Satrix dividend plus fund

The Satrix Dividend Plus Fund is a new addition to the family of Satrix products and is being launched in late August 2007.

The pre-listing information on the Satrix Dividend Plus Fund states that the fund will provide a means of investing in a portfolio of companies paying higher than average dividends on the JSE. The fund will track the FTSE/JSE Dividend Plus Index.

The Portfolio will consist of the 30 shares selected from the JSE Top 40 and Mid-Cap indices that are expected to pay the best normal dividends over the forthcoming year and will replicate the performance of the FTSE/JSE Dividend Plus Index.

Note that the Satrix Dividend Plus Fund is classed as an Exchange Traded Fund [ETF] and is also a registered Collective Investment Scheme [Unit Trust].

The Index is reviewed annually in June. The shares making up the Satrix Dividend Plus Fund will only be adjusted at review in June of each year, except in the case where corporate actions occur, such as terminations or mergers. In order to reduce constituent changes, a maximum of 5 additions and deletions are allowed at each annual review by evaluating the highest forecasted dividends of listed companies.

Potential investors must be aware that the Satrix Dividend Plus Fund consists of listed shares and is a long-term investment, as is a general equity unit trust or a share portfolio. Any share portfolio or equity unit trust investment is subject to risk and capital loss/gain and investors need to be acutely aware of downside risk on share prices of any equity/share investment.

An essential difference of investing in the Satrix Dividend Plus Fund versus other general equity funds, such as Allan Gray Equity, Foord Equity, Investec Value Fund or Nedgroup Rainmaker Fund and other actively managed unit trust funds, is as follows:

• The Satrix Dividend Plus Fund focuses on only ONE fundamental criterion i.e. dividend yield.
• While dividend yield is important for tax efficiency, “active” value-oriented unit trust managers also consider the Price to Book [Balance Sheet] and Price to earnings [Income Statement] of every particular company’s share they are investing in.
• A very important difference with good, active managers is that they also consider the ability of a company to pay a sustainable dividend and to grow the dividend over time. The sustainability of a dividend is fundamental to how much a company is worth. It is no use buying the share of a company that pays a high dividend next year and then goes through re-structuring or delisting, which may result in bankruptcy.

Silke Financial Services applies the minimum investment for any Satrix Fund lump sum investment of R1000 or multiples of R1000. The minimum debit order investment is R500 per month.

We believe that it is good to diversify your investments and should you be interested in the Satrix Dividend Plus Fund we are accredited to advise you and provide service on this Fund or any other Satrix Fund

Have a great week.

Ken silke
E-mail: ken@silke.co.za