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Multimanagement can it still be justified? Profile:
Diane Radley, CEO Old Mutual Investment Group
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2013/02/07 9:43 AM
Multi-management: Can it still be justified?
SUBS C RI P TIONS
O8 Three questions to ask your multi-manager O9 The single vs multi-manager debate: It’s about selecting
the right strategy, not the right manager
12 Head to Head: Roeloff Horne, Head of SA Portfolio
R37,50 | July 2013
Management, MitonOptimal and Kobus Sadie, Chief Investment Officer, Verso Multi Manager
Profile: Diane Radley, CEO Old Mutual Investment Group
16 Unsecured Lending 20 ASSET ALLOCATION EMERGES AS THE SUPERIOR INVESTMENT STRATEGY 24 Africa’s investment potential
Multimanagement can it still be justified?
DIANE RADLEY, CEO OLD MUTUAL INVESTMENT GROUP
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he second half, which we are now settling into, carries different characteristics for different players. Look at Premier League football in the UK. League winners Manchester United are known to be a second-half performer, often scoring the winning goals after the half-time break. Unlike Chelsea, who start to fade away at the second-half whistle. Closer to home, the Sharks also tend to stage spectacular second-half collapses. And Formula 1 racing? Ferrari is a second half speedster, overtaking as the race draws to a close while other teams drop back.
How are you, the investor and financial adviser, positioned for the second half? If all is going according to your financial plan it shouldn’t make any difference. But what a first half it has been! Portfolio adjustments may be required, while keeping an eye on the increasingly active regulator referee who seems keen to brandish a yellow or red card whenever possible. One sector of shares that looks particularly lively for the second half are the media companies. Kagiso Media had bells ringing when the share price shot up 10.5 per cent in a day after a deal to sell Juta Bookshops. Some readers might remember that old time book retailer from their schooldays. And Independent Newspapers SA, home of some top newspaper titles and nearly bled to death by the dividend-grabbing O’Reilly father-and-son team in Ireland, is looking potentially healthier under new owners Sekunjalo. New boss Iqbal Survé says he will give 10 per cent of the equity, cash free, to Independent staffers. That’s the sort of incentive journalists and print room staff need. Media shares are a favourite with investors, including legend Warren Buffett and, if bought at the right stage of the cycle, can be rewarding. Print media, and Internet platforms, do well if the owners are prepared to pay for good content. Judging by the average reporters’ salary that’s not excessive, yet the owners seem to fail to grasp – or are just too mean – to pay for good content. But for stock-selecting investors, watch the media shares this half. There’s so much good investment advice and expert knowledge in this issue that I’m reluctant to mention any here. Go inside and explore the pages. It’s all there, the good and bad on multi-managers, alternative investments, and who owns what of the troubled platinum miners. Many happy financial returns for the second half. Here’s to the winning shot, but keep an eye on your own goal.
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MULTIMANAGEMENT: CAN IT STILL BE JUSTIFIED? S
peak to a retail investor and they will probably tell you that deciding whether to choose a multi-manager, or not, depends on the cost. Or more precisely, on the additional costs that multi-management entails. When multi-management became popular, back in the good old days of the bull market, additional costs didn’t matter much to investors. They do now, with investments markets much tighter and volatile. Extra costs come off the final return, and multi-managers have to justify those costs through downside protection and additional return over the long term. But multi-management has evolved a long way since its inception was pioneered by Advantage Asset Managers. It is still one of the leading multi-managers and says that contrary to the perception that multimanagement will cost investors more, it can cost less. This is because of the economies of scale it can negotiate on behalf of clients. These cost reductions can then be passed on to clients. But there’s also the potential downside that investors, and their financial advisers, have to be very aware of. Many of these dangers have been ironed out but can still be lurking in some multi-management funds, including the question of just how independent multi6
managers are in the choice of underlying funds and whether their portfolio construction is sufficiently diversified to outperform, over the long term, the performance of the single fund managers they choose. Investment Solutions believes it can answer these criticisms. Listing the benefits of multimanagement, it says multi-managers can take an objective and unbiased view on underlying asset managers. This is based on the idea that they can critically assess the strengths and weaknesses of each manager. However, Investment Solutions concedes there can be disadvantages, one being that because multi-manager portfolios focus on delivering consistent performance, it can never be the top performing manager over any given time period. The big issue, though, remains additional costs. Are multi-managers worth it? On this score the answer is split between retail and institutional investors. In many cases it might be the answer for institutional investors. “Multi-manager solutions are most appropriate for retirement funds with asset values that range between R5 million to R500 million,” says Investment Solutions. It’s different for individual investors. A high net worth client requiring a fairly complex portfolio construction might be best off with a multi-manager. While the investment adviser might be well aware of the client’s risk profile,
the adviser in many cases cannot be expected to make the best asset allocation call between underlying specialist fund managers, or even to choose the most appropriate managers, considering differences in assets and investment styles. This is where the additional costs might be worthwhile for the retail investor. If the investor is committing substantial amounts of capital, the additional costs can be negotiated down or even cancelled. But there are many cases where the investor’s risk profile, time horizon and investment goals are not suited to multi-management, regardless of the additional costs. Unfortunately, some clients still get put into multi-management for the wrong reasons. Symmetry Multi-Managers says to justify extra fees, a multi-manager has to reduce the risk, defined as volatility, of an investment portfolio and deliver consistent long-term returns. If that is achieved, and if it’s in line with the investor’s profile, the additional costs are justified. The larger question is: why look at multimanagement when there are cheaper options available that can achieve the same results? One option would be balanced unit trust funds, where you have a professional fund manager making the asset allocation call. Even less expensive are index-
tracking exchange traded funds (ETF) and/ or exchange traded notes (ETN), which specialise in commodities. It may sound simple but, once again, constructing the right portfolio may be beyond what the financial adviser can be expected to achieve. With so many balanced unit trust funds in the market, how does the adviser choose the most suitable funds? And choosing the best combination of ETFs and ETNs is also a specialised skill. So while there are lower cost options available, multi-management could still be the preferred route. One lower cost option that a suitably skilled financial adviser could help a client to achieve is to construct a portfolio by buying shares directly. This is what multi-management is doing, but with an extra layer of choice (the specialised underlying funds which then buy the shares directly) and an additional layer of cost. The good adviser will know the client’s risk profile. He will also be aware that diversification is essential over the long term. The difficult part is making the asset allocation call but it can be achieved through thorough research and hard work. Whereas a multimanager seeking exposure to a commodity like oil will research the specialist single fund managers in this category, the adviser could choose just two shares; say Sasol for the local economy and BP or Shell for international
exposure. The risk/return dynamic is raised, which will not be suitable for all clients, but the investment portfolio should suit the client’s needs, at a much lower cost than multi-management.
The difficult part is making the asset allocation call but it can be achieved through thorough research and hard work. However, the good multi-managers do the job well. If they achieve the right result the additional costs are worthwhile. And for many multi-managers it’s not just about the initial portfolio construction, but ongoing surveillance that the investment portfolio is achieving what it is meant to. Advantage Asset Managers stays with the investor throughout the multimanagement process. After the initial due diligence of underlying managers, Advantage says it provides ongoing services in the most cost-effective and transparent way possible. “As such, we provide a solution that is designed to add value at each level in the investment process.”
At this stage, there are two possible dangers investors and advisers should be aware of. One is around the independence of choice of the multi-manager. A system of discounts, effectively kick-backs, may be in place that compromise independence of choice. Some asset managers offer the multi-manager these incentives to get on a list of favoured providers. Another is the frequency of, and extra cost of, rebalancing portfolios. Rebalancing is a legitimate exercise to ensure the portfolio continues to reflect the needs of the client. But it can cost additional fees as underlying funds are shuffled in and out of portfolios. Investors and advisers should make sure this isn’t done too often and that when it is, it’s for valid reasons. However, these potential dangers were more prevalent in the earlier days of multi-management. Better compliance and the evolution of the multi-management industry have, or should have, removed these dangers. But it’s best for investors to remain aware of them. Like some earlier investment trends, linked investment service providers and wrap funds (anybody still hear of them nowadays), has the time come for multi-management? Probably not. It may not be as popular as it once was, but that has more to do with investment conditions than multi-management itself. There remains a place for good multimanagers, especially as they are now more aware of costs. investsa
to ask your multi-manager
various benchmarks, provide independent qualitative and quantitative research on manager universes, and provide access to economic research, portfolio monitoring reports and fund fact sheets. At Analytics, we partner with our clients to determine which solution would best fit their needs. Consider this an open invitation for a nice cup of coffee.
The benefits of investing in a superior multi-manager fund include:
n Robust investment process: The multi-manager funds are subject to rigorous qualitative and quantitative research processes which result in the selection of quality managers combined in an appropriate manner.
he next time you engage with a multimanager, after the niceties of asking after their family, take the plunge and ask the following three questions. You may just be surprised at the answers.
as a stable core of the portfolio, and selected low-correlated active funds as satellites. The idea is to lower costs, provide more diversification and generate better riskadjusted returns.
Why should I invest with a multi-manager and not a single manager? Multi-manager funds aim to deliver aboveaverage performance with below-average volatility over time. The objective of a multi-manager fund is to achieve consistent risk-adjusted results by identifying the best specialist investment managers available and to combine them in an efficient manner. The theory is that no single investment management style will deliver consistent outperformance across all phases of an investment cycle. Different investment managers adopt different investment philosophies, processes and time horizons; and while each one of these managers believes their own approach will maximise future performance, results will vary considerably across managers for any given time period.
Since multi-manager funds are diversified in nature and should provide the investor with good risk-adjusted returns, it could fit nicely in the enhanced core portion of a portfolio, with satellites chosen by the client to generate additional returns.
Multi-manager portfolios are constructed to avoid excessive exposure to any single investment asset class, manager or style, thus smoothing returns and providing peace-ofmind through different market cycles. Contrast this to single managers, who can run more concentrated portfolios and produce significant outperformance or underperformance over shorter time periods. Is it possible to use a multi-manager in the context of core/satellite portfolio construction? Core/satellite portfolio construction in the typical literature refers to using index funds 8
The multi-manager could provide qualitative and quantitative research on the list of available satellite managers (this list should also include exchange traded funds), guidance on which satellite managers would have low correlation to the enhanced core, the appropriate weightings to the core and satellite managers, and simulated performance of the overall portfolios versus relevant benchmarks over different periods of time. How can a multi-manager help me create bespoke model portfolios? If you donâ€™t want to consider investing in the current multi-manager fund of funds (the simplest solution and the least hands-on approach), or using one or more multi-manager funds of funds in conjunction with moderate to aggressive satellite managers (another simple solution, but more hands-on), then creating bespoke model portfolios with the help of the proven portfolio construction expertise of a multi-manager may be the route to follow. In this scenario, the multi-manager could assist the client to construct the desired model portfolios to target the outperformance of
n Actively managed portfolios: Portfolios are monitored daily and investment committee meetings are held at least weekly. n Timely communication: Informative reports and fund fact sheets are sent to clients monthly. n Independence: The ability to objectively research manager offerings and invest and disinvest without prejudice. n Cost efficiency: No capital gains tax is incurred when changes are made within funds of funds, no initial or performance fees are levied, and competitive total expense ratios are the result of negotiating favourable fees with the underlying managers.
Daniel Schoeman, CFA, Portfolio Manager at Analytics (Pty) Ltd
The single- vs multi-manager debate it’s about selecting the right strategy, not the right manager Sonja Saunderson: Chief Investment Officer at Momentum Manager of Managers
ulti-manager investment describes a savings product that consists of multiple specialised funds. Each fund may invest across different sectors and markets or have managers investing in the same asset class, but utilising different investment styles. An age-old debate in the investment industry is whether to invest in single manager funds or follow a more diversified multi-manager approach.
Now, let’s look at the consistency in singlemanager outcomes over time. Logic dictates that different manager styles/strategies will be rewarded differently depending on what
the prevailing market condition is. Table 1 illustrates this point clearly and considers two well-known single managers for calendar periods as indicated.
Proponents of the single manager methodology often see multi-management as an additional layer of fees with no real value add as an offset. They argue that multimanagement dilutes performance, with good and bad performance cancelling each other out to give an average outcome. The case for multi-management is mostly based on diversification. No single organisation has the resources and expertise to excel consistently at everything. No single fund manager can be an expert in every asset class, strategy and market. No single fund manager can therefore be expected to outperform those who focus their research and expertise on a single area of specialisation, and multi-management is therefore intended to give stable returns at lower risk than single managers.
