January 31, 2018
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‘Overall, this project is a win-win for investors and financial advisers.’ Derrick Msibi, STANLIB CEO
As communicated in December 2017, we have decided to simplify our fund offering. In response to investor needs, we are proposing to amalgamate several funds and amend some of the investment policies under the STANLB Collective Investment Scheme.
Investor activities in STANLIB’s unit trust funds in the last few years have signaled specific trends in the marketplace. We need to act on these trends for the benefit of our investors and their financial advisers.
A review of our products identified 15 unit trust funds that align with our guidelines for optimisation. These guidelines include keeping abreast of our investors’ needs, adapting to changing trends, treating our customers fairly and reducing the fixed costs of our funds.
Investors’ needs have changed from style-based, such as a capital growth objective, and sector-based funds mining, resources, industrial and financial for example, to general equity funds. This is largely attributed to market expectations that fund managers have the necessary skill and expertise to decide on behalf of their clients which style or sector to invest or disinvest in.
Looking at asset flows shows us that most investors prefer investing in the US dollar compared to the euro.
We have decided that the full range of funds for global currencies will only be offered on foreign-denominated funds. We are proposing that the STANLIB Euro Currency Fund of Funds merge with the STANLIB US Dollar Currency Fund of Funds.
We are also merging some funds that have similar objectives and investment philosophies. This will give investors more focused options and economies of scale benefits such as fixed trading costs over a larger investor base. We took specific care to ensure the choice of funds to be merged does not change the risk exposure and opportunity for growth for investors.
The matrix below shows the funds to be closed and which funds they will be merged with, and the reasons for the change.
The proposed changes enable STANLIB to remove overlapping mandates, allowing for more focus on performance across fewer funds.
Investors are the reason we exist. The benefits for our investors include a simpler investment offering and improved performance in the destination funds. Fixed trading costs will be shared over a larger investor base, which will reduce investment charges payable for each investor.
Financial advisers play an important role in advising their customers to invest wisely. The optimisation will greatly assist their efforts by removing duplication of funds with similar objectives and investment approaches.
Overall, this project is a win-win for investors and financial advisers.
The balloting process
We are pleased to announce that we are on track with the balloting process. All ballots were distributed to impacted investors in the first week of January 2018.
The ballot process will close on 12 February 2018 after which all responses will be audited. The effective date of the proposed changes is 23 March 2018.
Should investors not agree with the proposed optimisation they may elect, at any time, to switch their investment to another fund or sell their investment and withdraw their funds. If investors choose not to withdraw their funds prior to the date of implementation, the proposed mergers, if approved, will automatically apply to their investment.
How investors are affected
|Value of investment||There is no effect on the value of an investment. The value before and after the merger of the proposed fund with the destination fund will remain the same.|
|Capital Gains Tax||There will be no Capital Gains Tax implications as a result of the proposed mergers, assuming investors do not sell or switch any units. Should investors elect to sell or switch any or all of their units in the fund, it will be viewed as a normal transaction and Capital Gains Tax may apply.|
|A special dividend||For some funds, the distribution date/s will change. Therefore, a special dividend will be paid on the date of the proposed merger to all existing investors in accordance with income earned in their respective funds over the period from the last income distribution date to the date of the proposed merger. The special dividend will be calculated separately for each fund and paid to the respective investors before the proposed funds are merged. STANLIB will withhold the necessary dividends tax on this dividend.|
|Fees||Neither investors, nor the destination fund, will be charged any additional fees, charges, taxes or brokerage as a result of the proposed mergers. STANLIB will carry all costs relating to the proposal. The Shari’ah fund will be the only fund to attract higher fees as the new offering will be offered through a multi- managed solution.|
For any further information, please contact the STANLIB Contact Centre on 0860 123 003.