Sanlam Investment Management (SIM) has told investors that, if a ballot held later this year is approved, its SCI Small Cap Fund will be merged into the larger SCI General Equity Fund on 9 October. The same ballot also covers the SCI Financial Fund and the SCI Resources Fund, which would be folded into the general equity vehicle as well.
The small-cap fund is modest in size, assets under management (AuM) were R233 million at the end of July 2026, while the general equity fund holds about R9.8 billion, more than forty times larger. In a statement, SIM said the specialist funds were created in the late 1980s to early 2000s to meet demand for niche market-capitalisation mandates, but recent years have seen limited investor interest and relatively small balances.
According to the company, operating specialist funds at this scale can reduce cost efficiency and limit the benefits of diversification available to investors. By moving the small-cap assets into a broader portfolio, SIM aims to spread fixed expenses across a larger base and give investors a more diversified South African equity exposure while still targeting long-term capital growth.
What the merger means for small-cap investors
For investors who bought the SCI Small Cap Fund to gain focused exposure to smaller companies, the change means their money will shift from a dedicated small- and mid-cap mandate to a diversified equity allocation. The fund currently holds shares in 37 listed companies, six of which, Discovery, Remgro, Reinet, Northam Platinum, Sasol and Pan African Resources, are already in the JSE Top 40. After the merger, those holdings will become a tiny slice of a portfolio that contains over 70 stocks, including heavyweight names such as Naspers, Gold Fields, FirstRand, AngloGold Ashanti, Standard Bank and Capitec.
Analysts expect the general equity fund to trim many of the smaller-cap positions over time, which could reduce demand for the shares of companies like Grindrod, Advtech and Famous Brands. Less dedicated buying pressure may add to the downward price pressure already seen in the small-cap segment.
While the merger is presented as a move toward greater cost efficiency, investors should be aware that the loss of a stand-alone small-cap vehicle may limit their ability to target the higher growth potential that smaller companies can offer. Those who still want focused exposure may need to look for alternative specialist funds or consider direct share purchases.
For more coverage of how fund restructurings affect South African investors, see our Markets & Finance section.
