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31 August 2017 |

First for the professional personal financial adviser



SASFIN WEALTH LAUNCHES GLOBAL EQUITY FUND The fund launch aligns with the business’ strategy to enhance its global offering for clients.

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Dudu Tembo, Portfolio Manager/Equities Analyst at Argon Asset Management, on making a career in the financial services industry. Page 8

Cash is the more risky asset for longterm investors.

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Twin Peaks: Why fix what isn’t broken?


he Financial Sector Regulation Bill (FSRB) was passed by Parliament and sent to President Jacob Zuma for assent on 22 June 2017. The Bill establishes two brand new regulators: the Prudential Authority and the Financial Sector Conduct Authority. The Prudential Authority will regulate the prudential aspects of banks and all non-bank financial institutions while the Financial Sector Conduct Authority will regulate market conduct. The Banking Supervision Department of the SA Reserve Bank (SARB) will be dissolved and replaced by the Prudential Authority. The FSB will be transformed into the Financial Sector Conduct Authority, while the SARB will provide overall financial oversight. The FSB describes the FSRB as the first piece of legislation in a series of proposed laws that will bring the regulation of all local financial services together under the Twin Peaks model. Executive Officer of the FSB, Advocate Dube Tshidi, says that pivotal to implementing this framework is the acknowledgment that Twin Peaks will require a learning curve towards further strengthening South Africa’s financial sector, which has been resilient in the past. “The proposed regulatory framework has three key objectives which are to make sure that consumers are protected, that there is integrity in

the market and that institutions within the sector are financially sound,” he adds. While the Twin Peaks reforms don’t reflect any adverse judgment on the country’s current regulatory architecture, they are aimed at “making continuous improvements to the current framework, which proved its worth by helping the domestic sector weather the storm of the global financial crisis better than other jurisdictions.” Not everyone welcomes the reforms. Speaking at a Free Market Foundation (FMF) briefing last month, Robert Vivian, Insurance Professor at Wits School of Economics and Finance, was of the opinion that the FSRB has, “profound and damaging consequences for the financial services sector and in particular the insurance industry – which is fundamental to the economy and has successfully provided reliable insurance, jobs and investment for more than 200 years in SA.” The Bill also has “severe consequences for transformation, for employment and for Continued on page 2 consumers of insurance.”

THE GLOBAL MARKET NEVER SLEEPS. NEITHER DO WE. In today’s market, finding the best opportunities takes global perspective. Ours comes from over 650 investment professionals on the ground across more than 28 countries.* Find out more at

* As of 31 March 2017. Investors should seek professional financial advice before making a decision to invest. Investments involve risks. Franklin Templeton Investments SA (PTY) Ltd is an authorised Financial Services Provider. Please refer to our website for more information. © 2017 Franklin Templeton Investments. All rights reserved.

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EDITOR’S NOTE Continued from page 1

Professor Vivian suggests that Government rethink the policy, “before yet another important private sector is damaged and another disastrous economic policy is adopted,” disputing the claim that the Bill represents international best practice. “The Twin Peaks model already exists in practice, introduced by the Financial Advisory and Intermediary and Services Act 37 of 2002 (FAIS), but under a single peak, rather that the proposed expensive and grossly inefficient split into two peaks under the FSRB.” Twin Peaks will compound and exacerbate the problems and be an enormous waste of resources, he says. “Britain and Australia have been experimenting with it and Holland has piloted a different version. Not a single other country has tried it.”

THE BILL ALSO HAS ‘SEVERE CONSEQUENCES FOR TRANSFORMATION, FOR EMPLOYMENT AND FOR CONSUMERS OF INSURANCE’ He claims that both the National Treasury and FSB have failed to give clarity on why the legislation is necessary when its stated objectives can and are being achieved under current, simpler legislation. “Insurance, which is one of SA’s oldest, most established and most economically necessary private sector functions, has been unnecessarily lumped in with banking and other financial services.” FMF Executive Director, Leon Louw maintains that the regulation will hamper transformation in the industry and further encourage concentration into a few large firms instead of many smaller, more competitive insurance houses, agents and brokers. This is the opposite of what is intended: the creation of monopolistic conditions.

