--- name: sa-fund-analysis description: >- End-to-end framework for analyzing South African unit trust fund documents (Allan Gray, Coronation, PSG, 10X, Ninety One, Sanlam, Old Mutual, Stanlib, Sygnia, etc.). Extracts data from Minimum Disclosure Documents (MDDs/factsheets), models South African tax implications (SARS marginal rates on interest, REITs under s25BB, dividends under s64EA, CGT deferral), generates structured CSV comparison matrices, and produces standalone interactive web portals. --- # South African Unit Trust Fund & Tax Analysis Skill This skill provides the standard operating procedure (SOP) for conducting comprehensive fund comparisons, tax modeling, and client-ready digital asset generation for South African Collective Investment Schemes (CIS / Unit Trusts). Use this workflow whenever analyzing fund ranges from South African asset managers such as **Allan Gray, Coronation, PSG, 10X Investments, Ninety One, Sanlam, Old Mutual, Stanlib, or Sygnia**. --- ## Workflow Overview ``` ┌─────────────────────────┐ ┌─────────────────────────┐ ┌─────────────────────────┐ │ Phase 1: Extraction │ ──► │ Phase 2: Tax Modeling │ ──► │ Phase 3: Generation │ │ - Factsheets / MDDs │ │ - SARS Interest (41%) │ │ - Standardized CSV │ │ - Multi-agent parser │ │ - REIT Income (s25BB) │ │ - Strategy Report (MD) │ │ - Returns, Fees, Alloc │ │ - Dividends Tax (20%) │ │ - Dynamic Web Portal │ │ - Top 10 Holdings │ │ - CGT Deferral (16.4%) │ │ - Legal Disclaimers │ └─────────────────────────┘ └─────────────────────────┘ └─────────────────────────┘ ``` --- ## Phase 1: Fact Sheet (MDD) Data Extraction South African asset managers publish monthly **Minimum Disclosure Documents (MDDs)**. When provided with a folder of PDF factsheets: ### 1. Extraction Strategy * If multiple PDFs exist (e.g. 5 to 15 funds), launch parallel subagents or run a Python extraction script using `pypdf` or `pdfplumber` to extract structured fields. * Always verify the date of the fact sheet (e.g. "as at 31 July 2026") and fund class (default to **Class A / Retail Unrestricted**). ### 2. Standard 45-Column Extraction Schema Extract the following exact fields into a standardized schema: | Category | Required Fields | | :--- | :--- | | **Identification** | Fund Name, Management House, ASISA Classification, Risk Category (Conservative, Cautious, Moderate, Aggressive), Reg 28 Compliance, Recommended Horizon, Benchmark, Inception Date, AUM (R millions). | | **Fee Structure** | Base Management Fee, Total Expense Ratio (TER), Transaction Costs (TC), Total Investment Charge (TIC = TER + TC). | | **Performance** | Net annualised returns: 1-Month, 3-Month, 1-Year, 3-Year, 5-Year, 7-Year, 10-Year, Since Inception, and R1,000 growth illustration. | | **Risk Metrics** | Annualised Volatility (Std Dev), Maximum Drawdown, Positive Months Percentage, Highest 12-Month Return, Lowest 12-Month Return. | | **Asset Allocation** | SA Equities %, International Equities %, SA Fixed Bonds %, SA Floating Bonds %, SA Inflation-Linked Bonds (ILB) %, Offshore Bonds %, Offshore ILB %, SA Cash/Money Market %, Offshore Cash %, SA Property (REITs) %, Total Domestic %, Total Offshore %. | | **Top 10 Holdings** | Exact security name, portfolio weight (%), asset class, and counterparty/sector. | | **Income Distributions**| Distribution frequency (monthly, quarterly, semi-annual), last distribution in cents per unit (cpu). | --- ## Phase 2: South African Tax Modeling & Return Characterization A critical mistake in investment analysis is comparing gross unit trust returns directly to a guaranteed fixed deposit. In South Africa, different return streams are taxed under completely different provisions of the **Income Tax Act No. 58 of 1962**. ### 1. The 4 Distinct Tax Streams ``` Total Fund