Three important conclusions can be drawn from the table:
Chart 1 illustrates the minimum and maximum returns of managers in the Alexander Forbes Large Manager Watch for different periods (and based on data from February 2003 to February 2013). The chart displays the normal funnel effect of decreasing uncertainty in equity manager returns as time increases. We also add the history experienced in the Momentum Manager of Managers’ multi-manager portfolio for the same period. Multimanager returns clearly lie somewhere between the minimum and maximum returns and this remains true over all periods.
n Multi-management will not give the highest return over time, but it will give the most stable outcome. Risk-adjusted returns for multi-managers will therefore be more stable than those of the average single manager in the market. n If we could consistently predict market conditions, and therefore select next year’s best performer, this would become a moot point. However, it is virtually impossible to consistently pick the best-performing managers on a forward-looking basis. n Over shorter time periods, there is a wider opportunity set for single managers to out- or underperform multi-managers, but watch how the effect diminishes over time. Over longer periods, all portfolios, whether multi- or single manager, end up converting to the long-term equity risk premium in the South African market. This emphasises Momentum’s belief in selecting the right strategy as opposed to the right manager and makes the whole discussion about single vs multi-manager less relevant for longer periods.
the roundtable convergence of great minds
Key speaker at the event Tavonga Chivizhe – Senior Portfolio Manager BBusSci (hons) – Actuarial
Tavonga Chivizhe Senior Portfolio Manager BBusSci (hons) – Actuarial
On completing his actuarial studies at the University of Cape Town in 2005, Chivizhe joined Metropolitan’s multi-manager division in September 2005. Given that the Metropolitan multi-manager division had just been established with a seed capital of just under R100 million, Chivizhe was instrumental in building the division for the Metropolitan Group to an asset base of close on R6 billion at the time of the merger between Metropolitan and Momentum in 2010. In building his career, Chivizhe continued to pursue his actuarial studies with the Institute of Actuaries (UK) and passed his Actuarial Fellowship in December 2011. He is currently a senior portfolio manager at Momentum Investment Consulting (MIC), the merged entity of Metropolitan and Momentum’s retail multi-managers. In this role, Chivizhe has ownership of, and thus drives, MIC’s investment strategy and has been instrumental in growing MIC from an asset base of just under R9 billion in 2010 to its current asset base of close to R17 billion.
In order to achieve reasonable investment success, Momentum Collective Investments (MCI) believes that there is a strong correlation between investment performance and the quality of investment decisions made. At the end of May, Tavonga Chivizhe, senior portfolio manager at Momentum Collective Investments, unpacked the reasons why the Momentum Best Blend Series, which uses the multi-manager approach, has consistently delivered above-average performance. This series consists of two predominant underlying strategies: singleasset class strategies and multi-asset class strategies with the objective of exploiting market inefficiencies and industry trends within South Africa’s asset management landscape that have the ability to sustainably deliver alpha over time. The single-asset class strategies series comprises the Local Equity-Momentum Best Blend Specialist Equity fund, and the Local Fixed-Income-Momentum Best Blend Flexible Income fund. The multi-asset class strategies series comprises the Momentum Best Blend Stable Fund of Funds (managed in line with the MET Odyssey Conservative Fund of Funds), and the Momentum Best Blend Balanced Fund of Funds (managed in-line with the MET Odyssey Balanced Fund of Funds).
Skill and breadth Chivizhe says that, given that an active manager has identified a robust methodology that it requires to exploit specific market inefficiencies, its ability to achieve investment success will depend on its ability to strike a good balance between two critical factors: skill and breadth. SKILL is defined by three key factors: people, philosophy and organisational structure. To the extent that an investment philosophy is typically originated by an individual, people are the most critical factor for any asset management business. However, these resources also require an optimal platform to express their investment
Momentum Collective Investments
talent. In South Africa, most highly experienced investment professionals have found the organisational structures in the more established houses very challenging, the result of which has been a massive proliferation of boutique asset management companies. Because these boutique firms are owner managed, the resultant organisational structure has tended to provide the most optimal platform for these highly skilled individuals to express their investment talent. This has been met with high levels of investment success. BREADTH refers to the base on which investment skill is applied in an attempt to derive investment success. It is determined by three key factors: product range, size of assets under management and geographical reach. To be successful, the product range needs to be an accurate reflection of the asset management business’ underlying skill. Typically, boutique managers have a very focused product range which has tended to be an honest and accurate reflection of their capabilities. This has been met with high levels of investment success. To the contrary, a number of the larger players have a highly proliferated product range which is not always an honest reflection of their capabilities. This has not been highly successful. Chivizhe adds that investment skill and the size of assets on which this skill is applied are not independent factors. Beyond a certain size, it becomes highly challenging for any asset management business to exploit inefficiencies within small and mid-cap stocks without assuming excessive concentration risk. This inability to participate across the entire spectrum of the market has tended to detract from investment success in a big way. By virtue of their small size, most boutique firms have a strong competitive advantage in this space. He adds that an asset management business increases its odds of investment success if it allows itself to employ its capabilities
Multi-manager across a wider range of geographical areas. This is particularly important for local asset management companies in this current market environment, where most local asset classes are looking very expensive. Boutique asset management firms in South Africa have taken a lead role in exploiting inefficiencies in areas such as Africa equity, Africa fixed income, developed market equities, global property and alternative fixed income, amongst many other areas. Despite these markets being illiquid, many are developing and thus providing investors with attractive long term investment opportunities. Most local investors in South Africa have displayed a preference for balanced funds, which, due to their size (among other factors), have been unable to exploit these attractive investment opportunities. These investors have thus failed to benefit from this broader set of investment opportunites. The Momentum Best Blend Series has distinguished itself by exploiting all of these opportunities and thus providing local investors with more complete multi-asset solutions, otherwise referred to as balanced funds.
The best blend series The Momentum Best Blend Specialist Equity Fund – Suitable for investors with a long-term investment horizon and the need to maximise capital growth through a diversified portfolio of domestic equity counters. Tolerance for volatility over the short to medium term, especially in volatile markets is required. The Momentum Best Blend Flexible Income Fund – Suited to investors whose main objective is a high level of income and the potential for stable capital growth over an investment horizon of up to three years. The Momentum Best Blend Stable Fund of Funds – This would suit investors with a short to medium-term investment horizon and the need to generate a high level of income combined with stable to modest capital growth under a complete multi-asset class solution. Tolerance for volatility over the short to medium term is recommended
despite attempts to control this through highly diversified portfolios. The Momentum Best Blend Balanced Fund of Funds – Suitable for investors with a medium to long-term investment horizon and the need to generate a moderate to high level of capital growth under a complete multi-asset class solution. Tolerance for volatility over the short to medium term is recommended, despite attempts to control this through highly diversified portfolios.
Comments from delegates “I found the round table event quite informative and it’s nice to have it in a closed forum so that we can interact with the asset manager on a more personal level. I really feel it’s important to get such exposure for it expands the way we look at certain asset managers and can relate the message to our clients. Thank you very much; I really enjoyed it.” Marius du Preez, business development manager, Wealth “The round table presentation was highly informative; a focused, more personal niche investment discussion.” Sebastian Paul – Momentum MFP
Head to head
Head of SA Portfolio Management
R o e l o ff
H o r n e
1. What are the benefits of the single manager approach?
4. What should an adviser look for when choosing a single managed fund?
fund to match the investor’s risk profile, return requirement, investment horizon and risk capacity.
The investor gains access to professional security analysis and research of an investment specialist or a team of specialists that can actively manage a series of securities within a specific asset class or across asset classes. A key benefit of a single manager is that they normally have a clear philosophy and approach on how they manage money.
An adviser should first ensure that the fund mandate matches the needs of their client. If so, determine if the manager is equipped to deliver on the mandate by looking at investment philosophy, approach and track record. If the adviser is looking at a single managed fund to be part of a portfolio of different funds, it would be important to perform a medium and long-term risk and return attribution (Alpha/ Sharpe/Standard Deviation) analysis and blend funds in a manner to include a combination of funds that are less correlated to one another with awareness of the dangers of over-diversification. Once a fund is selected, it is obviously important that the adviser is able to gain reasonable access to ongoing information of the manager’s portfolio and views, while performing a performance review on a quarterly basis.
7. What are the biggest challenges investors are facing right now and how does the multi-manager approach serve to offer value in the current economic climate?
2. And the disadvantages? The single manager has to utilise its expertise adequately to generate outperformance relative to its benchmark. Long-term statistics prove that global specialist single manager solutions often underperform their benchmark due to fees. The reality is that active single managers do incur costs to implement bottomup sector and company research, which can then raise the cost of the investment and thus makes it harder to outperform a relative benchmark after fees. Investors are restricted to a single investment philosophy and view. This view will not always be right; and when it’s not working, an investor may wonder about having all their eggs in one basket. 3. One of the complaints is that single managed funds are too risky. What is your view? Single managed funds can be risky because the manager may get something wrong, and there is no diversification of this manager risk. This also implies potential business risk for advisers. If the investor’s needs, risk profile and investment horizon are matched by the mandate of the fund, and the manager sticks to their philosophy and approach, there shouldn’t be any inappropriate investment risk. But, where investors use performance tables to randomly select a single manager due to past performance, that strategy becomes risky. 12
5. Should one even compare single and multi-managed funds? Yes, but only where the fund mandates are similar. The perception is that single managed funds are cheaper than multi-managed funds. There is certainly a cost to multi-management, but multimanagers usually gain access to single managers at institutional rates and can also invest in low-cost passive investments, which means the final cost to the investor may be the same or even lower despite being invested in a multi-managed fund. Investors also have the option of combining single and multi-manager multi-asset funds. In this way the investor gains access to the best of both worlds. You gain the expertise, investment philosophy and process of the single manager, while the multi-manager can blend passive index solutions with an active single manager to improve the probability of generating outperformance, often at lower risk. 6. What risk profile should someone have to choose a single managed fund? Any type of risk profile on condition that the investor/adviser chooses the appropriate
The biggest challenge investors always face is where to invest. Using past performance as your only guide may lead you to buy expensive assets. The other challenge investors face is the regulatory environment. Advisers are being forced to be more accountable for the investment decisions that they make, which is a good thing. But as a result, many in South Africa have migrated to simply using balanced funds. This move has also meant that the large asset management companies have gained market share due to their brand awareness and past performance, but are becoming so big that their ability to deliver consistent performance may now be under pressure.
If the investor’s needs, risk profile and investment horizon are matched by the mandate of the fund, and the manager sticks to their philosophy and approach, there shouldn’t be any inappropriate investment risk. Multi-managers can easily overcome this problem by selecting funds or smaller managers that have larger allocations to these smaller asset classes and can apply tactical asset allocation techniques to adjust exposure to different managers and asset classes when appropriate. Multi-managers help reduce the adviser’s and investor’s selection risk.
Chief Investment Officer
Verso Multi Manager K o b u s 1. What are the benefits of the single manager approach? A single fund manager invests directly in the available instruments and, as such, has full control over the portfolio and the subsequent performance. The maximum alpha of these funds, especially over the short term, can be higher than a multi-manager fund. If the investor has the specific investment skills to select and monitor the single manager, the cost may be slightly lower than that of a multi-manager fund. 2. And the disadvantages? Although a single-manager fund can be the better performer, especially over the short term, the consistency of performance might be lower than that of a multi-manager portfolio. The fund manager of a single manager fund usually follows a particular investment style. This specific style will be suitable only for certain market cycles. This may lead to extended periods of underperformance. Investing in a multimanager fund should result in smoother performance relative to the peers and the benchmark. The single manager fundâ€™s performance is also dependent on the fund manager and the supporting team. If this changes, it could materially influence the future performance of the fund. In most cases the investor will not be aware of these changes. 3. One of the complaints is that single managed funds are too risky. What is your view? These portfolios are not too risky, but the risks are certainly higher than multi-manager funds. The underlying holdings in these single manager funds are more concentrated than multi-manager funds. Single managed funds have a high conviction in the instruments they select and, in the short term, this selection may cause underperformance. This may cause the single managed fund to have a higher standard deviation (volatility), a
S a di e
higher maximum drawdown (performance from peak to trough) and a higher tracking error (volatility of the alpha) compared to a multi-manager fund. Over the long term, however, the risk should decrease as the single-manager fund goes through various market cycles. 4. What should an adviser look for when choosing a single managed fund? Quantitative analysis (performance, risk, tracking error, etc) is important but, even more important, is qualitative analysis. A popular disclosure in the unit trust industry is that past performance is not an indication of future performance. Qualitative factors can mostly explain past performance and can be a better indication of the long-term future performance. An adviser should consider the following qualitative factors: ownership structure, staff turnover, quality of the investment team, long-term track record, investment process and whether the fund manager, in the past, consistently applied their investment philosophy.
