Page 150 - Profile's Unit Trusts & Collective Investments - September 2025
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Chapter 8 Classification of CISs
White label funds
A white label (or third party) fund is marketed under the name of a third party but is managed
by a licensed unit trust management company. White label funds arise because it can be
difficult and costly to acquire a unit trust license from the FSCA.
Some white label funds are run by experienced asset managers who are too small to register with the
FSCA. These funds may become fully-fledged management companies in time (eg, Allan Gray started
without its own unit trust license).
Many white label funds are set up by brokers and financial advisers. For a broker, a white label fund is
easier to manage because the investor agrees to the mandate of the white label fund, and the fund
can make investment changes without consulting each investor. Usually, the brokerage also receives
a portion of the annual management fees, thereby improving returns for the brokerage without
necessarily charging trailer fees. White label funds also have brand marketing benefits.
Since 2012 it has been mandatory for the name of a white label fund to incorporate the name of the
licensed manager (eg, in the case of Dotport BCI Flexible FoF, “BCI” stands for Boutique Collective
Investments).
R Low Equity funds may have a maximum effective equity exposure (including international
equity) of up to 40%.
Income funds
The Income funds sector, previously found under the then Fixed Interest category (now Interest
Bearing), contains funds that seek to maximise income yield while at least preserving capital.
These funds invest predominantly in government bonds, fixed deposits and other high income
earning securities, although under the 2013 classification revision they are allowed to hold equities
and listed property shares as well. This is the reason that some varied specialist income funds were
moved from the Fixed Interest category to the Multi Asset category.
In contrast to the rules governing funds in the Interest Bearing sectors, funds in the Multi Asset
Income sector have few restrictions on the type of income yield assets in which they can invest.
These portfolios are allowed a maximum effective equity exposure (including international equities)
of 10% and maximum listed property exposure of 25% (again, including international holdings).
There is no official benchmark for the Income funds sector. Benchmarks vary, with the STeFI being
the most popular (periods used differ). The All Bond index (Albi) is used as a benchmark by several
funds.
Interest Bearing funds
Funds in the Interest Bearing sector (previously known as Fixed Interest) invest exclusively in
bond, money market investments and other interest-earning securities. These portfolios may not
include equities, listed real estate shares or cumulative preference shares.
What is the STeFI?
The STeFI, the industry benchmark for cash-equivalent investments and for South African–
Interest Bearing–Short Term funds, is a set of proprietary indices designed by Alexander
Forbes to reflect average short term interest rates. They are calculated and published daily by the
South African Futures Exchange division of the JSE. The STeFI composite index is calculated from four
narrower indices as follows:
15% of the STeFI Call Deposit index, which is based on an Interbank call rate (SARB-SABOR)
30% of the STeFI 3 month NCD Index (3 month NCD instruments measured at SAFEX rates)
35% of the STeFI 6 month NCD Index (6 month NCD instruments measured at SAFEX rates)
20% of the STeFI 12 month NCD Index (12 month NCD instruments measured at SAFEX rates)
Alexander Forbes also produces a Money Market Index (AFMMI).
148 Profile’s Unit Trusts & Collective Investments September 2025