The FMF believes that Twin Peaks was put forward as a solution for a problem that has yet to be identified, researched, analysed or quantified. The organisation is particularly concerned about the Cabinet mandated Social Economic Impact Assessment (SEIA) that was produced. “A SEIA is required to precede all new policy. The SEIA produced was grossly inadequate and misleading; in fact, a case study in precisely how not to produce such an assessment.” The FMF believes that the FSRB will cost R4.8 billion per annum1, although “no evidence has been provided that any additional benefit will derive from the billions spent.” It also thinks that the Bill will create an expanding enormous regulatory bureaucracy while not providing a new or different approach. “The Bill stifles innovation, reduces consumer choice and access to low cost advice. It also reduces competition – the opposite of the intention.” 1 The FMF believes that this is the equivalent of 500 000 RDP houses or 5 000 new clinics per year, every year.

Robert Vivian, Insurance Professor, Wits School of Economics and Finance


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don’t know about you, but I’m certainly tired of hearing about Bitcoin. Not a day goes by without me receiving an email about the cryptocurrency and how buying it will change my life. I’ve never believed the Bitcoin hype: “It’s a totally revolutionary concept – a decentralised money system! Transactions are made without middle men, there is no transaction fees and you don’t have to give your real name!” So what? And why would I want to risk moving money from rand into Bitcoins just to save a tiny amount on transaction fees? We’re also told that according to the Bitcoin protocol, only 21 million Bitcoins can be created. There are currently about 15 million in existence. Yet, these coins can be divided into smaller parts right down to one hundred millionth of a Bitcoin. While the price of Bitcoin may have significantly increased, one gets the impression that the cryptocurrency is more a gamble than anything else. It’s hard enough trying to predict the movements of real currencies, let alone cryptocurrencies. Furthermore, I’m rather suspicious of anyone wanting to trade anonymously. Remember that the Silk Road website was closed down a few years ago, following raids by the FBI amid allegations of drug dealing. Millions of dollars of Bitcoin were confiscated during those raids. It’s not surprising that governments are becoming concerned about the lack of regulation around the cryptocurrency as well as its potential to be used in illegal activities. So will Bitcoin (and all the other cryptocurrencies) crash? I don’t know the answer, but I’m not willing to risk my hard-earned money in a Bitcoin investment. Fortunately, my financial adviser shares my views. On a different note, I must say that it was a pleasure to feature some of the country’s wonderful women in financial services in this month’s magazine. I wish them – and all our female readers – a very Happy Women’s Month. Janice @MMMagza

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Unless previously agreed in writing, MoneyMarketing owns all rights to all contributions, whether image or text. SOURCES: Shutterstock, supplied images, editorial staff. While precautions have been taken to ensure the accuracy of its contents and information given to readers, neither the editor, publisher, or its agents can accept responsibility for damages or injury which may arise therefrom. All rights reserved. © MoneyMarketing. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, photocopying, electronic, mechanical or otherwise without the prior written permission of the copyright owners. © MoneyMarketing is not a financial adviser. The magazine accepts no responsibility for any decision made by any reader on the basis of information of whatever kind published in the magazine.


31 August 2017


How did you become involved in financial markets – was this something you always wanted to do? I first became excited by financial markets in the late 1990s when I walked on the open-outcry trading floors of the Chicago commodity exchanges in the United States. There were hundreds of traders in multicoloured jackets barking orders and waving hand signals at each other; buying or selling millions of dollars of option contracts on commodities like wheat, corn or pork bellies. It was a fascinating experience and I saw the opportunity for a career in finance and to hopefully put some of what I had studied at university to good use. A few years later, I got a job as a bond and interest trader and I learnt first-hand about the dynamics and psychology of markets.

Ironically, the business of asset management is a lot less frenetic than the volatile world of trading and I find it suits my personality better. As a fund manager, you take much longer views and trade a lot less. What is similar, however, is the psychology – it is important not to get caught up in the shortterm noise and emotion. Given the volatility in both local and offshore markets, what makes a good investment in today’s economic environment? The best investments deliver consistent cash flows regardless of the economic environment. The more uncertain the market outlook, the more valuable these investments are. However, the old adage says: ‘Markets climb a wall of worry’. So it is important to realise that sometimes the best time to invest is when the

economic outlook is not good. Ironically, when the outlook is good, usually markets have factored in the good news already and that can be the most dangerous time to invest. What have been your best and worst financial moments? The worst investment I ever made was buying a piece of land in a game reserve. It generates no income and I have to pay the levies every month. I have made a wide range of successful investments and along the way I have learnt that by diversifying your investments, you can afford the pain of one bad investment.

of compounding does over time. However the best investment you can make is in yourself. The studying and sacrifices I made to get the CFA Charter was by far my best investment.