A popular disclosure in the unit trust industry is that past performance is not an indication of future performance. 5. Should one even compare single and multi-managed funds? These funds can be compared but, in addition to return, risk and qualitative properties of multi-managed funds should be considered in the analysis of these funds. The Sharpe ratio (return per unit of risk) is a good indication of the amount of risk taken to achieve a return. Qualitative properties of multi-manager funds such as diversification, selecting and monitoring funds adds additional value that cannot be quantified. To get a true sense of the performance, these
funds should be compared over a full market cycle as certain market cycles may favour one over the other. In the current market cycle, for example, value funds underperformed but over the long term, these funds delivered significant alpha. 6. What risk profile should someone have to choose a single managed fund? The risk profile of an investor should not determine the selection of a single or a multi-managed fund. Within a risk profile an investor should decide whether they have the knowledge and time to select and monitor the funds. 7. What are the biggest challenges investors are facing right now and how does the multi-manager approach serve to offer value in the current economic climate? There are currently more than 760 unit trust funds (primary retail fee class) in South Africa. These funds range from domestic to offshore, from low risk money market funds to high risk equity funds as well as different investment styles such as value and growth. Choosing between these funds is a daunting task. Most investors do not have the resources to analyse all these funds. After selecting a fund, the investor should monitor the fund for any material changes. These changes can include a change of the fund manager, or changes in the investment team. An investor should also monitor the fund manager to assess whether they are consistently applying their investment philosophy. A multi-manager has the skills and resources to select and monitor these funds. They can select the best of breed fund managers and blend different investment styles to create an optimal risk versus return profile. The blend of single manager funds creates a more diversified portfolio. A multi-manager can switch between underlying fund managers in their own unit trust without the client incurring capital gains tax.
1. You were appointed as chief executive of Old Mutual Investment Group South Africa (OMIGSA) effective from 1 January 2011. Where did you see the industry heading at the time of appointment? At the time, investors were very cautious as the global financial crisis was still fresh in everyone’s minds. Retail investors were steering clear of equities, with the majority of flows going into money market and fixed incometype funds, despite low interest rates. In difficult market conditions, asset managers were facing the challenge of producing returns that beat fund benchmarks, while cost reduction was also a priority. This had a particularly severe impact on those facing retirement and the choices they had to make. 2. What challenges have you encountered along the way? The lack of depth of talent in the industry surprised me, and in particular employment equity talent. Transformation has been one of OMIGSA’s top priorities, yet there has been a scarcity of black investment professionals that has made progress slow. Despite this, we were able to achieve a Level 2 BBBEE rating in 2011 after much hard work, including the establishment of a scholarship for previously disadvantaged students. Our Imfundo Trust programme has so far funded the tertiary studies of 82 promising individuals – of whom over 50 are black females – in five universities across the country. 3. What do you think is in store for the asset management sector in South Africa over the course of the next year? We expect continued market volatility with increasing local issues – a tricky environment to navigate in order to deliver returns to clients and shareholders. Markets have been challenging for value-styled managers and it is difficult to anticipate when value will emerge. At the same time, we’ll have to contend with the additional governance implications of several new pieces of legislation, like Treating Customers Fairly. While I believe the asset management sector is generally compliant with the spirit of these, putting in place processes to ensure we can demonstrate that compliance to authorities will create some governance and cost burdens across the industry. 4. How has OMIGSA navigated its way through the changing regulatory landscape? Through active engagement with the regulators on proposed pieces of legislation (either directly or via industry bodies). This enables us to air concerns and potentially improve final 14
legislation. Importantly, it also ensures that we’re aware of the implications well in advance and are able to appropriately gear our systems and processes to deal with them. 5. What is the benefit of investing through a multi-boutique investment business? Clients have the benefit of smaller, specialist investment teams who have ownership in their business and are focused on achieving top performance. Investment professionals are incentivised and rewarded according to this performance and must invest alongside clients. Also, they do not have to worry about administrative and other non-investment functions, since these are handled by a central shared services team of experts in governance, fund administration, etc. This leaves them free to focus solely on fund management, which is key in our rapidly changing market conditions. 6. How do you wind down from the pressures of your position? I like to cycle, and time on the road, or out on my mountain bike, clears the brain. Once some exercise has de-stressed me, I spend time with my family; we love to hike in the mountains and pottering around in the garden. This keeps my feet on the ground, away from all the corporate noise. 7. How do you define success? Our business is about delivering on the promises we make to clients. So the ultimate measure of success is happy clients who are passionate supporters of our business. We’ll only get that right through the right combination of great talent, great processes and diligent delivery – which are the early success indicators. I also believe that challenged and valued employees are critical to success and driving excellence in a business creates the right outcomes. 8. Finally, if you had R100 000 to invest, where would you put it? I’m very keen on alternative investments like private equity, infrastructure and our development impact funds investing in affordable housing and schools. All of these offer excellent diversification benefits, and private equity has a strong track record for outperforming the listed equity market. Infrastructure investments like roads, rail and renewable energy projects can provide solid above-inflation returns, while simultaneously improving the economy. Of course, you must have a long-term perspective to invest in these types of funds, where up to 10 years is required to get the maximum benefit.
While I believe the asset management sector is generally compliant with the spirit of TCF, putting in place processes to ensure we can demonstrate that compliance to authorities will create some governance and cost burdens across the industry.
D ia n e R ad l e y CEO O l d M u t u a l Investment Group investsa
Neither a borrower nor a lender be. Seems Shakespeare had it right.
he question being asked by analysts and institutional investors earlier this year was whether a bubble was forming in the unsecured lending market. That’s no longer the question. Rather it’s whether the bubble caused by what many describe as reckless lending has burst, or if there’s still more to come. Either way, it has caused huge financial damage to banks – billions of Rand wiped off market capitalisations – as well as reputational damage. The reputational damage comes from the perception that the banks became too greedy and rushed into the lucrative unsecured lending market without taking all the proper precautions. Bank shareholders should be furious as the banks try and repair the damage. What’s more difficult to measure is the damage to cash-strapped consumers, many of whom unfortunately had to rely on loans just to make ends meet. Unsecured loans will now be harder to get. But it’s not the bank bosses who will starve. African Bank Investments Ltd (Abil), the biggest lender in the unsecured market, has so far taken the biggest hit. While still very profitable, the 26 per cent plunge in headlines earnings in its interim results published in May took investors by surprise. Worse was the sharp cut in the interim dividend payment, down from 85 cents to 25 cents per share. This from a bank that was often bought as an investment because of its generous and reliable dividend payment history. At least Abil CE, Leon Kirkinis, was frank about what had gone wrong. And he warned of the “significant increase in unsecured lending by all players in the market during 2012”, saying it had introduced an unacceptable level of risk. ‘‘And it was all the banks, including the big four, piling into unsecured lending. I received several SMS messages from Nedbank inviting me to pop into the nearest branch and apply for a personal loan. It surprised me for two reasons. Firstly, how did Nedbank, with which I have never had an account, know my cellphone number (Vodacom could probably answer that). And why was Nedbank offering me a personal loan when it knew absolutely nothing about me.’’ Though nowhere near as bad as the sub-prime housing crises caused by banks, first in the US but soon spreading to other parts of the world, this is a crisis for the South African banking
industry. South African banks, as far as analysts can tell, are well capitalised and stable. The South African Reserve Bank confirms this. The cynical point is that all the warning signs about the unsecured lending market were out there, for example that 46 per cent of about 20 million credit-active South Africans are in default. And that 40 per cent of debtors’ income is used to repay debt. And millions more are starting to skip those debt repayments. But it seems that what should have been red flags for the banks were instead seen as opportunities to make more money. Unsecured lending attracts top interest rates. So they rushed in. Now the banks are tightening up unsecured lending conditions and reining in lending to that market. But the people in that market, typically (but by no means exclusively) lower income workers, still need loans. We need only look at how miners, many with pay docked from strikes, are desperate for loans. Where will they go? To the loan sharks, a murky market that charges a fortune for loans. And the sharks make sure the loans are repaid. Getting blacklisted is mild compared to having your leg broken.
Unsecured loans will now be harder to get. But it’s not the bank bosses who will starve. Many people, even our top end wealthy readers, need loans at some stage. It may surprise you to find out how many seemingly wealthy people are living on credit. A senior banker once told me that lending to this market was dangerous. The amounts were large and, unlike borrowers in the unsecured lending market, wealthy people often disappear when things go wrong, leaving a trail of unpaid debt behind them. This is where financial advisers need to step in and speak to their clients about excessive borrowing. Ideally, the client should be debt free. But if the client needs a loan, make sure it’s through a reputable organisation. Often this will be a bank. That’s fine, but get the client to negotiate a good deal. If borrowing a large amount, a client with a good credit
history and assets should be able to negotiate favourable terms. Banks want the business; make them work for it and take a cut in interest charged. The unsecured lending bubble has hit bank share prices, notably Abil and its main rival, Capitec. At the time of writing in early June, Abil’s share price had lost 26 per cent in 30 days. And that was after the share price had come back slightly from earlier lows. Over the year, Abil has lost 54 per cent. That has wiped more than R14 billion off its market capitalisation. Capitec has fared better, losing eight per cent over the same 30-day period and 15 per cent over the year. But it’s not just bank shares that have taken a knock from the unsecured lending crises. Just about every company that relies on consumer spending, mainly the clothing and furniture retailers, have seen share prices drop. Those affected most include Clicks, Woolworths, Lewis Group, Steinhoff, Foschini, JD Group and Truworths. Herein lies the opportunity for investors. Management of these companies have become passengers in the unsecured lending ride, unable to steer their groups away from the effect it is having on consumer spending which is vital to their businesses. But it will pass and the share prices will come back. Now could be a good time to buy some of these shares. One consensus forecast has both Abil and Capitec as a buy. Imara, very astute investors, rate Capitec as an add (a mild form of buy) and Abil as a buy. They say that despite the dividend shocker, the market has overreacted to Abil’s misfortune. It’s likely all the banks will show increased bad debt provisions and write-offs. One question, highlighted by Michael Snyder in The Economic Collapse blog, probes to what extent the “failed and bailed-out” banks overseas, like Goldman Sachs and Citigroup, were using derivatives to hide the true scope of their debt problems. Could that happen with banks in South Africa? They all use derivatives in various forms, but it’s unlikely. The South African Reserve Bank is a good watchdog and would probably pick up any attempts at a cover up. And since the bursting of the unsecured lending bubble, it will be keeping an even closer eye on the banks. investsa
Private equity players invest in Africa infrastructure boom O
nce best known for corporate investing, private equity firms are now ploughing money into African infrastructure.
Erika van der Merwe, CEO of the South African Venture Capital and Private Equity Association (SAVCA), says: “Infrastructure gives private equity investors access to the strong African growth story, an exceptional theme in a structurally low-growth world.” Buying exposure to infrastructural assets through private equity provides investors exposure to an asset class that is not easily found elsewhere. “There are very few listed alternatives,” adds Van der Merwe. “There is limited capacity in the listed market and even in the bond market for gaining such exposure to infrastructure.” Big US private equity players like Blackstone, Apollo, KKR and Carlyle have recently invested in Africa with Blackstone taking a stake in a major dam construction project in Uganda. The bulk of foreign direct investment to be devoted to Africa over the next 10 years is expected to be in infrastructure and related assets and industries. Pieter de Wet, head of research at Novare Equity Partners, noted that foreign direct investment (FDI) into sub-Saharan Africa has grown strongly since 2000. “Although this took place from a low base, indicative of growing appetite on the part of international investors is that Africa’s share of global FDI escalated from 2.7 per cent in 2007 to 5.6 per cent in 2012,” says De Wet. However, the listed markets in most countries across the continent are still relatively undeveloped and illiquid compared to their developed peers.
As a result, direct investments via private equity funds are the order of the day. investments are powerful tools for uplifting people and growing economies – and make infrastructure-focused private equity funds an ideal vehicle for fulfilling an impact investing mandate.”
Says De Wet: “With the exception of South Africa, and to a lesser extent Kenya and Nigeria, markets are too small to absorb the large quantities of money that investors are willing to deploy into the region. As a result, direct investments via private equity funds are the order of the day.”
Van der Merwe added that all development finance institutions and many pension funds now are focused on responsible investing and are looking to modify their allocations to ensure that these mandates, which extend to environmental, social and governance criteria, are fulfilled. Because of the mediumto long-term nature of their investments, infrastructure funds – and private equity funds more generally – are ideally positioned to implement these mandates on behalf of the providers of capital.
