Worldwide flexible unit trust
Merchant West SCI Worldwide Flexible Fund
Real capital protectionA stay-rich vehicle, not a get-rich one. The fund’s primary purpose is to protect capital in real, inflation-adjusted terms, evenly spread across cash, bonds, equity and commodities, and tilted, never tipped, towards what is undervalued.
The problem it solves
Once you have made enough money, there comes a point at which the job changes: you need to protect your wealth, or at least a portion of it. In other words, to maintain its purchasing power.
Everyone’s interpretation of “enough” is different. But for the genuinely wealthy there will at some point be a portion of wealth that needs protecting, for peace of mind, to preserve spending power, or to pass on to the next generation.
The primary purpose of the fund’s strategy is therefore to protect capital in real terms. This is a stay-rich vehicle, not a get-rich vehicle.
The three risks it manages
Inflation
Preserving the real value of the capital invested, in hard currency terms.
Permanent loss
Avoiding any permanent loss of capital, the one kind of drawdown that cannot be waited out.
Liquidity
Holding assets that can be sold when they need to be, not only when it is convenient.
How we do it
Four asset classes, held at all times, in roughly equal measure.
Cash
Optionality and defence, but managed carefully, because cash has historically lagged inflation.
Bonds
Contractual income, without reaching for yield to manufacture it.
Equity
The growth assets: real businesses bought at prices that embed low expectations.
Commodities
Hard, real assets that behave differently from paper when paper misbehaves.
The fund is fairly evenly invested in all four asset classes at all times. Its assets always offer some protection against certain events and produce gains from others. Exposure is tilted towards undervalued assets, those with embedded low expectations, but never in an extreme fashion.
Principles behind the process
We will not forecast.
We will not reach for yield.
We aim to generate satisfactory returns.
The price you pay is the most important source of return, and the only one entirely under our control.
What unitholders can expect
How the targeted return is built, asset class by asset class.
| Asset class | Past 20 years, real | Long-term expectation, real | Weight |
|---|---|---|---|
| Cash | 1,2% below inflation: careful management is required simply to keep pace | In line with inflation | 25% |
| Bonds | Yields averaged 0,8% above inflation | About 1% above inflation | 25% |
| Equity | n/a | 4 to 6% real; we work with 4% | 25% |
| Commodities | Gold 8,6% (5% real); oil 5,8% (3,2% real) | We work with 3% real | 25% |
The targeted investment return, arrived at by allocating 25% to each asset class
The fund is built to be robust in whatever economic environment prevails, without trying to forecast what that environment will look like. The profile of returns will be less volatile than pure equity, with a lower expected return to match, but in excess of inflation over the medium to long term.
Fees
Maximum annual advice fee: 1.15%
More information
To find out more about the fund and to invest, visit the Merchant West website.
Merchant West Investments ↗Statutory information
Fund objective
This portfolio will be a worldwide multi-asset flexible portfolio with specific focus on generating returns in excess of inflation. The primary objective of the portfolio is to seek above average returns with below average risk for investors.
Fund strategy
The portfolio will invest in a flexible combination of securities in the equity, bond, money and property markets. The portfolio will be managed with assets being shifted between various investment markets to reflect the changing economic and market conditions, in order to maximise returns for investors. The Manager will be permitted to invest on behalf of the Merchant West SCI Worldwide Flexible Fund in offshore investments as legislation permits. The portfolio may include participatory interests of portfolios or other forms of participation in collective investment schemes or other similar schemes registered in South Africa or operated in territories with a regulatory environment which is to the satisfaction of the Manager and Trustee and of a sufficient standard to provide investor protection at least equivalent to that in South Africa. The portfolio may also invest in listed and unlisted instruments (derivatives) as allowed by the Act.
Disclaimer
Sanlam Collective Investments (RF) (Pty) Ltd is a registered Manager in terms of the Collective Investment Schemes in Securities. A schedule of fees can be obtained from the Manager. Charges of the most expensive fee class, maximum fund charges include (incl. VAT): Manager initial fee (max.): 3.45%; Manager annual fee (max.): 1.15%; Total Expense Ratio (TER): 1.28%. The Manager retains full legal responsibility of the third-party portfolio. The registered name of the fund is Merchant West Sanlam Collective Investments Worldwide Flexible Fund. The Management of this portfolio is outsourced to Merchant West Investments (Pty) Ltd, (FSP) License No. 44508, an Authorised Financial Service Provider under the Financial Advisory and Intermediary Services Act, 2002. The fund invests in equities and commodities and therefore moderate to high risk. Additional risks due to foreign investments might be applicable such as potential constraints on liquidity and repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information. Merchant West Investments (Pty) Ltd, (FSP) License No. 44508 is an Authorised Financial Services Provider under the Financial Advisory and Intermediary Services Act, 2002.
Merchant West Investments (Pty) Ltd accepts no liability of any sort resulting from reliance being placed upon information contained in this document by any person. Whilst every effort is made to represent accurate financial and technical information on an ongoing basis, inadvertent errors and typographical inaccuracies may occur. Information, laws, rules and regulations may also change from time to time. Information contained is therefore made available without any express or implied representation or warranty whatsoever, and Merchant West Investments (Pty) Ltd disclaims liability for any expenses incurred, or any damage, claims or costs sustained by users arising from the reliance being placed on the use of services or any information or representations contained in this document. The materials contained on these pages are provided for general information purposes only. We accept no responsibility for any loss or damage which may arise from reliance on information contained in these pages.
The document should not be seen as an offer to purchase any specific product and is not to be construed as advice or guidance in any form whatsoever. Investors are encouraged to obtain independent professional investment advice before investing. Investors should be aware that investing in a financial product entails a level of risk which depends on the nature of the investment. The merits of any investment should be considered together with the investor’s specific risk profile and investment objectives. Collective Investment Schemes are generally long-term investments. Merchant West Investments (Pty) Ltd does not provide any guarantee, either with respect to the capital or the return of a portfolio. Past performance is not necessarily a guide to future performance. Fluctuations in exchange rates and underlying investments may cause the value of international investments or underlying investments, if included in the mandate, to go up or down. Illustrations are not guaranteed but are for illustrative purposes only.