SB US Equity Index Feeder Fund

The US Equity Feeder Fund allows you to
invest in the world’s biggest economy.

About the Fund

The SB US Equity Index Feeder Fund aims to invest in large, mid, and small cap US equities with diversified growth and value styles through a Target Fund. The Fund seeks to track the performance of the CRSP US Total Market Index.

We will be changing our Fund’s custodian from HSBC to Standard Chartered as part of our continuous efforts in finding the best rates for our customers. The shift shall lower our fund administration costs, ultimately boosting the returns of our Funds. This will be reflected in the KIDS as of April 2019.

Client Sustainability

The SB US Equity Feeder Fund is suitable for investors who:

  • Have an aggressive risk tolerance
  • Seek potentially higher returns through investments in US stocks and who can tolerate high price volatilities
  • Have the possibility to be exposed to capital losses given the volatile nature of the US equity market
  • Have an investment horizon of three to five (3-5) years
Fund Type Equity Index Feeder Fund
Inception Date July 2, 2018
Benchmark CRSP US Total Market Index
Initial NAVPU USD 1.00
Business Day A day (other than a Saturday or Sunday) on which banks are generally open for the transaction of business in Manila, Philippines and is a Banking Day of the Vanguard Total Stock Market ETF (the “Target Fund”). Target Fund Name: Vanguard Total Stock Market ETF
Order Date (T) Any Business Day within the Subscription Cut-Off Time and/or Redemption Cut-Off Time.
Trade Date (T) A Business Day where the subscription and/or redemption order is executed. Order Date is the Trade Date.
Redemption & Subscription Cut-Off Time Up to 1:30pm of any Business Day
Subscription Settlement Date On Order Date
Redemption Settlement Date Up to seven (7) Business Days after receipt of Redemption Notice and/or Redemption Confirmation within the Redemption Cut-Off Time.
Valuation Date The Business Day at which the Fund’s assets are valued. In case of Subscription and/or Redemption, the Valuation Date is the Trade Date.
Trust Fee (p.a.) Class A: 0.71% Class B: 0.51% Class F: 0.51%
Other Notes

Applicable holidays for this Fund: US, Singapore, and Philippine holidays

Class Minimum Initial Participation Minimum Subsequent Participation Minimum Redemption Minimum Holding Amount
Class A USD1,000.00 USD500.00 USD500.00 USD1,000.00
Class B USD5,000.00 USD1,000.00 USD1,000.00 USD5,000.00
Class F USD5,000.00 USD1,000.00 USD1,000.00 USD5,000.00

Class A – This Unit Class is open to all individuals and institutions and it is recommended but not limited to those who want to invest in small amounts. This is for individuals and Institutions looking for the flexibility to be able to invest in small amounts with no commitments of additional future subscriptions.

Class B – This Unit Class is only open to institutional investors that are duly registered with Securities and Exchange Commission and existing under the laws of the Philippines, such as partnerships, corporations, government financial institutions, educational institutions, organizations, and foundations, all subscribing on their own behalf, and the structures which such Institutional investors put into place for the management of their own assets. This is for institutions who deal in very large amounts and foresee themselves making very large individual transactions.

Class F – This Unit Class is open to individual investors that meet the Minimum Initial Participation required for the F Unit Class. This is primarily intended for High Net Worth Individuals looking to invest in the amount of USD 5,000 and above and foresee themselves making additional investments in the amount of USD 1,000 and above.

*High Net Worth (HNI) refers to a Wealth Management customer

Investment Commentary

After experiencing its swiftest fall from bull to bear, US equity markets recovered surprisingly fast, as can be seen in the table below. The S&P rose 20% in the second quarter for its best quarterly gain since 1998. The tech-heavy Nasdaq Composite’s 30.6% jump over the same period was its best performance since 1999.

Since the early June high of 3,227 the S&P500 has been directionless as price action drifts sideways above key support provided by the 200-day MA and April/May highs at the 2,943-3,017 area. A trading range between 2,943-3,017 and 3,300-3,394 sits within the large broadening pattern which has formed off the January 2018 highs with a series of higher highs and lower lows. The upper boundary of this larger pattern provides resistance at the 3,450-3,500 area. Should the S&P500 fail to hold the 2,943-3,015 support level we would anticipate a lower range to form between 2,700-2,730 support and 2,943-3,017 resistance

June has seen a renewed wave of the virus in some US states and it is starting to weigh again on economic activity. Indeed, the US states with faster case growth are now underperforming economically based on high-frequency indicators. As of this writing, US Covid-19 cases reached over 2.9mn with daily new cases breaching 50,000.

This stagnation across the large US states masks some convergence between red and blue states.

  • The large blue states such as New York actually accelerated their reopening, but this was offset by the large red states slowing down or even reversing theirs.
  • Florida in particular showed signs of reversing mobility, as did Ohio, which is perhaps the next largest state to see a second wave, given it’s one of the most open states in the US. On most recent estimates its local transmission rate (R) has exceeded 1.