The most significant constraints to African growth are the lack of energy and transport and logistics infrastructure. Emile du Toit, SAVCA chairman notes: “None of the growth that is projected for the region will materialise without a major rollout of infrastructure, which private equity is now helping to fund. The multiplier effects created by infrastructural
“The added attraction is that, compared with listed equity, private equity infrastructure funds offer lower-risk and more consistent returns. This is due to the underlying revenues usually being contractual and backed by the local governments and related utility companies. And they often carry political risk guarantees on their revenue.”
Interestingly, De Wet adds that it is not only developed countries that are investing in Africa. According to a 2012 study by Ernst & Young, South Africa, with 235 FDI projects, was the African country with the highest number of projects on the continent, second only to India’s 237. “This is mainly due to South African multinationals from various economic sectors looking for higher growth in markets outside of their well-served home market. Some have recently raised capital for additional funding, a major portion of which has been earmarked for further expansion into Africa.” A growing number of SAVCA’s members are launching funds with a focused infrastructure mandate, a trend which Van der Merwe expects to continue.
Erika van der Merwe, CEO of the South African Venture Capital and Private Equity Association (SAVCA), and Pieter de Wet, Head of Research at Novare Equity Partners
ASSET ALLOCATION EMERGES AS THE SUPERIOR INVESTMENT STRATEGY category over three and five years at this year’s Raging Bull Awards.
Thompson provides these guidelines for investors following an asset allocation strategy Be well diversified Diversification is the key to spreading one’s risk. Even if equity is delivering very attractive returns, remaining 100 per cent in equity at 50 per cent more risk than a portfolio, which is largely equity (70 per cent), does not make sense. It’s important to balance your investments with your risk profile. Be active about passive (make use of passive investments) Investors and managers tend to forget the potential of passive investments. “Where active management struggles or fails to beat the index in a particular asset class on a consistent, sustainable basis, we use a cost-effective index fund,” he says.
he aftermath of the global financial crisis has exposed vulnerabilities in individual asset classes that have reacted to changing market conditions. This has put the spotlight on asset allocation as an investment strategy, which has proven to be robust and successful in the current environment. A recent white paper issued by a Cambridge University professor, in partnership with Deutsche Asset and Wealth Management Global Financial Institute (GFI), also came out in favour of the strategy, stating that asset allocation strategies are more important than stock selection strategies.
In the paper ‘Asset allocation vs. stock selection’, Professor Raghavendra Rau, the professor of finance of Cambridge University, concludes that asset allocation strategies yield a superior dispersion in returns than stock selection strategies, particularly when there is an economic crisis or high market volatility. Mark Thompson, CEO and founder of Southern Charter, says the asset allocation process that it has been implementing since the company’s inception, has allowed the funds to achieve market-beating performance in very difficult conditions. “An asset allocation strategy involves allocating the assets on a predetermined, mathematically established basis. For example, 20
the long-term allocation to achieve a growth rate of inflation plus five per cent, might be 35 per cent equities, 55 per cent bonds and 10 per cent property. How these percentages are determined is based on long-term capital market assumptions and the funds’ long-term risk tolerance levels. It is this philosophy that enabled us to defend our clients’ money through the worst of the financial crisis,” he says. However, not everyone is on board with the asset allocation strategy. Robert Markman, author of Hazardous to your Wealth: Extraordinary Popular Delusions and the Madness of Mutual Fund Experts, says investors should determine their risk tolerance and decide how much of their portfolio they want in stocks, with the rest in bonds or cash. “Asset allocation, in the form most often promoted by the industry, is a good idea gone dangerously out of control.” Markman argues that the problem is this theory depends on the premise that asset classes will continue to perform relative to one another as they have in the past. That’s a very big assumption. “All you are seeing is random data forced into patterns that have little or no predictive value.” In spite of these views, Thompson remains steadfastly pro-asset allocation. Not surprising, since the Southern Charter Growth Fund and the Southern Charter Balanced Fund placed top of their class in the risk-adjusted performers
Investment style is crucial “As the 2008 crisis unfolded, we realised we needed the protection of a value-style investment manager (focuses on the intrinsic value of an investment) with a top-down approach, which takes macroeconomic conditions into account, and a consistent track record of delivering above-average results. Putting these managers in place ensured that we had skills and resources to create growth in a market where growth was very hard to find.” Understand the big picture Market moments do not take place in isolation and an understanding of how certain market elements will be affected is very useful. Thompson says interest rates can be especially important to watch. “It’s important to understand in which direction interests are moving; when there is going to be a change of direction; and the magnitude of that change in order to assess and address the effects this could have on a portfolio.” Use scenario planning and probability to understand the global macroeconomic picture According to Thompson, the use of tabled, systematic probability formats is important in stopping investors from overly focusing on any one indicator and potentially adopting the wrong strategy. “Our style of strategic thinking, using scenario planning to access a complex financial situation by using a set of leading indicators as flags as to what scenario we face, and it allows us to minimise the risk and avoid being hampered by our cognitive limits.”
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These highly competitive investment features make XtraMAX truly compelling for customers as well as advisers and brokers – it is extra money that works for you from day one. Its low cost means higher returns and safety if you want it, hence being heralded as a real ‘win-win solution’ for all.
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Hot Africa, the most and least attractive continent for global business leaders According to the Ernst & Young Africa Attractiveness Survey 2013, of the global business leaders surveyed who have established businesses in Africa, 86 per cent rank the continent as the second most attractive regional investment in the world after
South Africa to recover gradually The International Monetary Fund (IMF) subSaharan Africa regional economic outlook report revealed that South Africa will recover from the 2.5 per cent economic growth last year. Output in the region is also expected to accelerate to 5.4 per cent this year and 5.7 per cent next year, following growth of 5.1 per cent in 2012.
Private sector companies flock to sub-Saharan Africa The World Bank’s investment arm will increase lending to sub-Saharan Africa
this year as private sector companies are drawn to the fast-growing region. Driven by investment and commodity prices, the World Bank perceives sub-Saharan Africa’s GDP accelerating to more than five per cent over the next three years. FDI to sub-Saharan Africa rises According to the Overseas Development Institute, the volume and volatility of private capital flows will affect growth prospects on the continent. Foreign direct investment flows to sub-Saharan Africa increased from below US$15 billion in 2001 to around $37 billion in 2011.
Asia. However, despite the optimism around Africa’s future, business leaders who have not invested in Africa continue to view the continent negatively and rank Africa as the least attractive investment destination in the world.
s y a w Side
SA named least favoured emerging market in poll In a poll conducted by Bank of America Merrill Lynch, fund managers have named South Africa as the least favoured major emerging market for the third consecutive month in May due to a negative outlook
on commodities. This was also attributed to investors positioning themselves for slower growth in China and prolonged low inflation. African economies trail emerging regions Despite African economies’ impressive growth, the Africa Competitiveness Report 2013 revealed the continent’s competitiveness lags behind emerging regions in terms of quality of institutions, infrastructure, macroeconomic policies, education and technological adoptions. The report also revealed that large gaps exist between the continent’s highest and lowest ranked economies.
Platinum sales fall to 12-year low According to a report by Johnson Matthey, 750 000 ounces of platinum output were lost last year due to strikes, shaft closures and government-ordered safety stoppages. Platinum sales by South African producers fell by 16 per cent to a 12-year low of 4.1 million ounces. This sharp fall in production was attributed for the 13 per cent decrease in global platinum shipments in 2012.
FIVE YEARS AT ITS 2013 ANNUAL AWARDS CEREMONY
he annual Financial Intermediaries Association of Southern Africa (FIA) Awards Gala Dinner, one of the most prominent events on the financial services calendar, was held on Thursday, 30 May 2013 at the Sandton Convention Centre in Johannesburg. Almost a thousand industry representatives gathered to congratulate the winners of the 2013 FIA Awards at a glittering event that coincided with the association’s fifth anniversary celebrations. Brian van Flymen, president of the FIA, says that the organisation’s members have prospered over the past five years despite tough regulatory and economic conditions. “The awards represent the benchmark for excellence in the offerings of product providers as rated by finance and risk advisers.” He added that the FIA prides itself on working with industry stakeholders to protect members’ interests and promote the value of good financial advice to the consuming public. “The FIA believes that financial products can only fulfil the purpose for which they are designed if accompanied by relevant explanation, clarification and appropriate advice. Independent financial advice is essential if the industry wishes to satisfy the requirements set out in the FAIS Act and the pending Treating Customers Fairly regime. The important role that valuable and reputable advice plays in assisting consumers to secure their financial future cannot be underestimated,” says Van Flymen. “The awards present the ideal platform for product providers to be recognised for going that extra mile.”
Financial services giant, Discovery Limited, bagged three awards through Discovery Life in the category Long-term Insurer of the Year – Risk; Discovery Invest for Investment Products Recurring Premium and Discovery Health for Health Care. The country’s largest open medical scheme administrator has won
Left: Allan Gray - Ebeth Van Niekerk - Gavin Came, Chair of the Financial Planning Exco, FIA Above: Discovery Invest - Kenny Rabson Gavin Came. the award in each year since its introduction. Aquarius Underwriting Managers was the new winner in the UMA of the Year category, while Liberty Corporate held off the competition in the Employee Benefits category and Allan Gray took the honours for Investment Products Single Premium. The 2013 FIA Awards winners were determined by way of an extensive survey of FIA members, conducted independently by Bluestream Research. Members were asked to rate product providers based on product quality, service quality and relationship quality. “The main objective of the FIA benchmark survey is to determine and recognise South Africa’s top performing product providers, independently rated on intermediary satisfaction,” says Pieter Aucamp, CEO of Bluestream Research. “What distinguishes the FIA Awards is the consistent methodology that has been applied, improved upon and perfected over the eight consecutive years that Bluestream has been involved in the survey.” He adds that the 15th FIA Awards is one of the most comprehensive total industry broker satisfaction benchmarks produced in South Africa. This year, an unprecedented 7 565 contracts were evaluated over a 10-week period; and a staggering 23 500 telephone calls were placed to finalise the interviews,
Short-term Insurer of the Year – Personal Lines
Short-term Insurer of the Year – Commercial
Short-term Insurer of the Year – Corporate
Underwriting Manager of the Year
Aquarius Underwriting Managers
Long-term Insurer of the Year – Risk
Product Supplier of the Year – Investment Products Single Premium
Product Supplier of the Year – Investment Products Recurring Premium
Product Supplier of the Year – Employee Benefits
Product Supplier of the Year – Health Care
which each took approximately13 minutes to complete. “We would like to extend our heartfelt congratulations to each of the category winners at the 2013 FIA Awards,” says FIA CEO, Justus van Pletzen. “And we offer a special word of thanks to those product providers who continue to back the model of intermediated distribution and consistently put their clients – our members – first.”
Highlights of FIA achievements over the past five years: n The FIA introduced the Code of Conduct to offer our members a professional framework for conducting business with their clients in line with the provisions of the FIAS Act. n The FIA went to Parliament in 2008 to represent its members’ concerns with regard to the then-proposed Insurance Laws Amendment Act, with the result the implementation date was pushed out. n The FIA was instrumental in securing income streams for brokers prior to the introduction of new Binder Agreements. n The FIA provided member support for the thousands of key individuals and representatives within our structures who had to sit the Level 1 Regulatory Examinations. n The FIA made direct and successful representations to the Minister of Health to have broker healthcare fees reviewed in 2012. n The FIA has on two occasions successfully petitioned SASRIA to review its broker commission structures, achieving increase for its members. n The FIA ensured that its larger members continued to receive Section 156 Interest on Premium when regulators proposed the practice be abandoned. n The FIA is involved in a joint venture known as the Human Capital Project. It will work with other representative bodies such as SAIA and the IISA as well as the Financial Services Board to create an industry road map for new entrants to the insurance industry. n The FIA is represented on the executive committee of the WFII, where FIA pastpresident, Seamus Casserly, currently presides as president. investsa
Africa’ s investment potential African economies are among the fastest-growing in the world and it is this growth that is focusing people’s minds on the continent and specifically towards equity markets in Africa.
hile African equity markets have performed well in recent months, they have not experienced a recovery in line with global markets and are well below their 2008 highs. This has been despite strong fundamental data at both the macro and company level throughout the last five years. Valuations are generally attractive and investors can buy good companies in stable economies cheaper than elsewhere in emerging or even frontier markets. When considering the Africa opportunity, Caveo Fund Solutions concentrates on the frontier markets and therefore excludes South Africa. As a more mature and developed economy, South Africa has deep liquid asset markets, an established financial system and would certainly not be classified as frontier. There are no specific markets that we favour, but can point at countries that are harnessing this potential better than others, for example Ghana, Nigeria, Kenya and Zimbabwe. Countries that are not only benefiting from the improving conditions in their own country but the region they operate in. While it is always important to evaluate the individual countries generally, there is a backdrop of improving macro fundamentals across the region. After decades of crisis, false dawns and economic mismanagement, many governments are putting policies in place that have not only supported historical GDP growth, but are ensuring its sustainability going forward. There are two themes that dominate Africa’s asset markets: resources and the growth of the domestic consumer. Resources are generally an important component of GDP in many countries, and with new finds in East Africa, have become of greater significance in countries like Kenya and Mozambique. However, it is the combination of the resource rich environment with a growing consumer base that has changed the profile of the continent. 24
Historically there has been little if any discretionary spending in Africa; however, this is changing rapidly and we are seeing an emerging consumer base with not just the desire but the ability to spend. Local and multinational companies are capitalising on this, many of which are listed on the local equity exchanges and providing opportunities for investors. It is interesting to note that resource-related companies are very often listed outside of Africa. They tend to capital raise on exchanges with more appetite and understanding of the complexities involved with exploration and mining, normally London, Toronto and Australia.