What do you teach your children about money? I am trying to teach them how to have a healthy relationship with money and to make it work for them.They need to understand that the only guaranteed way to get richer is to save. In other words they need to spend less than they earn. The most What was your first important thing to investment and do learn about money is you still have it? the power and pleasure My first real investment of saving and investing. was into my pension fund. Fortunately, I have always invested the maximum possible contribution. It may be a cliche, but it is amazing what the power


UPS & DOWNS Despite the increasing scrutiny, executive guaranteed pay increases in SA have in general exceeded inflation over the past five years. This is according to Deloitte’s inaugural Executive Compensation Report. According to Deloitte’s actuarial, reward and analytics leader, Leslie Yuill, CEOs and chief financial officers at the top 100 JSE companies have been receiving,

on average, a total pay package of R17.9 million a year, or around R69 000 a day. The study also found that there was little correlation between CEO guaranteed pay and the size and complexity of the company they lead.

Eskom reported a significant drop in profit from R5.2 billion in 2015/16 (the restated net profit) to R900 million for 2016/17. “The Eskom pack of cards is crumbling and it can surely only be a matter of months before it succumbs to financial collapse, despite promises by CFO Anoj Singh that liquidity is absolutely not

an issue,” says Ted Blom, OUTA’s Portfolio Director for Energy. “With rampant cost increases in salaries and other unnamed expenditure, a perennial shortfall in cash to complete Medupi and Kusile, and an evaporating electricity market, the best Eskom could hope for is another bailout by government,” he adds.


SA REIT Growthpoint Properties has commenced its multi-million rand development of a new head office for Exxaro, one of the largest and foremost empowered South Africanbased diversified resources companies. The development of the new Exxaro headquarters is the second phase of Growthpoint’s redevelopment of the prime Lakeside office site on West Street, Centurion, directly opposite the Centurion Gautrain Station. Exxaro’s new corporate headquarters will consolidate its current offices in Pretoria and Johannesburg into a single thriving workspace, located at a convenient midpoint in a decidedly accessible location for its staff and business partners. Exxaro has business interests locally as well as in Europe and the US. Growthpoint’s development and workspace design team is delivering an innovative green building, integrating P-grade aesthetics and finishes and high-performance workspace. Exxaro will occupy all of the new building’s 18 500sqm of gross lettable area on a long lease. Standard Bank has opened the world’s first dedicated Africa China Banking Centre (ACBC) at its Simmonds Street offices in Johannesburg. The Centre will look to provide a long-awaited platform to link African and Chinese clients with China’s highly networked digital banking and customer knowledge systems. The Centre is a virtual finance hub for personal and business banking clients. It is staffed by bankers with Chinese language and cultural capability, providing seamless consultation and advisory services via telephone, online or email. “This represents a critical opportunity to leverage the full potential of Africa and China’s rapidly evolving trade partnership. As an African bank with global reach, Standard Bank is uniquely placed in Africa – and, indeed, the world – to unlock African opportunity by accessing Chinese capability,” says George Lo, Head: Africa China Banking, Standard Bank. Coface, the international credit insurer, has launched an online Customised Credit Opinion (CCO) service that will provide companies with information about their business partners. Coface is also offering uninsured collections complementing its CCO services. “CCO will enable customers to make informed trading decisions regarding debtors and provides customers with a guideline as to the amount Coface would be willing to cover based on its analysis of the debtor’s financial situation,” says William Surmon, Chief Commercial Officer, Coface South Africa. “CCO is unique in the credit insurance industry with none of our competitors offering this type of service. This is complemented by an extensive network of information collected across more than 200 countries covering 80 million companies worldwide,” he adds.

31 August 2017


Sense of freedom As insignificant as this amount may seem, it brought a sense of freedom and responsibility. However, there was one condition to accepting this allowance: I couldn’t ask my father or my mother to buy me anything anymore. Anything extra I wanted, had to be purchased by using my own money. Granted, the only ‘extras’ you have as a nine-year-old are sweets, but it was the principle behind it. The first time I received R5, I ran to the shop as quickly as possible and spent it all. The problem followed the next day – going to the shops and walking out empty handed. This continued for a few weeks until the realisation dawned on me that I didn’t have to spend the money as soon as I got it.

