If I can use the analogy of friendships for shares, 2015 will be a year where having 500 friends will not serve you well. You will have to go for quality instead of quantity!
2014 gave us the following:
South African JSE All Share : +7.70%
USA S&P 500: +11.40% in US$
Cash in SA: +5.00%
Rand against US$: Rand weakened 10%
Like with friendships, shares will serve you well until they don't. We have had a fantastic run over the last 5 years (JSE up 108%, the S&P up 138% in Rand) and listed property did even better. But now we are at a point where some of our friends turned their backs on us. This can clearly be seen when we look at resources shares like Kumba, Sasol, Anglos, Exxaro, BHP etc.
2015 will be a year where we will have to analyze the value of our friendships and make sure they are not just superficial tag alongs while the going is good. We will also have to evaluate the change in value, meaning we might find that friends that seemed to disappoint us in 2014 might offer value in 2015!
South Africa will battle the incompetence of our political leaders and we will continue the downward spiral of load shedding, budget deficits, corruption and imaginary repatriation of wealth. The one pillar of strength, SARS, is also faltering and what a disaster this can become. Like I predicted for 2104, we will struggle to beat inflation on the JSE. The Rand will remain under pressure and the only positive will be the lower oil price which will counter the falling Rand and protect us from rising inflation and hence interest rates.
USA will continue the strong growth and provide the stability in a faltering world economy. It is just insane to have the 10 year Bond yield trading at below 2% and this cannot carry on for much longer. The share market has performed very well but now the earnings will have to support the elevated prices or we can see poor returns from the US equity markets as well. Watch out for the first interest rate increase, it will drag the market down!
Europe is back in recession and deflation is looming. If the EU cannot stop the slide in economic growth, we will enter a game with new rules and as with any uncertainty or unknown, the markets will become negative. Europe can be the place where individual stocks perform because they have been beaten so badly.
China will have to come back to the party. This is a friend that South Africa depended on so much but with the slowdown in its growth and thus the decrease in their demand for our resources, they have abandoned us.
So in 2015 I believe that we will once again see a share market with lots of ups and downs, where individual companies will perform well but on average you will not get a lot of joy. Cash will be king in the short term and used to buy into share weakness. If we get lucky and the Rand strengthens to say R10.50 to the $, buy $ and take it offshore. Wait for weakness and buy international shares.
We live in a world where things can swing both ways. We cannot take all our money off the table and become fearful, but we can also not become a blind believer and invest all our money. Remain a long term investor and be patient. However, choose your friends carefully!
Thursday, January 8, 2015
Thursday, October 2, 2014
Time is running out for South Africa
The clouds were hanging low over the skyscrapers in Manhattan as I ran to the United Nations building to cast my vote in South Africa's first democratic election. It was a joyous day for me and millions of people around the word and the honeymoon has begun.
In January 1995 I started working for a small wealth management company, specializing in retirement funds and we made a killing. Why? Because the inevitable rounds of re-distribution of wealth and opportunities have begun. Previously advantaged employees of any state or semi-state institution, or even where the business conducted by a private enterprise involved the government, were retrenched and re-employed on a contract basis for double their previous salary.
People with years of experience and post graduate degrees were replaced by people with no experience and a limited education. This "re-balancing" was inevitable because of the ridiculous situation created by the apartheid regime.
The one question I always asked my clients was "but is your replacement sustainable?" To me it seemed like the new government was building a house of cards. They were recklessly using the state funds and flood of new international financial aid to implement a socialist structure, making good on promises made to friends of the "struggle" and greasing the palms of strategic partners.
My clients always told me that what the government was doing amounted to "window dressing". They were working twice as hard under contract because they had to do the work as well as train the new "employee". What concerned me more was that my clients were all top management. They had to run departments which would have had a devastating effect on the economy, public services and productivity if they were to collapse.
Now, in 2014, 20 years after the joyous day, I can't open a newspaper, listen to the radio or watch the television without being told that another high ranking government official or even minister has been suspended for falsifying his or her CV. That somebody in a management position or a senior member of the ANC executive does not have the doctorate they claim to have. The courts have proven that people running our country have been involved in corruption. The arms deal worth Billions of Rands enriched many people close to or in the government. I shudder to think how much money our leaders are going to pocket for the latest Nuclear Power deal with Russia for Trillions of Rands! Our Public Protector seems to only have a knife in a gunfight.