While it is always important to evaluate the individual countries generally, there is a backdrop of improving macro fundamentals across the region. The key concerns for investors looking towards the continent are normally politics and liquidity. As the political backdrop in many of these countries has vastly improved in the last 10 years ago, certain countries are more vulnerable to instability than others. This means that election cycles are of more focus than developed markets, a consideration not just in Africa but across frontier markets. Liquidity is something that investors need to evaluate carefully and consider as the markets are less liquid than other regions, although improving. A key differentiator for the region is that Africa’s equity market tends to be more sensitive to the domestic
situation than global trends. This is good for diversification as it increases the importance of in country knowledge and on the ground research. Identifying opportunities and accessing them correctly requires specialists on the ground with knowledge and analysis. The fixed income markets are relatively immature but growing and presenting interesting opportunities. Although liquidity is limited in this space, it is growing as governments are keenly looking to grow their fixed income markets. A robust government debt market can have positive knock-on effects throughout the economy, in particular for corporates looking to raise finance. One recent development which has been very encouraging is that certain countries are successfully issuing debt in hard currency. Looking forward, there are interesting opportunities across the African continent such as the recovery story in Zimbabwe, the impact of oil and gas finds in East Africa and the ongoing political changes in North Africa. However, the African opportunity set comes with the challenges of frontier market investing and the additional levels of risks which need to be carefully managed.
Gyongyi King, CIO for Caveo Fund Solutions: Caveo Fund Solutions, the joint venture of Investment Solutions and Peregrine
of platinum miners
he South African mining sector is once again in the spotlight as renewed labour unrest has sent the share price of platinum miners tumbling.
Much of the trouble started in August of 2012 after what has become known as the Marikana Massacre. At the time police were attempting to disperse a large group of striking Lonmin (JSE: LON) workers who were asking to speak with CEO Ian Farmer. The miners were demanding a pay increase from R4 500 to R12 000 a month. Events turned tragic when police opened fire on a small group of advancing miners. In total, 46 people lost their lives. Lonmin eventually came to an agreement with its workers for a 22 per cent pay increase and a one-off payment of R2 000.
Date of holdings
All of this uncertainty has put pressure on the entire mining sector and the country as a whole. For instance, Impala Platinum (JSE: IMP) suffered a 17 per cent loss during the same week Anglo American was hurt; the Rand dropped to a fresh four-year low against the US Dollar; and Moody’s analyst Kirstin Lindow warned that continued labour unrest could eventually lead to a credit rating downgrade for the country. These losses have hurt not only stock investors, but also many of the country’s unit trust investors. South African mining companies play a large role in many unit trust portfolios. The following tables show the largest unit trust owners of Anglo American Platinum and Impala Platinum respectively:
However, in May of this year, Lonmin workers started a two-day wild cat strike after fresh tensions arose between rival workers unions and after the murder of a senior union worker who was scheduled to testify regarding the events of the Marikana Massacre. Lonmin’s stock price fell eight per cent following the news. Meanwhile Anglo American Platinum (JSE: AMS) suffered a loss of 17 per cent several days later as its Unit trust
workers threatened to strike in protest of the firm’s plans to lay off 6 000 workers.
Events turned tragic when police opened fire on a small group of advancing miners. Portfolio weighting %
Position market value
Number of days to liquidate
Investec SA Value
305 599 976
643 415 659
Sanlam General Institutional
123 530 163
RE:CM Flexible Equity
28 013 176
26 986 830
Date of holdings
Portfolio weighting %
Position market value
Number of days to liquidate
1 696 627
262 658 420
STANLIB Gold and Precious Metals
18 279 607
11 638 183
38 135 279
Source: Morningstar Direct Unit trust
NewFunds Equity Momentum ETF
Source: Morningstar Direct It is worth noting that it is possible these funds have added to or reduced their exposures to these companies since their last reported holdings. According to the data, most of the funds listed have an exposure to the stock that
could be liquidated inside one day (assuming normal stock liquidity) very quickly should the fund manager deem it desirable to do so. See ‘Number of days to liquidate’ column.
David O’Leary, CFA, MBA | Director of Fund Research, South Africa | Morningstar South Africa
HOBSON’S choice Recent events in the financial services industry could well determine how consumers seek redress for losses in the future.
he sentence meted out in the J Arthur Brown case shocked the public, but not as much as it did the National Prosecuting Authority (NPA) and the Financial Services Board (FSB). The regulator of financial services issued a statement expressing its disappointment at the light sentence handed down to Brown, while the NPA applied for leave to appeal against the sentence.
both the Law Society and the NPA. Late in May 2013, she promptly called two directors of BlueZone as respondents to the complaint when she discovered that the adviser involved had passed away in 2010. She also recently held the directors of Sharemax and the adviser involved jointly and severally responsible for losses incurred in Sharemax ventures; and questioned the conduct of the auditors involved in these cases.
In his verdict, the judge questioned the NPA’s handling of the case. Concerning the evidence given by the FSB’s chief accounting officer, he said: “If his findings are factually correct, then I find it astounding that you (Brown) have been brought to court on only the nine counts listed in the indictment. I find it even more astounding that the state saw fit to accept your pleas of guilty on the facts set out in the admissions you made … If the facts related by this witness are correct, then something is sorely wrong and I can only think the prosecution case has been poorly handled.”
This is in stark contrast to what has previously happened. It was inevitably the adviser who sold the business who was held accountable, mainly for not being able to prove that they applied due care and diligence in advising the clients. Being able to comply with such a sweeping definition is indeed a daunting task. Another oft-stated transgression involves not having conducted a proper due diligence of the investment house, something which few are able, or qualified, to do. For most of them, the fact that the FSB issued a licence was sufficient proof.
In contrast to this, the FAIS ombud found in favour of the public in most of her determinations thus far. In fact, she actually extended the scope of her findings to related parties where she felt that they were at least partly responsible for the losses suffered by consumers of financial products. In 2011, the ombud called for the conduct of the accountants and the property valuators involved in the failed BlueZone property syndication to be investigated by their respective regulatory bodies, and the actions of the syndication’s lawyers to be referred to
One adviser wrote: “There is something fundamentally wrong when a citizen of a country who cannot get redress via the judicial system, can then resort to a government agency for redress. The independent financial adviser is fast becoming the assurer/surety/guarantor of last resort for financial institutions. Somehow this just doesn’t seem right. Surely the financial institutions should have professional indemnity and fidelity cover to cater for these claims? If nothing else, the complainants should at least exhaust their actions against the company or directors first, before being allowed access to this extra-judicial
process that is becoming a cheap slam-dunk for complainants.” In a recent determination concerning yet another imploded property syndication, the attorney of one of the claimants advised investors to approach the FAIS ombud, rather than the courts, saying that they have a better chance of getting something back from the intermediary, than from the liquidators. No amount of additional regulation, or legislation, will stop the perpetrators of fraud from trying their luck. It will only cloud the issue. The only effective way to combat crime is to simplify the rules, and act determinedly and consistently against those who step out of line. The introduction of the Treating Customers Fairly initiative next year is a noble step towards moral regeneration. My only concern is that it will work for those who are already on the right side of the law. The rest will just find a way around it, as usual.
Paul Kruger | Head: Communication, Moonstone Information Refinery (Pty) Ltd
2013 PSG Annual Conference Celebrating 15 years PSG Konsult celebrated its 15th birthday this year at the annual PSG Conference held at Sun City in May.
They prefer disclosed fees, the ability to terminate a policy, simplicity, competition and comparability, which can at times stifle innovation as it leads to all products having similar features for the sake of comparison.” Guests were treated to an inspiring talk by Springbok rugby head coach, Heyneke Meyer, who used his own experience of coaching rugby to speak about the seven pillars of success.
he conference hosted more than 1 000 people comprising PSG’s financial advisers, their partners, exhibitors, insurers and asset managers. Representatives from Santam, Mutual & Federal, Hollard, Old Mutual, Momentum, Discovery, Investec and Coronation Fund Managers were just some of whom attended.
buy on price only when they can’t differentiate a product on other levels. If you are selling products and not yourself then this is the end for you.”
Willem Theron, CEO of PSG Konsult, shared some of the valuable lessons he learned during his tenure at the helm of the company. Francois Gouws, deputy CEO of PSG Konsult, who will take over as CEO on 1 July 2013, discussed the restructuring of the PSG Group into PSG Wealth, PSG Asset Management and PSG Insure and announced PSG Konsult’s plans to list in 2014. “The repositioning and restructuring of the business has happened quickly,” said Gouws. “Changes to the group structure seek to establish the company as a fully fledged financial services group. In future, PSG Konsult will do business simply as PSG.”
Day two of the conference welcomed Nicky Newton-King, CEO of the JSE, who engaged with delegates on some of the issues impacting the current business environment in South Africa; such as high levels of social inequality, as well as technological and regulatory changes. Jannie Mouton, founder and non-executive chairman of the PSG Group, touched on the current financial position of the group, glancing back over its successes and looking at what lies ahead.
Ronald King, executive officer at PSG Wealth, discussed the changing landscape for financial advisers, highlighting the fact that advisers need to do things differently in a post-FAIS world. “The rulings of the FAIS ombud, Noluntu Bam, have become more severe and set a precedent for the regulation of advice going forward,” said King. He also warned that if financial advisers continue selling products and not themselves, they are setting their businesses up for failure. “Customers
Dawie Klopper, investment economist at PSG Konsult, gave a market overview and looked at PSG’s own investment strategy in the current climate.
Ian Kirk, CEO of Santam, presented on the major challenges and opportunities facing intermediated insurers; while Mike Jackson, group CEO of PPS, looked in detail at the advice model and the changes it is facing globally and in South Africa. On the topic of fees vs commission, Jackson argued that if commission is removed, there is no one driving the consumer to save. “When it comes to adviser remuneration and product structures, regulators mistrust hidden fees and charges, special offers, annuity income, bundled benefits and volume incentives.
Gala and awards evening Well-known journalist and political analyst, Harald Pakendorf, was the guest speaker at the gala dinner and awards evening. One of the highlights was the announcement that the PSG Platinum Club, which includes those advisers who have earned more than R10 million in commission over the year, had grown from nine members to 17 members since the 2012 conference. There were over 200 individuals in the millionaires’ club, which includes those advisers who earned more than R1 million in commission over the year.
Award winners at the 2013 PSG Conference Financial Planner of the Year: Jaco Joubert, PSG Konsult, Sandton Portfolio Manager of the Year: Leon Ferreira, PSG Konsult, Pretoria Stockbroker of the Year: Chris Folks Outstanding Achievement Award: PSG Asset Management team Most Impressive Growth Award: Lynton Welby-Solomon Most Supportive Firm of the Year: PSG Konsult, Vredenburg Best Support Division: Leon Taylor and his team in compliance Best Healthcare Practice: PSG Konsult, Midlands Best Employee Benefits Practice: PSG Konsult, Midlands PSG Konsult Practice of the Year: Pretoria East investsa
SA wealth managers embracing Retail Distribution Review (RDR) reforms and clean pricing
ecent developments in the United Kingdom as a result of a drive to increase transparency for investors, have led to the implementation of the Retail Distribution Review (RDR), which became effective on 1 January 2013. The objective of RDR is to enable investors to know how much expert investment advice will cost, know what they are paying for (independent or restricted advice), and to improve professional standards. Investors will now move from paying built-in fees and commission, which has long been criticised as unclear and overly lucrative for advisers and administrators, to pre-set service fees or other set administration and management charges. “It is obvious that one of the surest ways of improving and optimising investment returns is by minimising costs and so it is felt that South African regulations will soon follow the UK,” says Andrew Ratcliffe, a director of Private Client Holdings. “Private Client Holdings has been proactive and has implemented unbundled pricing. We are investing in clean fund classes to promote transparency and disclosure.” According to Ratcliffe, clean funds are the same as traditional ones except they include no commissions, fees or rebates for financial advisers or LISP platforms – just the fee levied by the fund manager. “An example would be the introduction by Investec Management Services, a division of Investec Asset Management, of its iSelect pricing model. This was launched on 1 April 2013. What Investec has essentially done is unbundle the combined cost of the unit trust manager fee from the platform fee. Previously the fund manager would rebate a fee to the platform for being listed on the iSelect platform.” Now, investors on the iSelect platform have been switched to clean classes by the unit trust asset management companies. Ratcliffe explains that these are lower priced unit trust fee classes where the unit trust company does not pay a rebate. For example, if a unit trust was charging a fee of 1.25 per cent and paying a rebate of 0.40 per cent, the clean class fee would be 0.85 per cent. The advantage of a clean class is that the funds published total expense ratio (TER) will correctly reflect the true cost of that fund. Investors will now know exactly what they are paying for and establish where they are receiving value in the wealth management chain.
