- Satrix ILBI Portfolio, an investment fund, is undergoing changes in its distribution method and benchmark index.
- The portfolio will shift from a reinvesting ETF to a distributing ETF, simplifying tax implications for investors.
- The benchmark index will change from the S&P South Africa Sovereign Inflation-Linked Bond Index to the FTSE/JSE Government Inflation-Linked Index (IGOV), enabling better performance tracking.
Satrix Managers (RF) Pty Ltd has announced proposed amendments to the investment policy and name of its Satrix ILBI Portfolio. The portfolio, registered under the Satrix Collective Investment Scheme, tracks the S&P South Africa Sovereign Inflation-Linked Bond 1+Year Index (ILBI Index), which reflects South African rand-denominated inflation-linked securities issued by the government.
The proposed changes aim to convert the Satrix ILBI Portfolio from a reinvesting exchange-traded fund (ETF) to a distributing ETF. Currently, the portfolio reinvests income distributions into constituent securities of the ILBI Index. However, Satrix intends to distribute income to investors periodically under the new structure. The conversion to a distributing ETF will align with the Net Asset Valuation Calculation and Pricing conduct standard issued by the Financial Sector Conduct Authority.
Unitholders of the Satrix ILBI Portfolio will experience no negative financial impact from the change in distribution method. Previously, unitholders were subject to income tax on distributions that were automatically reinvested, requiring adjustments to their base cost calculations. With the new distributing structure, unitholders will receive cash distributions directly and pay taxes accordingly. The overall tax consequences for investors will be simplified, providing a more streamlined investment experience.
In addition to the change in distribution method, the portfolio will also shift its benchmark index from the S&P South Africa Sovereign Inflation-Linked Bond Index to the FTSE/JSE Government Inflation-Linked Index (IGOV). This change aligns with the objective of tracking the performance of the new benchmark index and enables a more accurate comparison of the portfolio’s performance against the price return version of the IGOV.
The proposed amendments to the investment policy and benchmark index have been presented as a ballot voting procedure. Satrix Managers (RF) Pty Ltd has sought approval from unitholders to proceed with the changes. Upon successful completion of the ballot, the portfolio’s name will be changed from Satrix ILBI Portfolio to Satrix ILBI ETF.
The conversion to a distributing ETF and the shift in benchmark index aim to ensure compliance with regulatory standards, simplify tax implications for investors, and enhance the overall investment experience. The proposed amendments demonstrate Satrix’s commitment to meeting industry requirements and providing investors with transparent and efficient investment solutions.