Page 144 - Profile's Unit Trusts & Collective Investments - March 2026

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).
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.
This sector originally had four sub-secotrs: Money Market, Income, Bond and Varied
Specialist funds.
In 2013 funds in the Varied Specialist sector which held shares and listed property were moved to
the Multi Asset tier and renamed Multi Asset Income funds.
That year, the Bond funds were renamed Variable Term funds and the Income funds were renamed
Short Term funds to better reflect their risk and return characteristics.
As of October 2024 funds that invest predominantly in inflation-linked bonds have been classified
in the Variable Term ILB funds subcategory. There is also a category for Unclassified funds.
Bond funds, inflation-linked bond funds and income funds are used predominantly by investors
wanting interest income but unlike money market funds, income, bond and inflation-linked bond
funds carry the risk of capital losses. The previous sector names did not reflect the risk of capital
losses. The new sector names better reflect the fact that all three categories offer interest income but
differ in their risk/return characteristics.
Note that a Short Term category fund is permitted to hold bonds provided the fund as a whole
conforms to the average duration limitation of the sector. Although bonds are issued with long
repayment periods (typically from 10 to 30 years) their risk/return characteristics change as they

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).

142 Profile’s Unit Trusts & Collective Investments March 2026