Fund Amalgamation 2019

STANLIB’s retail fund range focuses on the needs of our investors, providing sufficient choice without complexity. We continue to review and simplify our offering to ensure it is relevant to our investors in a changing landscape and allows us to fulfil investor expectations.

In line with this commitment and after fund changes made in 2016, we have recently conducted a fresh review of our fund range and decided to amalgamate four of our funds.

Why simplify?

The industry is overwhelmed with choice. SA currently offers more than 1500 unit trusts.

Why Simplify

 

Proposed funds to be amalgamated

STANLIB is proposing to amalgamate the following four funds. The rationale for each fund change is provided below.

  PROPOSED FUND TO BE AMALGAMATED DESTINATION FUND Rationale
1 STANLIB Inflation Plus 5% Fund STANLIB Absolute Plus Fund STANLIB Inflation Plus 5% and STANLIB Absolute Plus funds have the same objective: to achieve high capital and income growth. To remove duplication and simplify investment management, the STANLIB Inflation Plus 5% Fund will be amalgamated with the flagship STANLIB Absolute Plus Fund.
2 STANLIB Prudential Bond Fund STANLIB Bond Fund STANLIB Prudential Bond Fund and STANLIB Bond Fund have the same objective: to achieve capital growth and income generation through investing in fixed interest securities. The Prudential Bond Fund will be amalgamated with the STANLIB Bond Fund. Both funds comply with Regulation 28.
3 STANLIB Aggressive Income Fund STANLIB Flexible Income Fund STANLIB Aggressive Income Fund and STANLIB Flexible Income Fund share the same investment universe (non-equity and property) and have a similar objective (to generate a high level of income). The main difference in mandate is the allocation to listed property (25% for Flexible Income vs 33% for Aggressive Income). To remove duplication and simplify investment management, the STANLIB Aggressive Income Fund will be amalgamated with the STANLIB Flexible Income Fund.
4 STANLIB Quants Fund STANLIB High Equity Balanced Passive FoF The STANLIB Quants Fund and the STANLIB High Equity Balanced Passive Fund of Funds invest in the same universe. To remove duplication and simplify investment management, the STANLIB Quants Fund will be amalgamated with the STANLIB High Equity Balanced Passive FoF.

 

Benefits of amalgamation

The benefits of fund amalgamation include:

Benefits to investors and financial advisers
 

Process and timeline

SA’s unit trust industry is regulated by the Collective Investment Schemes Act 2002. Any change in unit trust funds requires the approval of the Financial Sector Conduct Authority (FSCA). Below is a summary of the amalgamation process.

DATE ACTIVITY
28 Nov 2018 STANLIB has received approval from the FSCA to proceed with the proposed amalgamation and ballot the investors.
Early Dec Financial advisers and investors affected by the proposed change will be notified of the proposal via email.
22 Jan to 6 Mar 2019 Investors or unit holders in the funds proposed for amalgamation will be balloted from 22 January and allowed 30 days to vote. Ballot closes 6 March 2019.
March 2019 Audit of votes by independent auditor.
April 2019 Financial advisers and investors will be notified of the results of the ballot.
3 May 2019 Restriction on transactions (new investments, additional investments, switches and withdrawals). STANLIB will not be able to act upon any portfolio instructions for the funds proposed for amalgamation between 3 May 2019 and 10 May 2019. This is to ensure that accurate, complete and up-to-date data is used for the amalgamation.
From 10 May Assuming the amalgamation is approved, implementation will take place.
 

Impact on financial advisers

Administration:
No administration is required. STANLIB will manage the balloting process and, if the amalgamation is approved, the transition for investors will happen automatically.

Communications:
STANLIB will keep all advisers informed of the process via email. Investors will receive a ballot pack and can obtain additional information on the website or through the call centre Email and Phone number (0860 123 003).

Commission arrangements:
There will be no impact on advisers’ current commission arrangements.

 

Impact on investors

Value of investment:
There will be no effect on the value of the investment. The value before and after the amalgamation will remain the same. For example, if you have R1 000 worth of unit trust funds in your current portfolio before the proposed changes, you will hold the same value (R1 000) after the proposed changes.

Capital Gains Tax (CGT):
There will be no CGT implications to the proposed amalgamations, assuming investors do not sell or switch units. If investors choose to sell any or all of their units in the fund before 3 May, this will be viewed as a normal transaction and CGT may apply.

A special distribution / dividend:
For some funds the distribution date/s will change. In that case, a special dividend will be paid on the date of the proposed amalgamation to all existing investors, reflecting income earned in their funds between the last income distribution date and the date of the proposed amalgamation. The special dividend will be calculated separately for each fund and paid to investors before the proposed funds are amalgamated. STANLIB will withhold the necessary tax on this dividend.

Fees:
Neither investors nor the destination fund will incur any additional fees, charges, taxes or brokerage as a result of the proposed amalgamations.

Investment suitability:
The funds to be amalgamated will move to funds with the same or very similar investment objectives.

 

Fund Amalgamation: Investor FAQ

Q1: Which funds are affected?