Return ├── 1. Interest Income ──► Taxed at Marginal Income Tax Rate (up to 45%, e.g. 41%) ├── 2. REIT Distributions ──► Taxed at Marginal Rate under Section 25BB (NOT dividend tax!) ├── 3. Domestic & Foreign Div ──► Flat 20% Dividends Withholding Tax (DWT under s64EA) └── 4. Capital Growth (NAV) ──► 40% CGT Inclusion Rate (16.4% effective) + DEFERRED until sold! ``` #### A. Interest Income (Section 10(1)(i)) * **Applicable Assets:** Money market instruments, fixed deposits, sovereign bonds, bank debentures, floating rate notes. * **Taxation:** Added to gross taxable income and taxed at the investor's marginal bracket (e.g. 41%). * **Annual Exemption:** An individual under 65 receives an annual interest exemption of **R23,800** (R34,500 if 65 or older). * **Baseline Fixed Deposit Math:** $$\text{Taxable Interest} = \max(0, (\text{Lump Sum} \times \text{Deposit Rate}) - 23800)$$ $$\text{Tax Drag} = \text{Taxable Interest} \times \text{Marginal Rate}$$ $$\text{Net Annual Yield} = \frac{\text{Gross Interest} - \text{Tax Drag}}{\text{Lump Sum}}$$ *(E.g., R1,000,000 at 9.00% gross in the 41% bracket yields **6.29% net after tax** due to full income tax on interest above the R23,800 exemption).* #### B. Listed Property / REITs (Section 25BB) * **Critical Rule:** In South Africa, distributions from Real Estate Investment Trusts (REITs) like Growthpoint, Redefine, Vukile, etc. are classified as **income**, NOT exempt dividends. * **Taxation:** Taxed at the full marginal tax rate (e.g. 41%). **Does NOT qualify** for the R23,800 interest exemption or the 20% dividend rate! #### C. Ordinary Dividends (Section 64EA) * **Applicable Assets:** Domestic and foreign equities (e.g. FirstRand, Naspers, Anglo American). * **Taxation:** Subject to **20% Dividends Withholding Tax (DWT)** withheld at source. Excluded from taxable income. #### D. Capital Gains Tax (Eighth Schedule) * **Taxation:** Individuals face a **40% inclusion rate** $\times$ marginal tax rate. At the 41% bracket, the effective maximum CGT rate is: $$\text{Effective CGT} = 40\% \times 41\% = 16.4\%$$ * **Annual CGT Exclusion:** R40,000 per tax year upon realization. * **The Compounding Deferral Advantage:** South African Collective Investment Schemes are rollover-exempt. Rebalancing within the fund incurs **no CGT** for unitholders. CGT is only triggered when the investor redeems or switches units. Therefore, capital gains compound tax-free year-on-year. ### 2. Blended Effective Tax Rate Formula For any fund or multi-fund portfolio: $$T_{\text{eff}} = (w_{\text{int}} \times T_m) + (w_{\text{div}} \times 0.20) + (w_{\text{reit}} \times T_m) + (w_{\text{cgt}} \times 0.40 \times T_m)$$ Where: * $w_{\text{int}}, w_{\text{div}}, w_{\text{reit}}, w_{\text{cgt}}$ are the respective proportions of the return generated by each stream. * $T_m$ is the investor's marginal income tax rate (e.g. 0.41). ### 3. Annual Fluctuation Principle Always document that **asset allocation does not equal annual taxable distribution**: * **Equity Bull Years (+20% equity):** Returns are predominantly capital gains (unrealized, zero immediate tax drag). * **Equity Bear/Flat Years (-5% equity):** Positive returns consist almost entirely of coupon interest and dividends, resulting in high taxable interest distributions on the IT3(b). --- ## Phase 3: Deliverables & Asset Generation When completing an analysis for a financial house, produce these three core assets: ### Asset 1: Standardized CSV Matrix Save a CSV file (`_Fund_Comparison_Spreadsheet.csv`) containing: * All 10-15 funds as rows. * 45+ columns covering metadata, fees, historical performance, risk stats, asset allocations, top holdings, estimated income splits, blended tax rates, and projected 5-year values. ### Asset 2: Comprehensive Markdown