My father saw that I was spending my money more wisely and thus took it a step further. He sat me down and said because I was doing so well with the R5, (ensuring it lasted me until the end of the week), he would give me R20 a month. Looking back now, I see that he was actually paying me the same amount, but at that age I’d never had a R20 note before, so I jumped at the opportunity. Little did I know how long a month could be when you spend all your money in the first week. So, the cycle began all over again, the R20 would be gone within a week and I would have to do without any sweets for three weeks. Savings A few months passed and my R20 was stretching further than a month. “It is not about how much you get paid, but how much you save”, my father would say to me. By the time the December holidays arrived, I had enough savings to enjoy the holidays. I appreciated this growing sense of independence so much that I began to search for new

JAMES GEORGE Compliance Manager, Compli-Serve SA


ou don’t have to be a techsavvy computer boffin to address the basics of data privacy. Like many areas compliance departments oversee, asking the right questions and getting the right internal controls in place are the most important first steps to addressing data privacy concerns within an organisation. The problem is, many companies aren’t carrying out this process. Data privacy compliance is built on the same foundation as other regulatory undertakings that compliance professionals are already familiar with and dealing with on a daily basis – such as the FAIS Act, FIC, Banks Act and others. SA lags quite far behind many other countries around the world in implementing comprehensive data privacy laws. Many countries, with Europe taking the lead, have already had these in place for many years – and SA is now among them, though we are still awaiting the commencement date.


Why I became a financial planner

JURIE DE KOCK,CFP® Old Mutual Private Wealth Management

hen I was nine-years-old, my father presented me with a R5 coin. He explained as best he could, the value of this coin and what it could potentially do for me. This was the start of my allowance and the first recurring income I would receive on a weekly basis.


opportunities to create additional income. At the age of 12, our local amusement park owner gave me my first holiday job cleaning tables. After receiving R100 for the entire December holiday’s work, I knew I had to save this money somewhere other than my wallet, and this is what sparked my initial interest in saving, investing and financial planning. As the years went by, I took on more odd jobs and saved the money in the bank. Similar to most inexperienced investors, placing my money into a bank account appeared to be the best and safest way to invest. At university level, I had saved up a significant amount of money. I knew there had to be a better place where I could put my money that would provide me with a better return on my investment. However, my knowledge was limited. University I started out studying accounting at the University of Stellenbosch, because we were informed at school that if you like the financial industry, being a Charted Accountant is the ultimate

qualification you can obtain. I enjoyed it and performed well, but my passion for finances pulled me in another direction. In the second semester of my first year, I picked up a subject called ‘Introduction to Investment Management’. This subject sparked my interest and I found myself doing more research into the field. Professor Niel Krige from the Financial Planning Department made a presentation to our class that provided an overview of the work of a Certified Financial Planner (CFP). I thought to myself: if I have some money saved and don’t know how to best secure and invest it, how many other people out there are in a similar position? I could not think of a better way to spend my life, than gaining that knowledge. Simply put, I wanted to learn what to do with my own money and once I knew, I just wanted to share my knowledge and help others. I changed my majors to financial planning and investment management and I was the youngest CFP in SA when I first obtained the designation.

Data privacy - what compliance departments need to know What this means for SA Many SA-based compliance professionals are not familiar with what data privacy laws are and, equally important, how a company complies. Especially for companies doing business internationally, this is a small but fast growing problem. While enforcement has been low relative to the high penalties we’ve seen for other types of regulatory enforcement, we are experiencing a perfect storm: the volume of data and sophistication of technology is growing, while more countries are enacting and strengthening data privacy laws. Enforcement and legal activity continues at a fast pace. Earlier this year, Italy imposed a record data privacy fine of €5.9 million (a little over R91 million (at the time of writing) on a UK company for violating Italian data privacy consent rules. In that case, the UK company had sent money transfers to China without consent of users. A few days later, Russia enacted a law increasing fines for violating Russian data protection laws.

In 2018, the EU’s General Data Protection Regulations will come into effect, introducing fines of up to €20 million (around R390 million at the time of writing) or 4% of annual revenue, whichever is greater, for data breaches. In the future, we may see much larger fines, making now the time for compliance departments to act. Mitigation of risk Compliance departments mitigate regulatory risks, and data privacy laws are no exception. As a new but quickly growing area of concern, compliance professionals who take an active approach, putting into place basic data privacy components, will find themselves far ahead of the game. Addressing data privacy should be done the same way other risks are: assess your risk sources, design appropriate risk

mitigation steps such as policies and procedures, assign responsibility and training, and set up internal controls, and then of course implement these steps. To do so effectively, compliance professionals must work closely with their IT department, relying upon them as a partner similar to HR. Data privacy is not as easy as other compliance department risk areas, but ignore it at your peril.