So it is sad to see the end of the honeymoon. It is clear that just window-dressing will only get you 20 years of joy. Where the political will is not present, the champagne will run out and your guests will return to their own homes, not thinking twice about the mess they have left behind for the host to clean up.
The bottom line is that it is fine to have a president or minister who can't do the job, as long as they listen to their advisers who can! Things can turn around for SA, we just need the political will!
In January 1995 I started working for a small wealth management company, specializing in retirement funds and we made a killing. Why? Because the inevitable rounds of re-distribution of wealth and opportunities have begun. Previously advantaged employees of any state or semi-state institution, or even where the business conducted by a private enterprise involved the government, were retrenched and re-employed on a contract basis for double their previous salary.
People with years of experience and post graduate degrees were replaced by people with no experience and a limited education. This "re-balancing" was inevitable because of the ridiculous situation created by the apartheid regime.
The one question I always asked my clients was "but is your replacement sustainable?" To me it seemed like the new government was building a house of cards. They were recklessly using the state funds and flood of new international financial aid to implement a socialist structure, making good on promises made to friends of the "struggle" and greasing the palms of strategic partners.
My clients always told me that what the government was doing amounted to "window dressing". They were working twice as hard under contract because they had to do the work as well as train the new "employee". What concerned me more was that my clients were all top management. They had to run departments which would have had a devastating effect on the economy, public services and productivity if they were to collapse.
Now, in 2014, 20 years after the joyous day, I can't open a newspaper, listen to the radio or watch the television without being told that another high ranking government official or even minister has been suspended for falsifying his or her CV. That somebody in a management position or a senior member of the ANC executive does not have the doctorate they claim to have. The courts have proven that people running our country have been involved in corruption. The arms deal worth Billions of Rands enriched many people close to or in the government. I shudder to think how much money our leaders are going to pocket for the latest Nuclear Power deal with Russia for Trillions of Rands! Our Public Protector seems to only have a knife in a gunfight.
So it is sad to see the end of the honeymoon. It is clear that just window-dressing will only get you 20 years of joy. Where the political will is not present, the champagne will run out and your guests will return to their own homes, not thinking twice about the mess they have left behind for the host to clean up.
The bottom line is that it is fine to have a president or minister who can't do the job, as long as they listen to their advisers who can! Things can turn around for SA, we just need the political will!
Wednesday, September 3, 2014
The tide is turning for shares.
When the USA started their quantitative easing program, shares throughout the word started rising at a dizzying pace. To give you an idea, look at the following figures:
- S&P500 index in the USA went up 40% in $ terms over the last 20 months
- All Share index in South Africa went up 32% in Rand terms over the last 20 months
And this is only over the last 20 months! Before that we had a good 2009, 2010 and 2012. In short we have been enjoying a 5 year party as far as equity returns go and it was all funded by low interest rates.
Now the tide is turning and interest rates in the USA will start going up in the not too distant future and many emerging economies like South Africa have already started increasing interest rates. If you have ever wondered what the trigger will be for the party to come to an end, then this is it!
For the USA the effect will be that share prices will come under pressure as free money find its way to interest bearing products or even just to reduce debt and in South Africa the effect will be even worse with international investors selling their SA shares, converting the Rands into US$ to take back home which will put further pressure on the Rand to weaken.
So what do we do?
Firstly, if you haven't invested in equities over the last 5 years then sorry, you have missed the boat. Secondly, investing in passive equity products like index trackers might be the wrong thing to do. In a world where the trend is down, you have to apply your mind and analyze the individual companies to determine the value at the current price.
For South African investors the benefit of investing in companies that earn the majority of its income abroad will be the Rand hedge quality of the share (as the Rand depreciates).
To sum up:
- The party is over, you will have to work for your return.
- Cash is king over short term but poison over 5 years plus term. You can not time the market!
- Don't be shy to invest offshore or in CHEAP Rand hedge shares if you are a South African investor.
- If you have participated in the stellar returns of equities over the lat 5 years and your short term funds have been depleted, re-balance your portfolio by taking some profits and building up your cash buffer.
I can see a carefully selected equity portfolio outperforming cash and beating inflation over the next 5 years but what about the next 2 years? I don't know but DON'T BE GREEDY!!
Tuesday, April 29, 2014
How did the "lessons in buying shares" work out?
