Portfolio construction is clearly a passion point for Nico Katzke of Satrix. He's also a fan of analogies, so you can expect to learn about whether it's the elephant or the mouse that swings the bridge that they are crossing.

But beneath the fun, there's a serious learning opportunity here about how asset allocation drives the returns in a multi-asset balanced fund. Identifying the elephant is a very important part of the process.

This is true even during a period of heightened geopolitical noise, giving us great reminder about the importance of a long-term lens and an anchored strategy.

With reference to the detailed strategic asset allocation document that Satrix makes available to the market, Nico explains the thinking behind the Satrix Balanced Index Funds.

In this episode:

00:00 Intro

01:30 Setting the scene: Satrix’s balanced funds and multi-asset strategies

03:45 Understanding the top-down process

06:05 How asset allocation drives long-term returns

06:40 The elephant, not the mouse

08:30 Placing balanced funds on the risk spectrum

09:32 Looking at the asset buckets in more detail

11:55 Low-cost vehicles as the building blocks

12:31 Overview of current exposure

15:16 Methodology used to assess different asset classes

19:41 Responding to changes in the geopolitical context

26:17 South Africa’s relative attractiveness

28:37 Closing thoughts

30:07 Disclaimer

This podcast is in partnership with Satrix.

Disclaimer:

Satrix Investments (Pty) Ltd is an approved financial service provider in terms of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (“FAIS”). The information above does not constitute financial advice in term of FAIS.

Satrix Managers (RF) (Pty) Ltd a registered and approved Manager in Collective Investment Schemes in Securities. Collective investment schemes are generally medium- to long-term investments. With Unit Trusts, Exchange Traded Funds (ETFs) and Actively-managed ETFs (AMETFs), 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 ETFs and AMETFs, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs and AMETF are registered as a Collective Investment and can be traded by any stockbroker on the stock exchange, LISP platforms and or via online trading platforms. ETFs and AMETFs may incur additional costs due to 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 and AMETF Minimum Disclosure Document. The index, the applicable tracking error and the portfolio performance relative to the index can be viewed on the ETF and AMETF Minimum Disclosure Document.

Performance is based on NAV to NAV calculations with income reinvestments done on the ex-div date. Performance is calculated for the portfolio and the individual investor performance may differ as a result of initial fees, actual investment date, date of reinvestment and dividend withholding tax. Some funds may hold assets in foreign countries and could be exposed to risks such as po...

• (00:00:00) - Intro
• (00:01:30) - Setting the scene: Satrix’s balanced funds and multi-asset strategies
• (00:03:45) - Understanding the top-down process
• (00:06:05) - How asset allocation drives long-term returns
• (00:06:40) - The elephant, not the mouse
• (00:08:30) - Placing balanced funds on the risk spectrum
• (00:09:32) - Looking at the asset buckets in more detail
• (00:11:55) - Low-cost vehicles as the building blocks
• (00:12:31) - Overview of current exposure
• (00:15:16) - Methodology uses to assess different asset classes
• (00:19:41) - Responding to changes in the geopolitical context
• (00:26:17) - South Africa’s relative attractiveness
• (00:28:37) - Closing thoughts
• (00:30:07) - Disclaimer