We started during 1983 with financial advice, but acquired our fund management license during 1995, when we started to act as DFAs (Discretionary Financial Advisors), managing the investments of our clients via wrap funds, but funds under management had grown to such an extent that we were able to change the wrap funds to fund of funds during 2005.
As mentioned elsewhere we have foreseen thereafter the possibility of the 2008 Credit Crunch Crash after which we have decided to apply apart from our CatII fund management license also for a CatIIA hedge fund management license, as an alternative methodology of risk management to address the perceived uncertainties of the expected 2008 Credit Crunch crash at the time.
2.1 Financial Advisors Regulated in Terms of FAIS Act
In complying with the FAIS Act (Financial Advisory and Intermediary Services), Kanaan Trust is required to bring certain information concerning its business entity and its employees to your attention. Before financial advisors were not regulated like lawyers, doctors and auditors have been. A Doctor for example must at least have a M.B.Ch.B degree, with the necessary experience and must be registered at the medical and dental board of South Africa. Financial Advisors are now also required to be licensed and there are thus 3 aspects concerning themselves that they are supposed to explain to you, namely:
2.1.1 The academic qualifications of our Key Individuals
2.1.2 Their experience concerning the products they give advice on.
2.1.3 Whether they are licensed to give advice on these products.
2.2 Our Key Individuals, Analysts, Representatives and Compliance Officer are:
Andre Delport (Chairman/Fund manager/ Financial Advisor)
B.Iuris (UP) degree, with a minimum of 5 years fund management experience and a Category IIA license (which includes the Category I and II licenses).
Gert Delport (CEO/ Financial Manager/ Fund Manager /Analyst/Financial Advisor)
B.Com (Fin) degree and studying towards his CFA (Charted Financial Analyst) with a minimum of 5 years fund management experience and a Category IIA license (which includes the Category I and II licenses).
Andries van Tonder (Analyst/Financial Advisor/ Compliance Officer)
Sc (Chemical Engineering) degree and studying towards his actuarial degree, has 3 years fund management experience and a Category I license, which also reflects on the website of the FSCA (Financial Sector Conduct Authority). He has also completed his Post Graduate Diploma in Financial Planning at the University of the Free State in 2017.
Johannes Delport (Administrator)
B.Com (Econ) degree.
2.3 Approved financial service provider
Kanaan Asset Managers is an approved financial service provider (FSP 528) and has a licence to advise, with intermediaries to deliver the service according to the following categories.
Category I: Long Term Insurance Category C, Retail Pension benefits participatory, interests in collective investment schemes. Act also as a (IFA) Independent financial adviser. Independent Financial Advisor fees on investments under management, fluctuate between 0.5% to 1% per year and are usually more expensive than FA’s (Financial Advisors) whose fees are limited by the institution for which they work, namely Old Mutual, Sanlam or Nedbank etc.
Category II: Long term insurance Category B and C, retail pension benefits, pension, fund benefits, money market instruments, participatory interests in collective, investment schemes. Act also as a DFA (Discretionary Financial Advisor). Although financial advisors like Kanaan Asset Managers which act as DIM’s, need to have the same minimum qualifications and licences of the fund managers of the institutions such as Old Mutual, Sanlam and the banks, they usually do not have the same experience and training in terms of buying and selling of shares. We therefore do not manage share portfolios on behalf of clients, but manage portfolios of investments in terms of fund of funds and wrap funds taking into consideration the clients risk profile and circumstances, with the emphasis on risk management.
Category II A: Hedge funds FSP (Financial service provider) Act also as a DIMM (Discretionary Investment Manager)
A copy of the licence with the content of the financial services for which Canaan is authorised, as well as exemptions, is available on request. Kanaan acts here also in the case of its category 2 license, as a DFA (Discretionary Financial Advisor). Here Kanaan acts in the case of hedge funds also as a DFA (Discretionary Financial Advisor), as mentioned in the case of its category 2 license.
2.4 Check that your Financial Advisor have the right qualifications
It is important that you, as an investor, find out whether a financial advisor, who approached you or who you approached, have the necessary academic qualifications, experience and licence to give the applicable advice to invest or withdraw out of a unit trust or hedge fund investment.
2.5 Visit the Financial Sector Conduct Authority FSCA) Website
You can check whether the applicable FSP (Financial Services Provider), has the necessary CAT 1, CAT II or CAT IIA license by visiting https://www.fsca.co.za/Pages/Default.aspx and click on:
2.5.1 Regulated Entities
2.5.2 List of Regulated Entities and Persons - FAIS
2.5.3 Financial Service Provider (FSP)
2.5.4 FSP Number, or FSP name (and example. Type: Kanaan Trust)
2.5.7 Contact Details
2.5.8 Click on “Key Individual”, scroll down to products and click on it. At this stage you will see the products for which the specific key individual is licenced.
