FUNDS
Sanlam Glacier
SAIF
SDIFoF SDIFoF
SOIF SOIF
SSGF
63
65. CONTACT
Fund queries
Wayne Liebenberg
021 941 1889
waynel@orafunds.co.za
Client queries
Caylin Conradie
021 941 1891
caylinc@orafunds.co.za
Transactions and statements
High Net Worth Department
086 010 4949
highnetworth@sci.sanlam.com
LISP Investments
Glacier Contact Centre
021 917 9002
client.services@glacier.co.za
Or speak to your consultant.
64
67. DISCLAIMER
The information contained in this document (together with any opinions expressed or further
information provided in connection with this document) is of a general nature and provided
for illustrative purposes. It does not address the circumstances of any particular person or
entity and it is not a recommendation or advice in relation to any transaction or investment.
In making this information available, we are not purporting to act in any way as an advisor or
in a fiduciary capacity. No one should rely on any of this information without appropriate
advice from an independent financial adviser, based on a thorough investigation of the
investor’s specific circumstances.
While we have taken care to ensure that the information is accurate and not misleading, Ora
Fund Managers (Pty) Ltd (Ora) makes no representations or warranties of any kind with
respect to its accuracy, completeness or correctness. The information is provided on the clear
understanding that Ora will not be held liable or responsible for any loss or damages that may
be suffered by any person or entity as a result of that party placing reliance on or failing to
act on any of the information provided.
66
68. NOTICE
The information in this document is proprietary to Ora and is not to be reproduced,
distributed, published or used for any purpose other than the evaluation of any proposal contained
in the document, except with the prior written permission of a director of Ora.
Ora is an authorised financial services provider.
Ora has entered into a co-asset management mandate with Sanlam Collective Investments Limited (SCI) and during the
preceding 12 month period, Ora earned more than 30% of its total remuneration from SCI in respect of this mandate.
The authorised representatives of Ora for purposes of this presentation are:
• Wayne Liebenberg
• Ian Groenewald
• Shirley Rademeyer
Directors: OJ Goosen, I Groenewald, IA Donovan, A du Preez, GC Swanepoel (alt)
Address: 3rd Floor, Mettle Building, Willie van Schoor Avenue, Bellville, 7530
FSP Number: 42968
More information about Ora Fund Managers (Pty) Ltd may be found at www.orafunds.co.za
67
69. NOTES TO INDICATIVE RETURNS
• Notes
• Net Fund Returns are net of fees and gross of tax.
• SOIF dividends includes dividends already declared and dividends to be declared. Assumption made that dividends to be declared will be grossed up.
• Capital gains tax is only for illustrative purposes and is calculated on the assumption that the investor invested funds at the exact same time and
date as the period stated above.
• Capital Gains Tax will differ for each investor.
• Assuming an individual tax rate of 40%, a corporate tax rate of 28% and a dividends tax rate of 15%.
• The returns for Company investments assume that Sanlam Collective Investments received a dividend tax exemption form.
• After 1 April 2012, dividends are received in the form of either dividends with STC credits (not subject to DWT) or a grossed up dividend subject to
DWT. Therefore, a STC benefit is calculated on dividends with STC Credits received, as the DWT exemption benefit is passed on to shareholders.
• The value of the units can go down or up. Past returns are in no way an indication of future returns.
• The quoted annual management fees are exclusive of VAT.
• These unit trusts are co-managed by Ora Fund Managers (Pty) Ltd.
• The returns were obtained from Sanlam Collective Investments.
68