The objective of RDR is to enable investors to know how much expert investment advice will cost, know what they are paying for (independent or restricted advice), and to improve professional standards. “Another example would be an all-in pricing model, used by certain platforms, where the adviser fee and the platform fee are wrapped up into one amount of say 1.50 per cent. This fee would be collected by the platform and split, with the adviser. The fund manager would then charge their fee over and above this. Again there appears to be is a considerable move within the industry to unbundle this all-in pricing model and introduce more transparency to the process,” says Ratcliffe. However, he cautions that this does not mean you necessarily get out of paying the charges. “The system will be more transparent, but not necessarily less costly. Funds are not going to suddenly cost 0.85 per cent rather than 1.25 per cent. What is happening with RDR is that fees are unbundled
and various elements are separated out and made clear – but they still exist.” The overall effect of this shift is that investors will see a rise in competition as financial advisers strive to provide a better service at a lower price. “At Private Client Holdings, we embrace this shift and urge investors to demand unbundled prices and clean asset classes.” Ratcliffe concludes that since the introduction of FAIS, the advisory industry has had to tidy up its act and conform to the new regulation. “This has come at a cost in time as well as resources to most wealth management practices. Hence, we welcome the objectives of RDR which will be to modernise the industry and establish a resilient effective market where consumers can have confidence and trust at a time when they need more help and advice.”
Andrew Ratcliffe Director of Private Client Holdings
“Tough love” proposals to help you fund your retirement
n partnership with our industry, National Treasury is working on several tough love measures that will force you to preserve your retirement benefits when leaving a pension or provident fund. One of these will force your employer to pay your retirement benefit into a preservation fund when you resign or if you are dismissed,” says Niel Fourie, public policy actuary at the Actuarial Society of South Africa. Fourie says currently you are given the option of taking your retirement benefit as a cash lump sum or to transfer the money into a preservation fund. According to National Treasury’s retirement reform proposals announced with the National Budget in February, this is set to change from 2015. The proposal states that from a date still to be determined in or from 2015, all retirement funds will be required to transfer members’ balances into a preservation fund when members withdraw from the retirement fund before retirement. Payments resulting from divorces will also have to be paid into preservation funds rather than being paid in cash.
Less than 10 per cent of those in the 30- to 40-year age group tend to preserve their retirement benefits. “These statistics paint a grim picture given that the later you start saving for your retirement, the more you need to put away to make up for years of lost contributions. Therefore, every time you dip into your existing savings you increase the amount that you have to save in order to make up for the lost amount and the growth you would have received had this amount remained invested.” Fourie says the following scenarios, while very simplistic, show why it is so important to start saving early and to preserve your retirement benefits:
He adds, however, that National Treasury’s proposals are not all tough – one of them will give you access to your preservation fund once a year. In terms of current preservation fund regulations, you can make only one withdrawal from your preservation fund before retirement irrespective of whether you make a full or partial withdrawal.
In terms of current preservation fund regulations, you can make only one withdrawal from your preservation fund before retirement irrespective of whether you make a full or partial withdrawal.
“While this new proposal may at first seem odd, the current system of allowing only one withdrawal has been encouraging people to take all their retirement savings in one go. By allowing one withdrawal a year, government is hoping that consumers will preserve most of their savings and dip into them only in times of need.”
Let’s assume that you start your career at age 25 and that saving 15 per cent of your salary every year will be sufficient to purchase a decent pension when you retire at age 65. We also assume that you change jobs three times during your working life at age 30, 35 and 40. For the sake of keeping this simple, we’ll ignore inflation.
Referring to the 2012 Alexander Forbes Member Watch Survey, Fourie says on average less than six per cent of employees between the age of 20 and 25 preserve their retirement savings when changing jobs.
Scenario 1: You preserve your retirement savings every time you change jobs and therefore you can keep your retirement fund contribution rate at 15 per cent. If you earn R100 000 a year this would amount to a
retirement fund contribution of R15 000 a year or R1 250 a month. Scenario 2: You took your retirement savings in cash when you changed jobs at age 30, but preserved your benefits when you changed jobs at age 35 and 40. To make up for the loss of the first five years of savings, your contribution rate from age 30 must increase to 19 per cent if you want to achieve your goal of a financially secure retirement. On a salary of R100 000 you would now have to contribute R19 000 a year or R1 583 instead of R15 000 a year or R1 250 a month. Scenario 3: You start preserving your retirement savings from age 35. You will have to increase your retirement fund contributions to 25 per cent of your salary if you want to retire comfortably. This will mean saving R25 000 of a R100 000 salary every year, or R2 083 every month. Scenario 4: You were a reckless spender until 40 and you cashed in on your retirement savings every time you changed jobs. Reality suddenly strikes you at age 40 and you realise that you need to start saving. You now need to increase your retirement fund contributions to 33 per cent to meet your retirement savings target. On a salary of R100 000 you would have to put away R33 000 a year or R2 750 a month. “The numbers above clearly show the benefit of preserving your retirement benefits every time you change jobs,” says Fourie. “It is therefore important that you resist temptation to dip into your pension or provident benefits unless you really need the money for financial survival.”
Niel Fourie, Public Policy Actuary at the Actuarial Society of South Africa
Majority of South African financial advisers are unprepared for RDR L
ess than half of South African financial advisers are seriously planning for possible regulatory changes that may come about as part of a South African retail distribution review (RDR), according to a new survey by CoreData Research. This general lack of planning is likely to catch many businesses short when new regulations regarding the remuneration of financial advisers and the classification of advice comes into effect, according to the Adviser 2013: Looming Regulation and Business Change report. The financial advisory industries in the UK, US and Australia have all recently undergone RDR. According to analysis of Financial Conduct Authority (formerly Financial Services Authority) numbers by CoreData UK, the number of financial advisers in the UK has dwindled from 35 000 in 2010 to around 20 000 following RDR. The South African industry could face a similar fate.
The fees vs commission debate within the South African financial advice industry has been going strong for some time. However, the Financial Services Board has come to the conclusion that a review of current remuneration models will not be enough and a full blown RDR is underway in South Africa. Considering over two-thirds of businesses still earn the majority of their income through upfront or trail commissions, RDR poses a significant threat to the survival of financial advisory firms.
However, the Financial Services Board has come to the conclusion that a review of current remuneration models will not be enough and a full blown RDR is underway in South Africa.
n Despite the lack of future preparations, financial advisers in South Africa say the greatest challenge they are currently facing is changes in remuneration legislation with 57.9 per cent ranking it the biggest hurdle over the next two years. n The classification of advice between independent and restricted is the next biggest challenge they face between now and 2015. n Only 12.8 per cent of SA advisers currently work on a fee-based model that would require no adjustment post-RDR. n Of those advisers who have begun to make changes to their business models, 40.4 per cent are modifying their fee structure in preparation. n Almost 60 per cent of advisers currently class themselves as providing full independent advice, while 15.4 per cent of advisers state they are restricted financial advisers. This spread could shift significantly in light of RDR. n The main bulk of South African advisers have successfully made it through the first round of the FAIS assessments; however, a quarter feel the second round of FAIS assessments is their greatest challenge over the next two years. n The size of the advice market in South Africa, in terms of numbers of advisers, is not expecting any major contraction in the short term as the majority of advisers (83.6 per cent) plan to continue in their current role by the end of 2013. n However, over the next two years, a quarter of advisers expect to leave their current role and, in three to five years, only half of advisers currently practising expect to remain in the same position. n Currently half of advisory businesses perform advice and asset allocation in-house. This is set to decrease by the end of 2013 and again in 2015. n At the end of 2015 there will be more advisers who perform advice in-house but outsource all investments to a DFM (35.8 per cent). n Currently a third of advisory businesses (32.1 per cent) state they have no need for paraplanning services, but by 2015 this sentiment almost halves to 17.2 per cent.
Retirement (as we know it) IS DEAD
“Gen X and Late Boomers face the bleakest retirements in history.” This headline appeared in a recent article. It highlighted the poor position of these two categories of people in the USA (roughly between 38 and 48 years of age). The article blamed the Gen X and Late Boomer’s situation on their saving and spending patterns and poor investment choices. According to the study, this age group was most affected by the market downturn.
know that bad news sells. However, if I put myself in the shoes of Gen X and the Late Boomers, I would just give up. There is so much bad news about retirement from the industry and the media. Retirement (as we know it) is dead. Perhaps the current generation of savers understands this better than the doomsayers. Retirement was a relatively short-lived experiment in world history, which only really started around the first half of the last century. The concept of a pre-ordained timeline of events – preparing to work, work, retirement and death – is also largely outdated. Retirement is no longer the time when you do what you’ve wanted to do all your life. Neither is it a time to do nothing – you might do nothing for a long time. Putting off leisure, for some time in the future, simply does not work for us anymore (speaking as a Gen X) and telling ‘old’ people they can’t study and work is an outdated notion. The new picture of life and retirement includes people seeking meaning and fulfilment throughout their lives. Parents want to be involved in their children’s lives. Many will sacrifice earnings to be more involved parents. Increasingly, people will forego high-paying jobs for those with more meaning, flexibility or time for leisure. Perhaps Gen Xers believe that they will never be able to afford old-fashioned retirement anyway because their obligations (sandwiched between parents and children) will prevent them from saving enough. Perhaps younger people believe that they will always be okay, that somehow they will ‘make it’ by means of their own entrepreneurial activity. Perhaps some will never want to retire, only work in a different way. This is already happening;
my own father (74) is still working a full-day job, in addition to farming on the side. These changes are brought about by many colliding forces, longevity being one of the most important. People stay healthy well beyond 70. What does this mean for the financial industry? For starters, we have to change our advertising. We can’t depict retired people as loving grey-haired couples walking hand in hand on the beach. Retired people exercise, study, work and travel. Retired people work for their children or charitable organisations. They are active members of society, involved in church communities and sport clubs. They give back by counselling, teaching or mentoring. My mother-in-law runs an active seniors’ club for the old people in her community– she is almost 75 herself. Some of these trends are forced by the unaffordability of long retirements. People will not be able to afford the picture-perfect retirement – it will be too long. The asset management and advice industry is largely built on encouraging people to save during their working careers so they can withdraw savings during retirement. Typically, investors become great clients during the final stage of their working lives when they really build up assets. What if the next generation believes they will work for life? What if the next generation does not build up assets? Will the next generation require advice? By all means. However, they will need a different type of advice – advice on how to use money to fund their lives. What kind of advice will we give our clients when they want to make mid-life career changes? Will it be: Don’t touch your pension to fund your new business
venture? You shouldn’t bond your house again to study further in your fifties? How will we charge for advice? Even our current legislation defines advice only in relation to selling products. How will we charge if no transactions are involved? What skills will financial advisers need? Regulation requires advisers to obtain technical skills which could become somewhat obsolete. Coaching and teaching skills may be more in demand. I could be resigned to trends which may not happen at all, trends that lie in the future, or ones that may be around the corner. If we don’t think about how our world is changing, we may not be prepared for it. The biggest risk to our industry might not be another market collapse, it might be the disappearance of our customers. That is, if we don’t change.
Sunél Veldtman, CFP CFA is the author of Manage Your Money, Live Your Dream, a guide to financial well-being for women. She is also a presenter and facilitator. Sunél is currently the CEO of Foundation Family Wealth and has more than 20 years of experience in financial services, most of which is as a private client adviser.