STANLIB Inflation Plus 5% Fund
STANLIB Prudential Bond Fund
STANLIB Aggressive Income Fund
STANLIB Quants Fund

Q2: What will happen to these funds?

A: STANLIB is proposing to amalgamate these funds with similar funds to simplify its range, remove duplication and create efficiencies in investment management and trading costs. The rationale for each amalgamation is provided in the table below:

  PROPOSED FUND TO BE AMALGAMATED DESTINATION FUND Rationale
1 STANLIB Inflation Plus 5% Fund STANLIB Absolute Plus Fund STANLIB Inflation Plus 5% and STANLIB Absolute Plus funds have the same objective: to achieve high capital and income growth. To remove duplication and simplify investment management, the STANLIB Inflation Plus 5% Fund will be amalgamated with the flagship, STANLIB Absolute Plus Fund.
2 STANLIB Prudential Bond Fund STANLIB Bond Fund STANLIB Prudential Bond Fund and STANLIB Bond Fund have the same objective: to achieve capital growth and income generation through investing in fixed interest securities. The Prudential Bond Fund will be amalgamated with the STANLIB Bond Fund. Both comply with Regulation 28.
3 STANLIB Aggressive Income Fund STANLIB Flexible Income Fund STANLIB Aggressive Income Fund and STANLIB Flexible Income Fund share the same investment universe (non-equity and property) and a similar objective (to generate a high level of income). The main difference in mandate is their allocation to listed property (25% for Flexible Income vs 33% for Aggressive Income). To remove duplication and simplify investment management, the STANLIB Aggressive Income Fund will be amalgamated with the STANLIB Flexible Income Fund.
4 STANLIB Quants Fund STANLIB High Equity Balanced Passive FoF STANLIB Quants Fund and STANLIB High Equity Balanced Passive Fund of Funds share the same universe. To remove duplication and simplify investment management, the STANLIB Quants Fund will be amalgamated with the STANLIB High Equity Balanced Passive FoF.

Q3: STANLIB amended and amalgamated funds two years ago. Why is this being done again?

A: STANLIB continually reviews and simplifies its range to ensure it is relevant to our clients in a changing landscape and allows us to fulfil investor expectations.

Q4: What are the benefits of rationalising or amalgamating funds?

A: STANLIB has been managing funds since 1999 and before that as part of Liberty / Standard Bank. Over time many funds were created to meet investor needs as the investment landscape has matured and shifted. To simplify and focus our offering for clients and advisers, STANLIB has reviewed its fund range and decided to amalgamate four funds.

For financial advisers this means:

  • Less duplication of STANLIB’s offering for clients, making it easier to sell.
  • Less sales material.
  • Better service due to a simpler offering and focused approach.
  • Improving STANLIB’s management focus on the remaining funds.

For clients this means:

  • A cleaner and simpler offering.
  • Less administration, enabling better service.
  • More focused fund management and potential enabling better performance.
  • Lower fixed costs per fund.

Q5: What are clients invested in the amalgamating funds required to do?

A: Investors in these funds are required to vote for or against the fund change. Ballot letters will be emailed (or posted where no email address is available) on 22 January 2019. Investors will have 30 days in which to return the ballot note. Completed ballot forms must be emailed directly to the auditors at Ballots@sng.gt.com. The ballot letters will also give details of how investors can vote electronically.

We can only make changes to our funds if over 50% of unit holders approve the proposals. Investors who do not return the completed amalgamation ballot form within the stipulated time will be deemed to have voted in favour of the proposed amalgamation. Your ballot pack has a voting form on which you may vote for or against the proposed changes.

Q6: How will investors know whether they will be balloted?

A: All investors on record as at 14 January 2019 will be balloted. The proposed amalgamation of funds will be executed from 10 May if the necessary approval is received from investors and the Registrar of Collective Investment Schemes (the “Registrar”).

Q7: When is the amalgamation happening and how will investors be informed?

A: SA’s unit trust industry is regulated by the Collective Investment Schemes Act 2002. Any change in unit trust funds requires the approval of the Financial Sector Conduct Authority (FSCA). Below is a summary of the amalgamation process.

DATE ACTIVITY
28 Nov 2018 STANLIB has received approval from the FSCA to proceed with the proposed amalgamation and ballot the investors.
Early Dec Financial advisers and investors affected by the proposed change will be notified of the proposal via email.
22 Jan to 6 Mar 2019 Investors or unit holders in the funds proposed for amalgamation will be balloted from 22 January and allowed 30 days to vote. Ballot closes 6 March 2019.
March 2019 Audit of votes by independent auditor.
April 2019 Financial advisers and investors will be notified of the results of the ballot.
3 May 2019 Restrictions on transacting (new investments, additional investments, switches and withdrawals) STANLIB will not be able to act upon any portfolio instructions between 3 May 2019 and 10 May 2019. This is to ensure that accurate, complete and up-to-date data is used for the amalgamation.
From 10 May Assuming the amalgamation is approved, implementation will take place.

Q8: Will the fund amalgamation have any cost of fee implications for investors?