If you as shown above have visited the FSCA website, you would have seen the products are categorised in categories and subcategories. Category one means that the applicable key individual and his marketers can market the applicable product. Category two implies that the applicable key individual can market and manage the applicable product. For instance, in the case of pension funds and collective investment schemes (Unit Trusts) the applicable key individual and his personnel can manage Fund of Funds, are allowed to make the necessary changes, are allowed to buy and sell the underlying funds, and switch to cash without obtaining the clients permission. We act here as a DFA (Discretionary Financial adviser). The category 2 licence has been very important to us since we have setup our funds during 1995 as that has afforded us the opportunity so switch to cash two weeks before the far east pacific share market crash, timeously before the IT bubble crash in 2000, timeously during the 2008 Credit crunch crash. However, we do not guarantee that we will always switch timeously.
Lastly you will notice on the FSCA website CAT II A, for Hedge Funds. If you do not see Cat II A under the name of the applicable key person, it means that the applicable key individual is not allowed to manage Hedge Funds.
Members of the public are of course allowed to invest in any one of the mentioned products regulated in South Africa as well as in offshore investments not regulated in South Africa but regulated offshore, if they feel they have the necessary qualifications, time, experience and confidence to invest directly and manage these investments themselves. They will then not have to pay a financial advisory fee.
2.6 Product Suppliers
Where clients and prospect clients have accepted this letter of introduction/disclosures and allowed Kanaan Asset Managers to do an analysis of their immediate, intermediate and retirement capital requirements, Kanaan may accordingly advise various investments and or financial security products via the following institutions, in terms of its service level agreement with these institutions.
2.6.1 Absa Investment Management Services
2.6.2 Boutique Collective Investments
2.6.3 Momentum Life, Momentum Wealth
2.6.4 Old Mutual
2.6.7 PSG Asset Management
2.6.8 Metropolitan Life
2.6.9 International Assurance Ltd
2.7 Indemnity Cover
Kanaan Trust holds adequate professional indemnity insurance through Coleman Insurance Brokers cc.
Compliance with the FAIS Act is monitored by Michael Denenga, an external compliance practice and compliance officer approved by the Financial Services Board. His email address is email@example.com.
2.9 Client Confidentiality
Kanaan Trust wishes to advise that all information obtained or acquired about you shall remain confidential unless you provide Kanaan Trust with written consent, or unless Kanaan Trust is required by any law to disclose such information.
If you are dissatisfied with any aspect of Kanaan Trust’s service, you should address your complaint in writing to me at Postnet Suite 94, Private Bag X0003, Ballito, 4420. A copy of Kanaan Trust’s Complaints Resolution Policy is available on request.
2.11.1 Comprehensive Financial Advice
For comprehensive financial advice therefore Kanaan charges 1% per annum, levied monthly in arrears from the units of the investment’s clients made through Kanaan Asset Managers or managed by Kanaan Asset Managers. Where Kanaan Asset Managers process applications for life cover and disability cover on behalf of the client, Kanaan Asset Managers receives commission according to the prescribed commission’s payable by the relevant company. Kanaan receives 5% upfront commission on investments made which is negotiable. Kanaan Asset Managers does not receive income for services rendered and does not invoice clients for financial advice in terms of the following:
The below-mentioned advice includes, but is not limited to:
- Immediate Capital Planning
- Intermediate Capital Planning
- Retirement Capital Planning
- Income Tax Planning
- Estate Duty Planning
- Family Trust Will
- Rebalancing of investment portfolios
- Advice concerning small business management and strategic planning
- Active Fund Management
- Passive Fund Management
2.11.2 Possible Conflicts of Interest
As mentioned previously, we have been adapting our services and products since 1987 according to the need of our portfolio of mainly mining engineers and other professions in the mining industry, therefore our approach became more complex and, in many cases, different from the advice of other financial advisers. Because of the need to protect our client’s investments against the big market corrections and to manage the fund of funds in various asset classes simultaneously, for a situation where we could not switch one of our fund of funds in an asset class to cash timeously, we had to acquire a Cat II, as well as a Cat II A fund management license. This can cause a possible conflict of interest and it can therefore be said that we are not independent financial advisors in the true sense of the word, where we advise our clients to invest in our three Fund of funds mentioned below.
Of course, we argue that we acquired the various underlying funds of our fund of funds/wrap funds, independently from any influence, merely based on our research, in terms of what we believe is best suited for our various wrap funds and fund of funds, namely:
We manage our fund of funds/wrap funds through our segregated mandate for active management or passive management depending on the needs of the client.