Appointments Roberto Ferreira has been appointed by STANLIB as fund manager of Africa portfolios in STANLIB Direct Property Investments. Ferreira will lead a focused effort on building African investment opportunities through creating quality stock in high growth areas, starting with the STANLIB Africa Direct Property Development Fund. With 19 years’ financial industry experience, Ferreira joins STANLIB from Harith General Partners. He holds several qualifications including an MBA (Finance) (Merit) from the Manchester Business School, University of Manchester; a BA Honours and MPhil. (Cum Laude) from the University of Johannesburg; and a BA (Law) from the University of the Witwatersrand, Johannesburg.
Barclays has appointed Jason Barrass as head of Africa Trade, a new role based in Johannesburg. Barrass will be responsible for Barclays’s pan-African trade business across structured trade, to the flow business, supporting global corporate clients with their trade finance needs. He joins Barclays in Africa from JP Morgan where he was a managing director in the global trade organisation and head of trade sales for the region. Prior to joining JP Morgan, Jason was employed by Standard Bank in London as the manager for global trade finance in Central Eastern Europe, Middle East and Africa.
MOMENTUM MANAGER OF MANAGERS ACKNOWLEDGED FOR ITS SERVICE EXCELLENCE
customer-focused values reflected in service standards, innovative service provision, and service excellence.
Momentum Manager of Managers (Pty) Ltd has been nominated for a service excellence award at the fifth annual Imbasa Yegolide Awards for 2013.
Kevin Milne, head of investment services at Momentum Manager of Managers (Pty) Ltd, says implementing innovative service delivery mechanisms is a key focus area and the company strives to make the investment management process as stress free as possible for trustees, consultants and investors. ”Our service excellence focus is being increasingly recognised in the industry, as are our efforts towards improved cost
The nomination, which was submitted under the multi-manager category, recognises exceptional service within the retirement fund industry. Emphasis is placed on leadership and exceeding customer expectations, 32
management in a post-2008, lowerreturn market.” Momentum Manager of Managers (Pty) Ltd has developed a number of technologybased service platforms, including the wellreceived Alpha-lab suite, which comprises online investment advice, analysis and research tools. The assistance provided by this service, which can be accessed remotely and on a 24/7 basis, has allowed investment managers and investment advisers to manage investor portfolios more efficiently and cost-effectively.
CORONATION ANNOUNCES EXCELLENT INTERIM RESULTS JSE-listed asset manager Coronation Fund Managers (Coronation) announced an excellent set of results for the six months to 31 March 2013. Revenue increased by 62 per cent to R1 475 million, from R912 million in the prior half year, on the back of excellent investment performance and a substantially increased asset base. For the period under review, assets under management increased by 21 per cent to R409 billion (September 2012: R339 billion), driven by total net inflows of R21.9 billion and rising global markets.
This resulted in an 88 per cent increase in diluted headline earnings per share to 163.4 cents (March 2012: 86.7 cents). If the effect of secondary tax on companies in the comparative period is removed, as a result of the introduction of Dividends Tax (DT), the increase in diluted headline earnings per share is 72 per cent. Anton Pillay, CEO of Coronation, says that exceptional investment performance and a substantial increase in assets under management during the period had a highly positive impact on the company’s revenue. “Although our short-term prospects appear robust, we would like to remind investors that, as a long-term manager, our business
is cyclical. Our revenues are highly geared to market returns and the outperformance we deliver in the funds we manage. “Looking ahead, we expect that markets will deliver lower returns compared to the recent past. In this more difficult market environment, we will remain unwavering in our pursuit of longterm value through the cycle and in serving our clients.” Coronation endeavours to distribute at least 75 per cent of after-tax cash profit. Accounting for projected cash requirements, it has declared an interim gross dividend of 163 cents per share, or 138.55 cents per share for shareholders who are subject to dividends tax.
Fedgroup pledges R1 million to Fidentia beneficiaries FedGroup Beneficiary Fund Administrators pledged R1 million to assist the 500 ex-mine workers and other beneficiaries in recovering their millions. John Field, CEO of FedGroup, says that FedGroup has been in the beneficiary fund industry for the past 25 years. “We know how important monthly payments are and how not making payments threaten basic needs such as food, shelter and education. The 500 miners
who lost millions continue to struggle to pay for food and shelter and deserve a further investigation. They cannot afford to get further advice, so we are pledging seed money to kickstart the process and pay for forensic, legal and accounting fees.” According to Field, the R1 million will be administered pro bono in a trust held by the Fidelity Trust Company. “It is important that the miners know that safeguards will be put in
place to ensure that the trust is administered properly and funds utilised appropriately.” Even though his pledge comes in the middle of the Fidentia blame-game, Field stresses that it should not be seen as an attack on Fidentia, nor as support for J Arthur Brown. “This pledge is about looking after the vulnerable people. It is our social responsibility to do so,” concludes Field.
FNB launches Share Saver FNB has announced the launch of Share Saver, a new product to add to its successful Share Investing platform. Share Saver is a unique investment vehicle, the first of its kind, giving investors a powerful and low-cost way to access the top 100 JSE-listed companies.
companies on the JSE, giving investors direct access to the top 100 JSE-listed companies in South Africa. “We have kept costs to a minimum for these investors to maximise the customer’s investment,” says Binikos.
Gusta Binikos, CEO of FNB Share Investing, says, “We identified a gap in the market which prevented customers from investing in shares.”
The Share Saver account is aimed at people who would like to invest but are restricted by cost and confidence to choose shares themselves. Lump sum investments can also be made.
FNB conducted research into customer behaviour and strong feedback was that many people know that investing in the market is a good way to build wealth, but they were not confident to pick their own shares or do not have a lump sum available to invest. The account gives customers exposure to two RMB exchange traded funds (ETF). Share Saver combines the RMB Top40, the 40 largest shares on the JSE, and the RMB MidCap, which is the next 60 largest
“The majority of our customers are between 24 and 35, which shows that young people are taking the initiative to invest in shares. However, through Share Saver we hope to grow this market further and, as investors become more confident, we should see them upgrade to more interactive investing accounts,” concludes Binikos.
Absa lists platinum ETF on JSE The corporate and investment banking division of Absa Bank Limited has listed the first fully backed physical platinum exchange traded fund (ETF) on the JSE. An investment in Absa’s NewPlat ETF issued by NewGold Issuer Limited, issuer of the largest ETF in the South African market, will provide investors with the opportunity to obtain exposure to the Rand performance of platinum bullion. Vladimir Nedeljkovic, head of Investments at Absa’s Corporate and Investment Banking division, says as a South African first, the NewPlat ETF demonstrates Absa’s innovation and leadership in bringing world-class financial products to local investors at competitive rates. Up until now, the only way for South African investors to access platinum was through exchange traded notes like Absa’s NewWave Platinum ETN. The listing of the NewPlat ETF is especially exciting for South African investors since the NewPlat ETF is classified by the South African Reserve Bank as a domestic investment – not affecting the foreign exposure limits normally applicable to institutional investors and authorised dealers. “Since ETNs, however, are treated as foreign assets, clients holding Absa’s platinum ETNs will have an opportunity to convert these into the NewPlat ETF at a cost of one basis point, thereby freeing up clients offshore allocation,” concluded Nedeljkovic. The 40 basis points cost associated with Absa’s NewPlat ETF compares favourably with other international platinum ETF offerings which range from 49 to 60 basis points per annum. 34
Nedbank launches familyfriendly financial management tool Nedbank has announced the launch of MyMoneyMap, an allowance management tool that is secure and easy for youth to use with the aim to empower them – with their parents’ help – to build financial fitness from an early age. MyMoneyMap is based on four pillars: 4spending, 4saving, 4growing and 4good. Introduced by Nedbank in 2012 as key features of the youth offering, Nedbank 4me – ‘My Future, My Bank’, it enables kids up to 18 years to transact and save with the benefit of earning a preferential interest. Anton de Wet, managing executive of client engagement, says the company is delighted to bring this ground-breaking tool as part of its ongoing commitment to deliver a choice of distinctive banking experiences and innovative solutions for its clients following the recently launched MyFinancialLife. “Nedbank 4me MyMoneyMap works on a very simple premise of joint responsibility between parents and their kids, allowing them to plan together and agree on a daily, weekly or monthly allowance amount. The allowance can be allocated to a set goal such as saving for an iPod or a school trip, and linked to any of the four pillars. ”Keeping track of how much parents give to their children as an allowance requires
serious planning, monitoring and, more importantly, accountability. Simply put, MyMoneyMap is a virtual allowance/pocket money management tool enabling parents to track the allowance given to their kids, and the kids to track their funds,” says De Wet. Hailed as the prototype allowancemanagement tool for families, MyMoneyMap can be accessed online at no cost to Nedbank and non-Nedbank clients. It will also be integrated with the MyFinancialLife online personal financial management tool later. It is an extension of the Nedbank 4me Market Days Programme, which is aimed at instilling sound money management, financial fitness principles and an entrepreneurial spirit in young people. “Building financial fitness is an imperative if we want to create a vibrant society and responsible future leaders. As a bank for all, we believe it is vital for banks to continue providing innovative tools and relevant products and services for our clients,” concludes De Wet.
KOREA, europe, africa, INDIA, FRANCE, INDONESIA, AMERICA
BUSINESS CONFIDENCE IN THE UK IMPROVING UK businesses continue to improve despite slow economic growth, the quarterly Business Confidence Monitor suggests. The survey reflects higher investor confidence as well as a forecast of stronger economic growth in the second quarter of 2013. However, government’s economic policies are still being questioned as there is still a degree of fragility and the economy is susceptible to knock-backs from events outside the UK. FEWER BUSINESS INSOLVENCIES IN UK NOT A SIGN OF HEALTHIER ECONOMY The first three months of 2013 brought a 5.3 per cent fall in the number of business bankruptcies in the UK, which is a 15.8 per cent improvement from the same period in 2012. According to Alan Hudson from Ernst & Young, this is an indication that the UK economy is moving in the right direction. However, Stewart Baird, director of SME investment firm, Stone Ventures, says that these figures are not indicative of a healthier economy. FRANCE IS FIRST CHOICE FOR OVERSEAS PROPERTY INVESTORS France is still the first choice for British citizens buying property abroad, according to the latest overseas property ‘hot spots’ report compiled by Conti. Accounting for 45 per cent of the world survey, France topped the list, followed by Spain with 33 per cent and Portugal with 10 per cent. Turkey, Italy, USA, Australia, Canada, New Zealand and Ireland respectively make up the rest of the top 10. SLOW RECOVERY FORECAST FOR INDIA’S ECONOMY India’s Central Bank cut its lending rate from 0.25 per cent, to 7.25 per cent, in part due to the easing of the country’s headline inflation. This brings positive news for the nation’s
economy as it is the third rate cut this year. Naoyuki Shinohara, deputy managing director of the International Monetary Fund, forecasts that India will see growth of 5.8 per cent this fiscal year and 6.3 per cent in 2014–2015.
Analysts say this could pose investment and importing dilemmas in the future.
INTEREST RATES CUT BY BANK OF KOREA TO BOOST ECONOMY
Three Latin America countries are expected to boom in 2013, according to a new World Bank report on Latin America, ‘As Tailwinds Recede: In Search of Higher Growth’. The report identified that Paraguay, Panama and Peru are projected to grow 11 per cent, nine per cent and six per cent respectively, while other Latin American countries will keep growing at moderate rates. The report also said that Latin America will grow 3.5 per cent this year. However, this is still below the five per cent annual growth rates of the past decade.
In a surprise move to spur on the economy and counter the Japanese Yen, South Korea cut interest rates. Its central bank, the Bank of Korea, lowered its benchmark rate from 2.75 per cent to 2.5 per cent, the first cut in seven months. The bank joins government efforts to boost the export-reliant economy as manufacturers face tougher competition from Japanese rivals boosted by the weakening Yen. However, there are still concerns in the consistency of the nation’s economy. EU PLEDGES 520 MILLION EUROS TO MALI RECONSTRUCTION The European Union (EU) will pledge 520 million Euros in financial aid to Mali at the International Donors conference in Germany, in order to help rebuild the nation’s struggling infrastructure sector and overall economy. European Commission president, Jose Manuel Barroso, said the money would help the West African state become “stable, democratic and prosperous”. Mali’s interim president, Dioncounda Traore, said after meeting the European Commission chief in Brussels that he hoped about two billion Euros would be raised at the conference.
THREE LATIN AMERICAN COUNTRIES TO BOOM IN 2013
FREE TRADE ALLIANCE COULD POSSIBLY PUT AFRICA ON THE MAP Three of Africa’s largest economic communities, the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (Comesa) and the Economic Community of West African States (Ecowas) are to come together in order to create one economic market as a method to attract foreign investment in Africa. South African minister of trade and industry, Rob Davies, says regional integration will reduce trade hurdles such as subpar transport systems and bureaucratic red tape, among others.
