STANLIB MultiManager INSIGHTS is a regular email communication that provides advisers with important information and insights regarding our business and solutions.

1.
Dear financial adviser,
STANLIB Multi­Manager INSIGHTS is a regular email communication that provides
advisers with important information and insights regarding our business and solutions.
At STANLIB Multi­Manager it is our vision to be an industry leader in delivering outcome­
orientated investment solutions that exceed our clients’ expectations. All our thoughts,
interactions and outcomes are shaped by our passion for our clients. Listening to and
understanding our clients’ needs remain paramount in our approach to generating value,
adding investment ideas to ensure quality and timeous outcomes for clients.
Who we are
Exceptional performance track record
STANLIB Multi­Manager performed exceptionally well over the last 12 months, with 16 of
our 17 funds (94%) ranking in the top two quartiles relative to industry peers, as shown
in the table below. Longer­term performance is also pleasing. Over the five­year period
to the end of January 2017, 80% of our funds ranked in the top two quartiles, whilst over
the 10­year period, 78% ranked in the top two quartiles.
STANLIB Multi­Manager fund rankings relative to peers as at 31 January 2017
How do we perform relative to large single managers?
The graph below shows the performance of managers with first and second quartile
rankings relative to peers as at 31 January 2017.
STANLIB Multi­Manager has a higher percentage of funds in the top two quartiles than
most other large single managers over the one and three year periods to 31 January
2017. Our longer­term performance is in line with the best managers in the industry.

2. Funds in 1st and 2nd quartiles relative to peers as at 31 January 2017
Dispelling the myth that multi­manager funds are expensive
Financial advisers often think of multi­managers as a hard sell to investors because of
perceived higher costs. However, in reality investors could be missing out on one of the
best­kept secrets of successful long­term investing.
Avoid looking at the collective when expressing a view on fees
Confusion about the fees charged by fund of funds (FoF) and those of multi­managers
tends to blur the issue. Fund of funds tend to be very expensive, partly because these
managers do not have the necessary scale to negotiate cost­effective segregated
mandates and fees. Multi­managers, on the other hand, benefit from having significant
scale, allowing them to negotiate cost­effective fees. Multi­managed funds charge far less
than FoFs and are often even more cost­effective than single manager funds.
For example, if you take the largest multi­asset ASISA category, high equity, you will see
that the majority of FoFs are more expensive than single manager funds. In contrast, multi­
manager funds from those managers with scale, such as the STANLIB Multi­Manager
funds, are generally much cheaper than FoFs and even cheaper than many single manager
funds.
(ASISA) South African MA High Equity Category TER
Maximum multi­manager/FoFs 3.61%
Average multi­manager/FoFs 2.12%
Category average 1.89%
STANLIB Multi­Manager Balanced Fund (B1) 1.45%
Source: MorningStar
An additional layer of fees does not necessarily translate into higher
fees
A multi­manager is a fund manager that creates a portfolio by choosing multiple
managers to manage the underlying mandates. The aim is to diversify risk and the
potential returns through blending some of the best managers in a particular portfolio. By
their very nature, multi­manager funds have an additional layer of fees – the fee they
charge for their service and the fee paid to the underlying asset managers. This does not
necessarily translate into a higher overall fee or total expense ratio (TER), as a large
multi­manager like STANLIB Multi­Manager can negotiate very competitive fees with the
underlying asset managers.
Do not forget the extra layer of governance when looking at fees
Having the STANLIB Multi­Manager investment team responsible for investment due
diligence is like having your own personal lawyer by your side whenever you sign a new
contract. You have the benefit of a professional who knows what to look for and how to
decipher the often complex financial language. By constantly reviewing a fund’s
investment positions and mandate adherence, we aim to identify and prevent
catastrophic risks before they occur.
There have been a number of high­profile fund failures which bring to the fore the
importance of operational and governance due diligence. The 2008 Fidentia scandal saw
R1.4 billion siphoned from a pension fund aimed at paying an income to widows and
orphans of mineworkers. In 2013, the Sharemax­promoted Zambezi Retail Park property
syndication turned out to be an illegal scheme with billions of investors’ capital
disappearing. As recently as December 2015, a SA unit trust lost 66% of its value in two
days when the fund manager could not get out of complex derivative positions.

3. Switchboard: +27 (0)11 448 6000 Call Centre: 0860 123 003 (SA only) Broker line: 0860 104 418 (SA only)
For enquiries: contact@stanlib.com For instructions: instructions@stanlib.com
The lesson is clear. Operational due diligence and governance procedures are crucial.
Changes in regulations are raising questions about the risk governance of managers and
attention is shifting to the administrator and trustee. Financial advisers may well be next
to come under the magnifying glass, particularly if the work they performed before
recommending a fund to a client is superficial, baseless, or based on past performance.
By partnering with STANLIB Multi­Manager many of these risks are mitigated for both
you and your clients.
We are committed to deliver on expectations
At STANLIB Multi­Manager, we focus on providing investment performance over
meaningful periods, to meet our client expectations.
Treating Customers Fairly (TCF) is a regulatory framework set by the Financial Services
Board (FSB). This framework governs the way a Financial Services Provider (FSP)
business conducts daily dealings with its clients ensuring that all clients are treated fairly,
during all stages of the product life cycle and advice process.
The FSB outlined six TCF outcomes, which should be entrenched within an FSP.
Outcome five – Product Performance Expectations – makes reference to "products that
perform as firms have led clients to expect." We fully support this TCF outcome and
seek to achieve consistent, reliable, above­average performance through a risk­
controlled approach to investment management.
We believe our success stems from our focus on the key principles that characterise the
STANLIB Multi­Manager approach to investing. This includes a commitment to
innovation, a disciplined process, diligent risk management and a collaborative
investment team. Our investment managers adhere to strict investment disciplines and
draw on high­quality, proprietary manager research and analysis.
We are committed by way of our disciplined investment processes, combined with our
fully integrated risk management and tight controls, to provide our clients with solutions
that deliver on what we expect and simultaneously meet our client outcome
expectations.
Regards,
De Wet Van der Spuy
Managing Director: STANLIB Multi­Manager
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