At the June FOMC meeting, Chair Powell’s press conference reaffirmed that the Committee has a cautious view on the economic outlook. Fed Chair Powell said that he is not even “thinking about thinking about raising rates.” Looking ahead, the Fed has made clear it will use all of its tools for as long as it takes to secure the recovery.

  • Recent data have been significantly above expectations, with declining jobless claims suggesting this could arguably have been the briefest recession on record. A variety of indicators suggest corporate and consumer confidence has held up surprisingly well. However, the recent re-acceleration in virus cases, potentially causing activity levels to recede again, is an overhang.
  • The equity rally so far has been a tale of two markets: mega-cap growth stocks, which are beneficiaries of the pandemic, have trended to new highs, but the rest of the stocks, still the majority of the market, have been largely stuck in a range for the last 2 months and are not pricing in a cyclical rebound yet.
  • As we enter the second half of the year, attention will focus on the US Presidential election in what looks to be a tight race, which has historically meant a range bound market till the uncertainty is resolved, followed by a strong rally into year-end regardless of who won.

A survey conducted by UBS on 450 US companies showed that CEOs and CFOs expect sales to slow dramatically in the next twelve months, three times worse than a similar survey they did in May 2018. Nearly 60% of companies with less than $500mn in sales expect a slowdown in the pace of revenue growth in the next 12 months compared to the last 12 months.

Target Fund Information and Performance

QUICK FACTS

Target Fund Vanguard Total Stock Market ETF
Benchmark CRSP US Total Market Index
Expense ratio 0.03%
Dividend schedule Quarterly
ETF total net assets $143,380 Million
Inception date May 24, 2001

TOP TEN HOLDINGS

Microsoft Corp. 5.0%
Apple Inc. 4.7%
Amazon.com Inc. 3.8%
Alphabet Inc. 2.7%
Facebook Inc. 1.8%
Johnson & Johnson 1.2%
Berkshire Hathaway Inc. 1.1%
Visa Inc. 1.1%
Procter & Gamble Co. 1.0%
United Health Group Inc. 0.9%

 

 

 

 

PERFORMANCE HISTORY

VTI (Inception 05/24/2001) Quarter Year to date 1 year 3 years 5 years 10 years Since inception
Net asset value (NAV) return 22.09% -3.41% 6.44% 10.04% 10.02% 13.73% 7.21%
Market price return 22.06 -3.39 6.47 10.03 10.02 13.74 7.21
Spliced Total Stock Market Index 22.09 -3.40 6.47 10.04 10.03 13.74 7.22

Dow Jones U.S. Total Stock Market Index (formerly known as the Dow Jones Wilshire 5000 Index) through April 22, 2005; MSCI US Broad Market Index through June 2, 2013; and CRSP US Total Market Index thereafter.

 

 

How to order

  1. You need to have an SB Dollar Account to invest. No dollar account yet? Click here to open an account.
  2. Fill up the UITF Application Form completely.
  3. Wait for a call from our investment specialist.

Why Invest?

Diversification

Investments (and risk) are spread across various assets industry-wide.

Liquidity

You can subscribe and redeem on any banking day.

Affordability

You can start investing in UITFs with just $1,000 (SB dollar account required).

Transparency

You can check the value of your investment daily with NAVPU.

Want to invest in the SB US Equity Feeder Fund?

Key Risks

Interest Rate Risk – The possibility of an investment to experience losses due to change in interest rates.

Market/Price Risk – The possibility for an investor to experience losses due to changes in the market prices.

Liquidity Risk – The possibility for an investor to experience losses due to inability to sell or convert assets into cash immediately or in instances where conversion to cash is possible but at a loss.

Credit Risk/Default Risk – The possibility for an investor to experience losses due to borrower’s failure to pay principal and/or interest in a timely manner.

Reinvestment Risk – The possibility of having lower returns of earnings when maturing funds or the interest earnings of funds are reinvested.

Foreign Exchange Risk – The possibility of an investment to experience losses due to fluctuations in foreign exchange rates.

Country Risk – The possibility of an investment to experience losses from an investment in a security issued by a foreign country due to changes in political, economic, and or social structures.

Other Risks – For Feeder Funds, the possibility of an investment to experience losses due to the Target Fund investing in emerging markets that may carry a higher risk than developed markets.

Taxation
  • Except when specifically required by law, the Trustee shall have no responsibility to withhold income or other taxes on revenues from the Fund.
  • Each participant should consult its own tax advisor as to the specific tax consequences of his/her investment in and redemption of units of participation in the Fund, including the applicability and effect of local and national laws of the Philippines, as well as consequences arising under the laws of any other taxing jurisdiction.
Disclaimer

The contents herein are intended for general information purposes only and should not be used as basis for making decisions nor should it be regarded as a substitute for specific professional advice. No representation or warranty as to its accuracy, reasonableness, or completeness, express or implied, is hereby made. The views and opinions expressed in this article does not pertain to the any opinion, representation or position of SBC Trust in whole or in part. SBC Trust denies any liability that may arise out of any loss or may result in actual, direct, indirect, special, incidental or consequential damage from the use or reliance on any information provided.

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