INDONESIAN GROWTH SLOWEST IN TWO YEARS Indonesian exports are growing at its slowest rate in two years. This is a major concern to ratings agency Standard & Poor’s. “Exports are underperforming and government spending is still not up to speed,” says Euben Paracuelles, a Singapore-based economist at Nomura Holdings. Growth was slower than the 6.11 per cent recorded in the previous quarter.
y e h T said “The increase in foreign participation also means non-traditional investors in the localcurrency market from parts of Asia have now gained exposure to the South African economy and its investment opportunities, a development that carries a long-term positive effect.” Monale Ratsoma, Treasury chief director of liability management on the fact that more investors are flocking to emerging markets in search of high yields, because of the low returns in developed economies. “Investing in properties that we already manage significantly lowers the due diligence risk compared with dealing with a third party.” Marcel von Aulock, CEO of Tsogo Sun after the company committed to a R900 million investment in economically buoyant Mozambique and Nigeria. “We have the infrastructure to open as many stores as we want to without significant investment.” Whitey Basson, chief executive at Shoprite, in response to Pick n Pay’s ambitious capital expenditure programme, which sees the retailer calling for investment of R1.767 billion in the 12 months to February 2014. “We have not seen such an investment, and we’ve looked at a number of things. When you do stumble on an investment of that size, you can be pretty sure someone has already unlocked the value.” Piet Mouton, chief executive at PSG on the launch of its third 36
corporate transition, Project Internal Focus. With an asset base of R16 billion, PSG would need to make a new investment of between R1 billion and R1.5 billion to affect portfolio value to a large extent. “Investment of about $93 billion a year is needed to develop the infrastructure required to support the region’s agricultural sector.” Grant Hatch, MD of strategy and sustainability at Accenture South Africa, in response to a report that revealed food production in sub-Saharan Africa must rise by 50 per cent in order to feed an estimated population of 1.3 billion by 2030. “Where originally our growth and expansion plans had looked at traditional places like Europe and the US and Asia, now we realise that from a strategic perspective, that to grow and expand our business, we have to look at Africa as an expansion. South Africa now is only a stepping stone for us to begin considering getting into other economies like Angola, Zambia, Nigeria, Ghana, so there are prospects and huge opportunities for us.” Mayank Patel, group chairman of the Azibo Group speaking at the 2013 World Economic Forum (WEF) in Cape Town. ”The African lions are growing even faster than the Asian tigers. But if this growth is not invested in human capital and diversifying economies, we will lose out on the opportunity.” Borge Brende, WEF managing
director and member of the managing board, who reiterated the request by African business leaders for a focus to be placed on investment in human capital and economic diversification, which would assist in making the growth across the continent more inclusive. “The primary reasons for South Africa’s popularity appear to be its relatively welldeveloped infrastructure, a stable political environment and a relatively large domestic market.” Ernst & Young in response to the company’s third Africa Attractiveness Survey, which rated South Africa as the most attractive country in Africa for investors. “It is very important for us and the country that we develop products that are suitable for the domestic market.” Christine Engelbrecht, head of the tourism business unit at the Industrial Development Corporation (IDC), after the State-owned development financier announced plans to invest R2 billion in local resorts and attractions and in hotels in the rest of Africa over the next five years. “It’s good for the industry and it is good for South Africa as an investment destination.” Amelia Beattie, chief investment officer of Stanlib’s Direct Property Investments franchise after the launch of real estate investment trusts (REIT) structure in South Africa, which together with the mobilisation of sovereign wealth funds for investment in Africa, is likely to stimulate hotel investments on the continent.
You said ned o i t n e m s a s t t twee s e b e h t f o e som s. A selection of ou over the last four week by y @ReutersJamie: “The most bearish Eurozone forecast so far? Capital Economics predicting GDP this year will shrink by around 2%.” Jamie McGeever – Editor and presenter at Reuters TV, tweeting on markets and economics. Mostly. Now London-based, previously in New York, Madrid, Rio, Sao Paulo. London @nicns: “So if one of Shoprite’s stores is losing money, will government force it to keep it open anyway? #Amplats” Nic Norman Smith – Chief investment officer at Lentus Asset Management. Building long-term wealth for clients using the value philosophies of Graham & Dodd. Jo’burg, South Africa @chrisadamsmkts: “Greek 10-year bond yields fall to lowest in three years following an upgrade of the country’s credit rating by Fitch.” Chris Adams – Financial Times Markets Editor. Any views are my own. @pdacosta: “Eurozone economy marks longest recession since union’s inception.” Pedro da Costa – Journalist covering economics and Federal Reserve policy for @ Reuters. Resident instigator at @Macroscope. Washington, DC. @WarrenBuffet: “Warren is in the house.” Warren Buffet – Chairman and CEO of Berkshire Hathaway
@investor_quotes: “”There is only one side of the market and it is not the bull side or the bear side, but the right side.” Jesse Livermore” Investment Quotes – Quotable quotations from major investors for inspiration, motivation and insight.
@carlvdberg: “Financial advisers! Sell your advice, don’t sell your product. Advice not sales.” Carl van der Berg – Financial consultant with @alexforbes. Futurist, behaviouralist and passionate about unique retirement solutions. I sometimes post photographs.
@Josh_CityIndex: “Of the last 22yrs, the #FTSE 100 has fallen in June (start to end) 73% of the time. Time for a correction? My target still 6750” Joshua Raymond – Chief Market Strategist at CityIndex. Regularly appears on CNBC, Bloomberg, Sky News and BBC. Arsenal fan! #viewsmyown #forex #cfds Losses can exceed your deposit! @MarcHussenfuss: “Who’s game for a 4.6% yield? Sportsware retailer Holdsport pays 130c final dividend, bringing full year pay out to 200c.” Marc Hussenfuss – Financial journo, whose real passions are Henry Miller, Frank Zappa and watching his kids destroy things. Kommetjie @LindsayBiz: “Sep 2012 unions said they’d bring mining in SA “to its knees”. They have. Shares plunging as more strikes hit. Well done. U win.” Lindsay Williams – Football and Fish, Broadcasting and Beer, Wine and Whining, Writing and Wronging. Cape Town.
And now for something
vintage jewellery could yield sparkling returns
o some, jewellery serves as a complement to a dress and also makes for a perfect gift on special occasions. For others, jewellery serves as a lucrative investment. The notion that jewellery retains its value is deeply rooted in traditions and cultures around the world. Certain tribal people sometimes use beads as currency, while others use jewellery as an offering for a wedding dowry.
decrease. Be aware of art deco or art deco renovated pieces as there will be significant difference in price. In spite of the array of factors to be wary of, vintage jewellery does make for a lucrative investment. Below are some of the vintage pieces of jewellery that have sold at auction for the highest prices. The implication is that jewellery endures and retains its value over the long term.
Jewellery is also extremely portable in its nature: rings, necklaces, bracelets, amulets and diamonds have often been smuggled by refugees who have been forced to flee a country and take their wealth with them in order to sell their valuables and start over. These rare items, as well as vintage and estate jewellery, have the potential to earn respectable returns due to their rarity and precision handwork craftsmanship, which is said to be a lost art.
Panther Bracelet $12.4 million When King Edward VIII of England wanted to show his devotion to his lover Wallis Simpson, he sought out one of the most exquisite pieces of jewellery in the world as a gift. He decided on an onyx and diamond panther bracelet. It was crafted in Paris in 1952, and became the most expensive bracelet ever sold when it was purchased for $12.4 million in 2010.
With this in mind, there are a few important points to consider before acquiring such an item. Vintage and estate jewellery offers the best value for money as new retail items can take 30 years to regain their initial sale value. Diamonds can also be purchased for a fraction of the price over their new retail counterparts, while historically platinum retains its value better than gold. First and foremost is to check the condition of the vintage item. Look out for damage such as missing prongs, bends and dents. Be sure to also check for the quality of craftsmanship, finish, type of gemstones used and if repairs were made. Is the jewellery detailed with clean or crisp edges? Another factor affecting a piece’s value is its originality. If it has undergone modifications and has changed in form and function from its original intended use, its value will 38
The Wittelsbach Graff Diamond $24.3 million A fancy greyish blue diamond weighing over 35 carats, this jewel was controversially cut by jeweller Laurence Graff to remove its imperfections. This meant that the piece was reduced to just over 31 carats, but was now absolutely flawless in its structure, both externally and internally. The stone originated in India and its ownership can be traced as far back as King Philip IV of Spain in the mid-17th century. It was sold for $24.3 million in 2010.
The successful bidder was anonymous, but rumours still circulate that pop singer Madonna bought the bracelet, and they gained strength following her first feature film as director of a biopic of Wallis Simpson.
The Graff Pink - $46 million Laurence Graff, a jeweller himself, won the bidding war for The Graff Pink in 2010 at Sotheby’s in Geneva. He purchased it for $46 million – the highest price ever paid for an item of jewellery. The emerald-cut extravagant intense pink diamond with rounded corners is set in a platinum ring with shield-shaped diamonds on either side and was previously owned by American jeweller Harry Winston for over 60 years before the 2010 auction.
The Empress Eugenie Brooch - $10.8 million Dating from around 1855, this brooch is covered in diamonds. A sculpted bow with two crafted tassels and five cascades are all decorated with European-cut 141-carat diamonds. It was designed and made by a Parisian jeweller named Francois Kramer as a gift for Eugenie, the wife of Napoleon III, the ruler of France in the mid-nineteenth century. Originally designed as a belt buckle, with a gold setting, Eugenie preferred to wear it as a brooch. It was sold in 2008 at Christie’s New York to a private bidder for $10.8 million.
Knowing where to invest can be daunting
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Asset Management Unit Trusts
All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such information or opinion without appropriate professional advice after a thorough examination of a particular situation. We endeavour to provide accurate and timely information but we make no representation or warranty, express or implied, with respect to the correctness, accuracy or completeness of the information and opinions. We do not undertake to update, modify or amend the information on a frequent basis or to advise any person if such information subsequently becomes inaccurate. Any representation or opinion is provided for information purposes only. Collective Investment Schemes in Securities (CIS) are generally mediumto long-term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request from the company/scheme. Commission and incentives may be paid and if so, would be included in the overall costs. Forward pricing is used. Performance is sourced from Morningstar and is based on R-class returns to 30 June 2012. The above portfolio performance is calculated on a NAV to NAV basis and does not take any initial fees into account. Income is reinvested on the ex-dividend date. Actual investment performance will differ based on the initial fees applicable, the actual investment date and the date of reinvestment of income. Investec Fund Managers SA Ltd is a member of the Association for Savings & Investments SA.
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2013/05/24 4:02 PM
What 70-year-olds do when their money starts to run out. RADAR/4243/IVSA/E
The first shock is realising it too late. If you own a house you invariably have to sell. Then you discover that renting isn’t cheap either and after a while that has to come to an end too. If you’re lucky enough to have children, you move in with them. But they resent the invasion of their privacy and you lose your independence, stature and, ultimately, your dignity. Depressing? Definitely. Avoidable? Absolutely. It’s called the Old Mutual Classic Five Investment Collection. Five handpicked unit trust funds that deliver the returns you need in years to come. Even setting aside a small amount now can mean a big payout thanks to the power of compounding over time. The sooner you start, the easier it gets. And if you’re feeling commitment pangs, don’t! • Unit trusts do not lock you in. • You can get access to your money in one day – without penalties. • You can miss monthly payments. Also, no penalties. • No upfront admin fees, so your money works from day one.
Classic 5 INVESTMENT COLLECTION
1. Contact your Old Mutual Financial Adviser or your Broker 2. Call 0860 INVEST (468378) 3. Visit investmentcollection.co.za
Old Mutual Enhanced Income Fund
Old Mutual Stable Growth Fund
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Old Mutual Investment Group (South Africa) (Pty) Limited is a licensed financial services provider. Unit trusts are generally medium- to long-term investments. Past performance is no indication of future growth. Shorter term fluctuations can occur as your investment moves in line with the markets. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. Unit trusts can engage in borrowing and scrip lending. Fund valuations take place on a daily basis at approximately 15h00 on a forward pricing basis. The fund’s TER reflects the percentage of the average Net Asset Value of the portfolio that was incurred as charges, levies and fees related to the management of the portfolio.
COSA Communications, a leading boutique publisher of print and electronic media, has announced the launch of INVESTSA - a specialist investm...
Published on Jun 25, 2013
COSA Communications, a leading boutique publisher of print and electronic media, has announced the launch of INVESTSA - a specialist investm...