Investing is something that takes time and patience. As I mentioned in my "lessons" posts it helps to look at what the established Fund Managers buy and to then evaluate the shares on a set of Fundamental criteria. If I look at my share "BUY" recommendations the following happened since the posts:
So both these buy recommendations worked very well and in a very short period of time. This is not the norm and we could easily see them drop back but that is not the point. The POINT is that these are solid companies that were offering VALUE at the point of evaluation.
Would I buy them at current levels? No, I would wait for them to drop back. There are probably other shares that offer BETTER value at the current moment.
Would I SELL them and take profit? No, this is an investment and these companies are still as good as they were when we bought them, they are just more expensive for now.
Let's look at the company I mentioned as my least favorite in my Feb14th post:
In one of my recent posts I also wrote about my feelings towards an Index tracker like SATRIX DIVI. I mentioned that I prefer to select the companies I invest in based on some Fundamental evaluation and not to be stuck in a company just because it has some other characteristic i.e. size or historic dividend.
Out of all the SATRIX funds the one with some fundamental evaluation criteria is SATRIX RAFI and I would rather be in it than the others. This does not mean that I believe the whole SATRIX range offer bad value, I only prefer to be more selective in the companies I invest in. We can see DIVI bounce nicely from the under performance over the last 2 years but the risk adjusted return over time pushes me to an actively managed investment.
- March 4th: Capitec went from R183 to R226. This is a 23% increase
- Feb 14th: Standard Bank went from R115 to R139. This is a 21% increase
So both these buy recommendations worked very well and in a very short period of time. This is not the norm and we could easily see them drop back but that is not the point. The POINT is that these are solid companies that were offering VALUE at the point of evaluation.
Would I buy them at current levels? No, I would wait for them to drop back. There are probably other shares that offer BETTER value at the current moment.
Would I SELL them and take profit? No, this is an investment and these companies are still as good as they were when we bought them, they are just more expensive for now.
Let's look at the company I mentioned as my least favorite in my Feb14th post:
- Naspers went from R1138 to R1033. That is a 9% drop.
But Naspers did go up to close to R1300 before it came down! It is not a bad company, just very expensive.
In one of my recent posts I also wrote about my feelings towards an Index tracker like SATRIX DIVI. I mentioned that I prefer to select the companies I invest in based on some Fundamental evaluation and not to be stuck in a company just because it has some other characteristic i.e. size or historic dividend.
Out of all the SATRIX funds the one with some fundamental evaluation criteria is SATRIX RAFI and I would rather be in it than the others. This does not mean that I believe the whole SATRIX range offer bad value, I only prefer to be more selective in the companies I invest in. We can see DIVI bounce nicely from the under performance over the last 2 years but the risk adjusted return over time pushes me to an actively managed investment.
Tuesday, March 4, 2014
Basics of buying shares: Lesson 4
In lesson 3 I looked at the share choices shared by more than one Fund Manager. This lesson I look at some of the shares in the top 10 but not shared by more than 1 Fund manager. Just to re-cap why I go about selecting shares using this process:
- The top 10 pics of reputable fund managers give fundamental validity to the selected shares
- I can start building a WATCH LIST. It gives you a target, nothing more.
- The watch list will focus your attention towards any news about the company, building a cumulative knowledge database about the shares.
I recently listened to an interview with Warren Buffett and his 2 lieutenants. They read average 500 pages per week relating to news on companies on their watch list. I usually read the Business Day newspaper cover to cover, scanning for the names of the companies on my watch list. One of the things that I wait for is news of company directors share dealings in their own company which they have to make public, and more importantly the news of the shares that reputable fund managers buy.
For example, yesterday Coronation increased their stake in Tygerbrands. Tygerbrands has fallen from R300 to R243 in a very short period but offer a good Divi and fair P/E. They will battle with the rising interest rate cycle but it is a solid company. I have been buying the share for a while and 5 years from now it will trade at a higher price, plus it will continue paying me the dividend. With Coronation also buying more at this level provide a lot of confidence.
