Frequently Asked Questions - Asset Managers

1. What is meant by Passive Management?
 
Active management involves the buying and selling of securities based on economic, financial and market analysis and through the exercise of investment judgment. Passive management, on the other hand, involves the buying and selling of securities only due to movements in the Index with the aim of tracking the Index. No independent economic, financial and market analysis or investment judgment will be applied in making adjustments to the portfolio, save as is necessary in order to track the Index.

In line with the principles of passive management, a portfolio will hold constituent securities purely for the economic rights and benefits attaching thereto.
 
2. How is Property Index Tracker Managed and Operated?
 
The portfolios of Property Index Tracker will not be actively managed (i.e. through the buying and selling of securities based on economic, financial and market analysis and investment judgment) but will rather be passively managed (i.e. the only movement in a portfolio will be movements caused through index-tracking or re-balancing and only securities in the constituent companies will be acquired).

The asset manager is obliged to ensure tracking of the Index by purchasing and holding the actual securities comprising the Index in the correct proportions, to the extent possible. In exceptional circumstances, the asset manager may, on a short-term basis only, employ other investment techniques and acquire other listed securities as will ensure the most efficient tracking of the Index, subject always to the terms of its mandate with the manager.
 
3. When would the Asset Manager need to employ alternative investment Techniques?
 
The need to employ alternative investment techniques would only arise in the event of a liquidity problem, for example if it were not possible to acquire any of the securities comprising the Index or dispose of securities falling out of the Index due to there being no market in such security.
 
4. How is Property Index Tracker Regulated?
 
Property Index Tracker is managed by Property Index Tracker Managers (Pty) Ltd. a registered manager in terms of the Act. The manager is bound by the provisions of the Act, the Property Index Tracker Deed and the JSE Listings Requirements.
 
5. What fees are payable by investors?
 
Management fee

The manager is entitled to an all-in management fee in respect of the administration of each portfolio on the basis set out in the Property Index Tracker Deed calculated as a percentage of the market value of the total assets of the portfolio (excluding any income accruals and permissible deductions, if any) accrued daily and payable out of the distributable income of the portfolio after the end of every accounting period. In order to ensure efficient tracking of the Index, the manager may (but is not obliged to) waive its fee (or a portion thereof).

Upfront and exit fees

The manager is also permitted in terms of the Property Index Tracker Deed to charge either an upfront fee or an exit fee in connection with the expenditure incurred and administration performed by it in respect of the creation, issue and sale of participatory interests and the repurchase of participatory interests, respectively. Such fees would be expressed as a percentage of the consideration received from or payable to an investor and/or charged on a sliding scale. No exit fee may be charged if an upfront fee was levied by the manager at the time the investor purchased the participatory interests. The manager may at any time in its discretion waive or rebate the upfront and/or exit fee (or any portion thereof) in respect of all investors, any category of investor or any particular investor.

Establishment fees

In order to recover a portion of the costs associated with establishing a portfolio, the manager may charge additional, once-off fees to investors who subscribe for participatory interests at the time of launch and listing of Property Index Tracker portfolios.  These fees will be as disclosed in the applicable supplement and supplementary deed.

Other costs and charges All taxes (including, but without limitation, UST), duties, administration, transaction and custody charges and brokerage fees are for the investor’s account.