Satrix style tracker Q3 2019

What worked and what didn’t in Q3 2019?

| 27 October 2019

Factor performance review at a glance

The third quarter of 2019 continued to favour Momentum factors, with Price Momentum (+10.1%) the clear winner, and Earnings Revisions (-2.0%) taking a breather. After Quality factors ended strongly in 2018, 2019 has continued to see a reversal with Return on Equity (RoE) (-12.4%) performing poorly over the quarter, and Debt to Equity (1.7%) performing fairly neutrally. Value factors were generally neutral in Q3 with Price to Book (+1.1%) performing better than Dividend Yield (-3.2%).

Key events that impacted performance in Q3 2019

In Quarter Three, the MSCI World (developed markets) returned a flat 0.5%, while the MSCI Emerging Markets (emerging markets) was down more than 4.3%. The US Federal Reserve and the European Central Bank both eased their policies to offset signs of weaker global growth. In the UK, Euro-sceptic Boris Johnson has become the prime minister after being elected as leader of the Tories. Commodity prices took a dive with key iron ore benchmark prices plunging some 20% in a matter of weeks, and the key industrial metal, copper, hitting two-year lows. In South Africa, the SA Reserve Bank held their policy rate unchanged at 6.5% at its September meeting. Interestingly, their statement was more dovish than earlier in July, when it did actually cut rates. Locally, the equity market lost a lot of ground, given the economic and global economic backdrop, while the Rand also depreciated significantly.

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Satrix Managers (RF) (Pty) Ltd (Satrix) a registered and approved Manager in Collective Investment Schemes in Securities and an authorised financial services provider in terms of the FAIS. Collective investment schemes are generally medium- to long-term investments. Unit Trusts and ETFs the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs are index tracking funds, registered as a Collective Investment and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur additional costs due to it being listed on the JSE. Past performance is not necessarily a guide to future performance and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The index, the applicable tracking error and the portfolio performance relative to the index can be viewed on the ETF Minimum Disclosure Document and/or on the Satrix website. Performance is based on NAV to NAV calculations of the portfolio. Individual performance may differ to that of the portfolio as a result of initial fees, actual investment date, dividend withholding tax and income reinvestment date. The reinvestment of income is calculated based on actual distributed amount and factors such as payment date and reinvestment date must be considered. If the fund holds assets in foreign countries it could be exposed to the following risks regarding potential constraints on liquidity and the repatriation of funds: macro-economic, political, foreign exchange, tax, settlement and potential limitations on the availability of market information.
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