Some of the other shares in the fund managers top 10 as mentioned in the beginning are:
- Steinhoff, Capitec, Exxaro, Remgro, Impala, Adcorp, Clover, Omnia, Glencore, Aspen, Reinet, Mondi, Nedbank, Intu
You will see that a lot of them have performed very well over the last year and are expensive to buy now. I have chosen 5 of these shares and performed the same analysis as I did the first time:
| Price | F P/E | D/Y | 1 yr | 30day | |
| Steinhoff | 52 | 13 | 1.56% | 98% | 12% |
| Capitec | 183 | 11 | 3.33% | -2% | -3% |
| Exxaro | 146 | 10 | 2.65% | -14% | -3% |
| Remgro | 184 | 14 | 1.87% | 9% | 0% |
| Impala | 115 | 23 | 0.52% | -13% | -1% |
| 52 High | 52 Low | Median | Fall | ||
| Steinhoff | 52 | 23 | 37 | -28% | |
| Capitec | 222 | 179 | 201 | 10% | |
| Exxaro | 179 | 137 | 158 | 8% | |
| Remgro | 211 | 171 | 191 | 4% | |
| Impala | 139 | 86 | 113 | -2% |
Looking at this list I will buy Capitec now and wait for a small drop in Exxaro and Remgro before I buy them. Capitec is trading at 10% below its median price, offer a 3.33% dividend and is negative on a 1jr and 30 day price.
There are many ways to skin a cat but this process will get you involved in looking and listening at certain shares. Never rush into buying a share. Watch it for a while until you are comfortable and then commit for the longer term. Even if the price falls the day after you have bought it, just forget about it. I usually buy 1/2 the amount of the share I identified as offering value immediately and then if it falls a bit more, I will buy the other 1/2.
Friday, February 14, 2014
Basics of buying shares: Lesson 3
Just to recap on what we have done in lesson one and two: We looked at the top unit trust fund managers top 10 share holdings on their equity fund fact sheets and listed those shares that appear on two or more of the fact sheets. The result was a list of 11 shares that two or more of the fund managers rate as being companies with all the fundamentals in place to make them solid investments over the longer term.
So now I know that after the fund managers have spent millions of Rands on analyzing these companies, they consider them to be sound. What I do not know is at what price the managers bought these shares and if they still offer VALUE at the current price!
Now there are many ways to determine the current value of a company and this is why there are always willing Buyers (they believe the share is Undervalued), and willing Sellers (they believe the share is Overvalued).
As I indicated in Lesson 2, there are a couple of things I look at to help me decide, and looking at the list again, I will explain my thought process:
The one important thing to remember is that the price you pay today will play a big part in the success of your investment over time. It will always be the best thing to pay less for the share than you think is fair value, but even paying a fair price for a good company is better than paying a great good price for a fair company.
If you follow the investment style of Warren Buffett (and you should!!!), you will see that he always pay more for a share that he likes than the price it trades at the day before he buys it. We call it "paying a premium" for the share. He does this because he believes the share is worth more than it trades at and he wants to make sure it is attractive for the seller to sell.
Returning to our list, based on the current Price of the share and the historic price range, I would put STANDARD BANK as my top choice and NASPERS as my last.
Why Standard Bank: At R115 per share it has a Forward Price Earnings ratio of 11 times, fair for a banking share. It means that you pay today for the next 11 years' worth of current earnings. So if the company can generate the same earnings it is generating today, your investment will be "paid off" in 11 years' time. The next important thing is that the company will pay me a dividend of 4.11% while I wait for the price to go up. In a money market I might get 5% so I almost get what I would get if I invested the money in the bank, PLUS I get the upside potential of the price going up! The price of the share has also gone down over the last year and last 30 days so it got "cheaper". Lastly it is almost halfway between its lowest and highest price over the last 52 weeks. If it was closer to its highest, the fall in price if something should go wrong over the short term would have been worse.
The big NEGATIVE is that banking shares do not like interest rate hikes. We saw the first of a potential wave of interest rate hikes recently and that might keep Standard Bank at the current levels or even lower. For the longer term though, I see good potential. The other silent advantage is that Standard Bank is strong in Africa and that is the future growth market.
Why not Naspers: Because every good point for Standard Bank is a weak point for Naspers. The thing that we have to admit is that Naspers is an exceptional company and will remain so. It is also known as a Growth company, thus the lower dividend and higher PE. So comparing Standard Bank with Naspers is NOT fair! But, just based of which company offer better value going forward I stand by Standard Bank.
The other companies can be analyzed in the same way, you will see that Richemont is also very expensive and Anglo better value.
The next very important thing to master, and that is where TIME and EXPERIENCE play a huge role, is to get a FEEL for where a share should trade. To get this experience you have to get interested! The best way to get and stay interested is to put your money on the table and to buy a share or two! You might lose some money in the short term but we all have to pay school fees! So that is why you start small.
