Page 193 - Profile's Unit Trusts & Collective Investments - September 2025

Fact sheet tips

All rates of return are expressed as nominal (rather than effective) rates. This is consistent with the
way that interest rates are generally quoted in the retail banking environment in SA.
Each performance table also shows the growth in a R1 000 lump sum or R100 per month invested
at the inflation rate. The official consumer price index (CPI) is used. This shows how much an
equivalent investment has had to increase to retain the same buying power.
Finally, each performance table shows historical volatility. This gives an indication of the riskiness
of the fund. Note that the three-year figure is generally regarded as the fairest indicator of “average”
volatility – this is the figure we recommend for comparing funds. To calculate volatility we use the
standard deviation of monthly returns on the NAV price.

Reinvestment of income (dividends and interest)
Income for unit trusts is usually declared and paid out quarterly or twice yearly. A few unit trusts
pay annual income and some pay monthly. It is obviously important to take the timing of differing
income declarations into account when comparing one unit trust with another. It is also important to
take into account the date on which the income is reinvested.
Different stats houses have different ways of accounting for income declarations in their
calculations. Some follow the international norm of reinvesting the income on the declaration
date, whereas others follow the South African convention of reinvesting the income on the actual
reinvestment date. There can be as much as four weeks difference between these two dates, but on
average it differs by a week or two.
In this handbook we calculate returns based on the actual reinvestment date – and the actual
reinvestment price which ruled on that day. This is the most accurate performance measure possible.
For calculation of performance data, the full (gross) distribution amount is applied to the purchase
of additional units (ie, no deduction is made for DWT). The actual rate of return of an individual investor
subject to DWT will, after April 2012, therefore be slightly lower than the reported performance figure.
Performance figures for money market funds
Money market fund yields, as quoted in the daily press, are based on an average yield over seven
days. This is to provide investors with an up-to-date figure based on recent performance that gives
an indication of the yield that might be expected for a short term deposit.
For the historical perspective which this book provides, a different approach is obviously warranted.
We use the actual monthly interest payments made by the money market fund, and convert these to
the equivalent of an annual interest rate paid monthly. The rationale is that this is the most common
way of quoting interest rates in the retail banking environment, and therefore gives a simple and
consistent basis for comparison.
The formula used is as follows:

Note that dividends for consecutive months are not added together. Each month’s dividend is
annualised to give its annual equivalent – as if that rate of return had been earned for a full year.
In other words, it is a rate of return equivalent to a fixed deposit for a full year which pays the stated
interest rate per annum monthly in arrears.
Portfolio structure table

The portfolio structure table gives a detailed breakdown of each fund’s holdings, by sector, as at
the end of June 2025 and six months earlier. Where a fund is less than six months old a comparison
with three months earlier is done.
Although these structure tables date fairly quickly, they do provide a wealth of information about
the approach and focus of each fund.

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