Satrix style tracker Q4 2019

What worked and what didn’t in Q4 2019?

| 5 February 2020

Factor performance review at a glance

The fourth quarter of 2019 ended the year in strong favour of Momentum factors, as Price Momentum (+4.6%) once again showed the strongest performance, backed up by Earnings Revisions (+3.7%). Quality factors performed poorly in 2019 and in the fourth quarter Return on Equity (-2.6%) as well as Debt to Equity (-1.7%) delivered disappointing returns. Value factors also performed poorly in the fourth quarter, with Dividend Yield (-4.1%) and Price to Book (-0.8%) delivering negative returns. On a positive note, Price to Book had a positive 2019. Dividend Yield was one of the poorest performers.

Key events that impacted performance in Q4 2019

The MSCI World (Developed Markets) returned an impressive 8.5% while MSCI Emerging Markets was up 13.1%. Global equities rallied behind signs of stabilising global growth and easing of trade tensions between the US and China, who announced in December that “Phase 1” of an agreement had been reached. In the UK, Eurosceptic Boris Johnson became the prime minister after being elected as leader of the Tories. Commodities were generally higher at the end of the quarter with Brent Crude, Gold, Palladium and Copper advancing 11.5%, 2.6%, 10.1% and 8.6% respectively. In South Africa this led to Resources (+13.4%) outperforming Financials (+2.5%) and Industrials (-0.05%). Industrials were negatively impacted by stage 6 load shedding. Despite the electricity situation and Moody’s revised outlook from stable to negative, the Rand ended the year at a remarkably stronger R14.01/US Dollar.

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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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