Next time I will look at some of the other shares on the top ten list (but not shared by more than one fund manager) and also discuss some of the other determining factors when creating a "Watch List" for future purchases.
So now I know that after the fund managers have spent millions of Rands on analyzing these companies, they consider them to be sound. What I do not know is at what price the managers bought these shares and if they still offer VALUE at the current price!
Now there are many ways to determine the current value of a company and this is why there are always willing Buyers (they believe the share is Undervalued), and willing Sellers (they believe the share is Overvalued).
As I indicated in Lesson 2, there are a couple of things I look at to help me decide, and looking at the list again, I will explain my thought process:
| Price | F P/E | D/Y | 1 yr | 30day | |
| Anglo American | 264 | 15 | 2.89% | -3.60% | 18.00% |
| Sasol | 530 | 10 | 3.57% | 36.70% | 2.80% |
| BHP | 322 | 13 | 3.49% | 6.10% | 0.50% |
| SAB | 491 | 20 | 2.00% | 9.80% | -8.00% |
| BAT | 527 | 16 | 3.62% | 16.30% | -5.10% |
| Standard | 115 | 11 | 4.11% | -2.60% | -9.40% |
| Richemont | 106 | 51 | 1.04% | 46.70% | 4.70% |
| Old Mutual | 32 | 12 | 3.29% | 21.60% | -4.90% |
| Investec | 75 | 14 | 3.72% | 10.60% | -1.10% |
| MTN | 199 | 15 | 4.35% | 13.30% | -5.40% |
| Naspers | 1138 | 45 | 0.34% | 87.80% | 3.40% |
| 52 High | 52 Low | Median | Fall | ||
| Anglo American | 281 | 185 | 233 | -13% | |
| Sasol | 558 | 369 | 464 | -14% | |
| BHP | 338 | 247 | 293 | -10% | |
| SAB | 550 | 430 | 490 | 0% | |
| BAT | 571 | 454 | 513 | -3% | |
| Standard | 130 | 105 | 118 | 2% | |
| Richemont | 108 | 67 | 88 | -21% | |
| Old Mutual | 35 | 27 | 31 | -4% | |
| Investec | 78 | 60 | 69 | -8% | |
| MTN | 217 | 158 | 188 | -6% | |
| Naspers | 1178 | 556 | 867 | -31% |
The one important thing to remember is that the price you pay today will play a big part in the success of your investment over time. It will always be the best thing to pay less for the share than you think is fair value, but even paying a fair price for a good company is better than paying a great good price for a fair company.
If you follow the investment style of Warren Buffett (and you should!!!), you will see that he always pay more for a share that he likes than the price it trades at the day before he buys it. We call it "paying a premium" for the share. He does this because he believes the share is worth more than it trades at and he wants to make sure it is attractive for the seller to sell.
Returning to our list, based on the current Price of the share and the historic price range, I would put STANDARD BANK as my top choice and NASPERS as my last.
Why Standard Bank: At R115 per share it has a Forward Price Earnings ratio of 11 times, fair for a banking share. It means that you pay today for the next 11 years' worth of current earnings. So if the company can generate the same earnings it is generating today, your investment will be "paid off" in 11 years' time. The next important thing is that the company will pay me a dividend of 4.11% while I wait for the price to go up. In a money market I might get 5% so I almost get what I would get if I invested the money in the bank, PLUS I get the upside potential of the price going up! The price of the share has also gone down over the last year and last 30 days so it got "cheaper". Lastly it is almost halfway between its lowest and highest price over the last 52 weeks. If it was closer to its highest, the fall in price if something should go wrong over the short term would have been worse.
The big NEGATIVE is that banking shares do not like interest rate hikes. We saw the first of a potential wave of interest rate hikes recently and that might keep Standard Bank at the current levels or even lower. For the longer term though, I see good potential. The other silent advantage is that Standard Bank is strong in Africa and that is the future growth market.
Why not Naspers: Because every good point for Standard Bank is a weak point for Naspers. The thing that we have to admit is that Naspers is an exceptional company and will remain so. It is also known as a Growth company, thus the lower dividend and higher PE. So comparing Standard Bank with Naspers is NOT fair! But, just based of which company offer better value going forward I stand by Standard Bank.
The other companies can be analyzed in the same way, you will see that Richemont is also very expensive and Anglo better value.