A: There are no cost implications for investors.

Q9: Will there be any tax implications for investors as a result of the amalgamation?

A: There will be no Capital Gains Tax (CGT) implications to the proposed amalgamations. However, if you choose to sell or switch any or all of your participatory interests in the proposed funds before 3 May, this transaction will be viewed as a normal transaction and CGT may apply. The usual tax on interest that is applicable to each investor will not change.

Q10: Will the value of an investor’s holding be affected by this amalgamation?

A: There will be no effect on the value of an investor’s holding as a result of the proposed amalgamations. For example, if you have R1 000 worth of unit trusts in your current portfolio before the proposed changes, you will hold the same value (R1 000) afterwards.

Q11: Will the distribution date of the funds being amalgamated change?

A: Some funds make distributions once a year, some twice a year and others four times a year. The table below shows the distribution dates of the funds proposed for amalgamation and the destination funds. Refer to Q 12 for information about special dividends

Fund proposed for amalgamation Distribution date Destination fund Distribution date
STANLIB Inflation Plus 5% Fund 30 June, 31 December STANLIB Absolute Plus Fund 30 June, 31 December
STANLIB Prudential Bond Fund 30 June, 31 December STANLIB Bond Fund 31 March, 30 June, 30 September, 31 December
STANLIB Aggressive Income Fund 31 March, 30 June, 30 September, 31 December STANLIB Flexible Income Fund 31 March, 30 June, 30 September, 31 December
STANLIB Quants Fund 31 December STANLIB High Equity Balanced Passive FoF 31 March, 30 June, 30 September, 31 December

Q12: What is a special dividend?

A: As the income distribution dates of portfolios do not always coincide, a special dividend will be paid on the implementation date (proposed for 10 May). The special dividend will be calculated separately for each portfolio and paid to investors before the proposed amalgamations.

Q13: Will investors’ Dividend Withholding Tax change?

A: The proposed amalgamation will result in the following:
  • A special dividend will be paid on the date of the proposed amalgamation to all existing investors to reflect income earned in their portfolios between the last income distribution date and the date of the proposed amalgamation. STANLIB will withhold the necessary dividends tax.
  • Once the proposed fund is amalgamated with the destination fund, it will be closed. If investors are eligible for a tax refund, it should be claimed directly from the South African Revenue Services.

Q14: What are investors’ rights on this rationalisation?

A: In terms of Section 99 of the Collective Investment Schemes Control Act 45 of 2002, the Financial Sector Conduct Authority requires all investors in the funds proposed for amalgamation under the STANLIB Collective Investment Scheme to be notified in writing of any proposed changes to the portfolios in which they hold a participatory interest. All affected investors are balloted so they can vote on the proposed amalgamation. Investors who do not return the completed amalgamation ballot form within the stipulated time will be deemed to have voted in favour of the proposal.

Please note that in terms of the Act, the Financial Sector Conduct Authority will not consent unless it is, inter alia, satisfied that the proposed amalgamation will not be detrimental to any investor. The trustees of the scheme, Standard Chartered Bank, have considered and consented to the proposals.

Q15: What happens to those investors who do not agree with the proposed amalgamation?

A: Investors may vote against the amalgamation, or they may switch to another portfolio, or withdraw their funds before 3 May 2019. This will be viewed as a normal transaction and, where applicable, Capital Gains Tax will apply.

If investors choose not to withdraw their funds before 3 May 2019 , the proposed amalgamation will automatically apply to their investment, provided the majority of investors have consented to this in the ballot process.

Q16: Should investors in STANLIB's preservation / pension / retirement annuity or living annuity products (all LISP products except the Classic Investment Plan and STANLIB Linked Investments Tax Free Savings Plan) vote or receive the ballot packs?

A: The trustees of the STANLIB Classic Preservation/Pension Plans and Classic Retirement Annuity Fund are responsible for voting on behalf of investors. Investors will not be balloted directly so do not need to take any action. The Trustees always consider the best interests of the members when voting.

Liberty is the owner of any unit trust funds that may be referenced in your Classic Linked Life Annuity policy, and as such will participate in a ballot vote for any proposed changes to a unit trust portfolio in your account. Investors will not be balloted directly so do not need to take any action. STANLIB will publish the results of the various ballots on its website. Once a ballot has been approved, a change will take place for your affected investment portfolio(s). These details will appear on your quarterly investment statement.

Q17: If a client receives multiple emails, are these duplicates?

A: No, they are not duplicates. If you have received multiple emails it means you have multiple investments affected by the amalgamation.

Q18: How does e-balloting work?

  • Investors with a verified email address will receive an Electronic ballot pack via email with a ballot document in pdf format attached.
  • For security purposes, investors will be required to input their ID number (linked to their investment) to open the pdf document.
  • The pdf document includes an "Online button". An investor may click on this button to submit their vote electronically.
  • An acknowledgement email will be sent to the investor once the vote has been submitted.
  • The system will warn and block the investor if he / she tries to submit a vote that has already been submitted.
Download FAQ PDF