188.8.131.52 Stable SA
184.108.40.206 Equities SA
220.127.116.11 Global SA
18.104.22.168 Compulsory SA
22.214.171.124 Stable Offshore
126.96.36.199 Equity Offshore
188.8.131.52 Moriah Offshore
184.108.40.206 Trading Offshore
2.12 Limited Financial Advice/ Passive Management
Clients who prefer Kanaan’s financial advice and services limited to the processing of predetermined investments and or financial security products where the client’s risk and investment portfolio will not be managed actively by Kanaan Asset Managers, Kanaan will still receive commissions from life offices relevant to the applicable life and disability products purchased, but in the case of investments Kanaan will charge only a management fee, levied monthly in arrears.
Maximum upfront commission is 5% of the investment amount before units are allocated.
2.13 DFA/IFA Fees
|TYPE OF FUND||DFA/ ONGOING FEE||PERFORMANCE DRIVEN FEE (PDF)||IFA/ ONGOING FEE||INITIAL FEE|
|2.13.1||Moriah Global FoF
|15% of performance above the previous high-water mark monthly in arrears.||0%
|20% of performance above the previous high-water mark monthly in arrears.||0%
|20% of performance above 6% per annum according to the high-water mark principle monthly in arrears.||0%
|2.13.4||Active Wrap Funds SA:
|15% (Exc. Vat) of performance above (Inflation + 3%) according to the high-water mark principle yearly in arrears.||1%
- DFA (Discretionary Financial Advisor)
- FA (Financial Advisor)
- PDF (Performance Driven Fee)
For more information concerning the fund management fee, you can visit our website www.kanaantrust.com and click on funds and thereafter on the applicable factsheet.
No distribution fees or rebates will be paid to entities or independent financial advisers promoting our funds to encourage them to invest in our funds. Financial advisers are supposed to invest in our funds because of their performances and their risk profile which might suit the needs of some of their clients.
2.15 Additional Fees
Fees may be levied if the client requests a new or enhanced service that is not contemplated by the current fee structure.
Performance, not profits, is what is important to us.
3.1. Grateful of what we have been able to do:
We aim to bring talented people together and to harness their skills and expertise.
3.2. To be innovative:
Our aim is to create something altogether new in the corporate world. We continually aim to be imaginative and innovative.
3.3. To make a difference in the lives of employees:
Our firm belief is that people who work for us are our biggest asset. Unity is strength and therefore we aim towards a united force where each one feels they belong to a large family and feel secure in that partnership.
3.4. To be a good leader:
Building competent leadership qualities is high on our list of priorities. Outstanding leaders in any field have always been those who can listen well – not those who speak too much and thereby tend to impose their views on their personnel and also on outsiders. When they do speak, their words are always meaningful, to be able to engage the opposition in healthy debate.
We are always transparent. We will always answer all our clients' questions and tell them like it is. There is no investment black box that the client does not understand.
3.6. Aligning Interests:
Most of the personnel have invested their own funds in the same portfolios that are offered to their clients in general.
We feel passionate about our business and its investments. We are intellectually curious and therefore also widely read.
We manage our business flexibly. In other words, we adapt to changing circumstances continually in the same manner as we manage our funds. Kanaan will close any fund under management if there is a possibility that the fund may become too big or inflexible in the foreseeable future.
The personnel management of Kanaan, when recruiting asset managers or analysts, is more interested in the right temperament for investments. The right temperament is one that allows a good manager to think differently and not to be influenced by the crowd. Having the ability to think differently also means that our underlying managers can withstand the stress of underperforming and stick to our investment philosophy. A study of 163 large cap equity managers in the US whose annual returns over a ten year period, placed them among the top 25% of managers in that category, shows that during that period, 97% of them had at least one three-year period where their returns placed them among the bottom 50% and 77% of them had at least one three-year period during which their returns placed them among the bottom 25% of managers.
3.10. Flexible conviction:
We tend to have a high level of conviction and this is usually reflected in a low number of funds in our portfolios. We take bigger bets on fewer funds. While we are independent and often contrarian thinkers, we can also change our views if the evidence changes. We are looking for resilience, not stubbornness.
3.11. Long term focus:
We tend to have a long term focus and do not speculate on the short term. We understand the need to have patience and wait for the value of a sector or a fund to be unlocked. Doing less often results in earning more.
We launch and manage only a few funds. We have never launched funds that target the latest fad and we do not focus on short term returns. We are stewards of our funds and are opposite of salespersons, who are simply selling products. Performance, not profits, is what ultimately drives us.
At Kanaan Trust, we have implemented the Code of Ethics as underlined by the CFA (Charted Financial Analyst) Institute. We aim to maintain high standards of education, integrity and professional excellence. For in depth information regarding this high standard, please either download our Code of Ethics or contact us to send it to you.