The next very important thing to master, and that is where TIME and EXPERIENCE play a huge role, is to get a FEEL for where a share should trade. To get this experience you have to get interested! The best way to get and stay interested is to put your money on the table and to buy a share or two! You might lose some money in the short term but we all have to pay school fees! So that is why you start small.
Next time I will look at some of the other shares on the top ten list (but not shared by more than one fund manager) and also discuss some of the other determining factors when creating a "Watch List" for future purchases.
Wednesday, February 12, 2014
Beware of Satrix Divi!!
I haven't been paying attention to the performance of Satrix Divi. It has cost me a lot of money! Satrix is supposed to be an investment without maintenance. You buy it and lock it away for a long time. Not so! There has always been this debate between active fund managers and passive index trackers. Satrix is a passive index tracker to some extent except the Satrix Rafi where there is an active share selection involved.
Satrix divi is supposed to be 30 companies, selected from the JSE Top 40 and Mid-Cap indices, that are expected to pay the best normal dividends over the forthcoming year. Here are the returns of 3 of the Satrix funds:
Why did Satrix Divi underperform? Just look at some of the shares in this portfolio:
Abil
Barclays Africa
JD Group
Kumba
Lewis
Foshini
Truworths
Spar
Woolworths
Nampak
They all pay, or used to pay great dividends but what happened to their share price?!!!!
The BIG elephant in the room is Abil. This share is down 56% from it's high some months ago and it used to pay a good dividend, not so now! It constitutes 6.24% of the portfolio, the BIGGEST holding!
So yes......., the interest rates are on their way up which will be bad for all retailers like Spar, Woolies, Foshini etc. Divi has an 23% exposure to this sector (BAD). Resources underperformed over the last 3 years and offer value, Divi only has a 7% exposure (BAD). Divi is supposed to give great dividends. The latest figures show that the Dividend yield on Satrix Divi is 3,57%, compared to Satrix 40 with 2.13% and Satrix Rafi with 2.32% (Rafi do not pay dividends out but roll it up in the fund).
A lot of the companies in Satrix Divi have fallen so much that they might outperform over the next 3 years but I lost my faith in index trackers because there is very little intelligence involved. I am switching to Rafi and some Resources companies. Retailers and Banks will be on my list of purchases later in the interest rate HIKING cycle.
p.s. Now if Abil was to suspend its dividend payouts, Satrix Rafi will be forced to sell out of Abil so IF there is a bounce in the Abil share price and a recovery takes place, Satrix Divi would have taken the 56% haircut and miss the recovery!
Satrix divi is supposed to be 30 companies, selected from the JSE Top 40 and Mid-Cap indices, that are expected to pay the best normal dividends over the forthcoming year. Here are the returns of 3 of the Satrix funds:
| Fund | 5 years | 3 years | 2 years | 1 year | 6 months |
| Satrix Divi | 87% | 21% | 6% | -7% | 0% |
| Satrix 40 | 120% | 38% | 37% | 13% | 11% |
| Satrix Rafi | 142% | 41% | 34% | 12% | 12% |
Why did Satrix Divi underperform? Just look at some of the shares in this portfolio:
Abil
Barclays Africa
JD Group
Kumba
Lewis
Foshini
Truworths
Spar
Woolworths
Nampak
They all pay, or used to pay great dividends but what happened to their share price?!!!!
The BIG elephant in the room is Abil. This share is down 56% from it's high some months ago and it used to pay a good dividend, not so now! It constitutes 6.24% of the portfolio, the BIGGEST holding!
So yes......., the interest rates are on their way up which will be bad for all retailers like Spar, Woolies, Foshini etc. Divi has an 23% exposure to this sector (BAD). Resources underperformed over the last 3 years and offer value, Divi only has a 7% exposure (BAD). Divi is supposed to give great dividends. The latest figures show that the Dividend yield on Satrix Divi is 3,57%, compared to Satrix 40 with 2.13% and Satrix Rafi with 2.32% (Rafi do not pay dividends out but roll it up in the fund).
A lot of the companies in Satrix Divi have fallen so much that they might outperform over the next 3 years but I lost my faith in index trackers because there is very little intelligence involved. I am switching to Rafi and some Resources companies. Retailers and Banks will be on my list of purchases later in the interest rate HIKING cycle.
p.s. Now if Abil was to suspend its dividend payouts, Satrix Rafi will be forced to sell out of Abil so IF there is a bounce in the Abil share price and a recovery takes place, Satrix Divi would have taken the 56% haircut and miss the recovery!
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