Reference Report Create `investment_strategy.md` containing: * The core trade-off (Guaranteed Bank Rate vs After-Tax Unit Trust Returns). * Clear statutory tax breakdown tables. * Deep-dive analysis of macro risks (e.g. US Tech/AI concentration vs SA Value/Resource tilt). * 3 to 4 **Hypothetical Allocation Models** (e.g., Defensive Income, Balanced Medium Equity, High Equity Growth, Domestic Focused). * Performance ranges showing: * **Lower Bound (`xx`):** Since-Inception historical annualised average (Conservative). * **Upper Bound (`yyy`):** Recent 3-Year trailing annualised average. * **Neutral, non-advisory language:** Never use "recommended", "flagship", or "sweet spot". Explicitly describe models as illustrative examples. ### Asset 3: Interactive Standalone Web Application Build an institutional-grade, responsive single-file HTML portal (`_Investment_Website.html`): * **No External Dependencies (CSP-Compliant):** Use Tailwind CSS via the allowlisted gstatic script: `https://www.gstatic.com/antigravity/web/dev/tailwindcss.min.js`. * **System Institutional Typography:** `font-family: -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", Arial, sans-serif;` with `font-variant-numeric: tabular-nums;`. * **Professional Iconography:** Use clean SVG vector icons; do not use cartoon emojis in headers or navigation. * **Dynamic Parameter Controls:** * Investment Amount / Lump Sum (numeric input + uniform quick buttons: e.g., R500k, R1M, R2M, R5M). * Fixed Deposit Rate (% input). * Marginal Tax Bracket (dropdown: 18%, 26%, 31%, 36%, 39%, 41%, 45%). * Horizon (dropdown: 3, 5, 7, 10 years). * **Reactive JavaScript Engine:** Dynamically recalculate all KPIs, future values, tax burdens, and comparative deltas on input change without page reload. * **Full Data Look-Through:** * Tab 1: Live Interactive Calculator & Distribution Models. * Tab 2: Full Fund Performance Matrix. * Tab 3: Tax Dynamics & Annual Realization Explainer. * Tab 4: Asset Allocation Matrix (All funds with statutory tax rate badges in green brackets per column, dynamically updating with selected tax bracket, plus an educational breakdown on Dividend DWT vs CGT deferral math). * Tab 5: Top 10 Holdings Look-Through (Interactive fund selector for all funds). * Tab 6: Legal & AI Disclaimer Page. --- ## Phase 4: Legal Protection & Disclaimer Boilerplate Every generated website and markdown document **MUST** incorporate comprehensive indemnification text containing these four clauses: 1. **Not a Financial Advisor (FAIS Act):** * State that the creator is **NOT** a licensed Financial Services Provider (FSP), financial planner, broker, or intermediary under the South African Financial Advisory and Intermediary Services Act (FAIS Act No. 37 of 2002). * State that all figures, models, and comparisons are strictly for educational and mathematical modeling purposes. 2. **AI-Assisted Development Notice:** * Explicitly disclose that Artificial Intelligence (AI) was utilized in parsing documents, building mathematical models, and generating code. * State that AI systems can introduce calculation errors, variances, or code bugs, and users must independently verify all data against official fact sheets. 3. **Complete Independence & Non-Affiliation:** * State that the project is completely independent and has **no affiliation, sponsorship, endorsement, or commercial connection** with the analyzed management company (e.g. 10X, Allan Gray, Coronation, PSG) or any other institution. 4. **Limitation of Liability & Indemnification:** * State that the author bears zero liability for any decisions, trades, allocations, capital gains, or capital losses incurred by users. * Direct users to consult an accredited Certified Financial Planner (CFP®) and registered tax practitioner.