Glacier launches second issue of Capital Enhancer


ollowing the success of the first issue and the continuing market uncertainty, Glacier has launched the second issue of its Capital Enhancer. The solution is a tax-efficient investment linked to the performance of a global portfolio, and offers capital protection as well as an enhanced return with uncapped upside. Addressing investors’ concerns The risk of losing capital on an investment is a big concern for investors. The Glacier Capital Enhancer addresses this fear by providing a guarantee on an investor’s gross investment amount. By combining the Capital Enhancer with an investment that provides a guaranteed return, investors can also secure a minimum return with uncapped upside potential. Enhanced returns The five-year investment offers the opportunity for high aftertax returns (effective rate of return of 10.6% after tax and fees, per year), even in low growth markets. This possibility to earn equity-like returns, while taking on very little risk goes against the typical risk return framework and enhances the overall riskreturn profile of a portfolio. The capital protection and investment return are provided by leading global banks. With a greater awareness of credit ratings following recent downgrades, only banks with a Fitch long-term credit rating of at least A+ will be selected. Exposure to global equity markets The Capital Enhancer provides exposure to a diversified portfolio of global blue chip stocks through the Euro Stoxx 50 and FTSE 100 price indices. Guarantees are provided in rands, removing any currency risk and the additional uncertainty and volatility that is typically associated with offshore investing. The FTSE 100 remains robust and well diversified in the face of ongoing uncertainty regarding the hung parliament and Brexit negotiations going forward. This was evident just after the election results were released. The index is therefore a good hedge against ongoing uncertainty. However, a possible hawkish stance from the Bank of England and a subsequent tightening of the monetary policy in the UK may prove to be a headwind in terms of this index’s performance. The outlook for European equity returns remains positive on the back of improving economic conditions, higher global growth, a stabilising political environment and improvements in company earnings.  Globally, tighter monetary policies may add to the tailwind of both indices. However, while the threat of deflation may have disappeared, it remains to be seen if meaningful upward pressure on inflation will materialise, calling into question the severity of tighter monetary policies. Based on the reference index of 30% FTSE 100 and 70% Euro Stoxx 50, the outlook for returns therefore remains upbeat, and well positioned away from local political and economic risks. The Capital Enhancer investment option addresses the need for investors to have exposure to these equity markets – allowing them to access competitive real returns and an opportunity to diversify their portfolio with more offshore exposure. With a full capital guarantee provided by a leading global bank as well as uncapped upside potential, this investment opportunity is not to be missed. The offer closes on 18 August 2017.

31 August 2017

Sasfin Wealth launches global equity fund Sasfin Wealth is pleased to announce the launch of its global equity fund. The fund launch aligns with the business’ strategy to enhance its global offering for clients, which also includes managed global share portfolios. The various global investment options provide clients with appropriate and cost effective ways of accessing global markets. According to Sasfin’s Head of Wealth, Michael Sassoon, it is critical for investors to adopt a global perspective across their investment portfolios.  “Global should be seen as the framework and not as an asset class within a local portfolio,” he adds.  Domiciled in Luxembourg, the fund will be co-managed by Bruce Ackerman, formerly Chief Investment Officer at Lloyd’s Bank’s investment arm in London, and formerly the co-manager of the Foord International Trust, and Bradley Mitchell, who heads up Sasfin Wealth’s research team that is responsible for investment strategy, equity analysis and equity portfolio construction.  According to Mitchell, the fund managers aim to provide investors the opportunity to invest alongside them, in a carefully selected and adequately diversified portfolio consisting of some of the world’s highest quality companies.  “The fund’s investment objective is to generate a superior risk-adjusted total return, in US dollars, over a longterm investment horizon, relative to the Morgan Stanley Capital International (MSCI) All Country World Index (ACWI),” Mitchell says.  The fund aims to achieve its investment objective by holding 20 to 30 global companies that are exposed to a more diversified set of higher economic growth

Michael Sassoon, Head of Wealth, Sasfin

regions than what is available on any one exchange. This helps ensure that, while still maintaining optimal diversification, the fund does not compromise on quality and valuation, to strive towards achieving a superior risk-adjusted total return. Mitchell emphasises the benefits for investors in the fund in having Bruce Ackerman on board as Co-Fund Manager. Ackerman is a seasoned fund manager who has experienced many market cycles, and has managed several large international equity funds.  “Bruce has a proven track record in managing institutional money, globally. His wealth of experience will greatly benefit the longer-term strategic direction of the fund, as well as inform each investment decision made,” says Mitchell.  One of the advantages that the fund enjoys, relative to other newly launched global equity funds, is a 30-month track record, based on a documented simulation which the fund managers have actively managed since December 2014. Over this period, the fund’s effective total return in US dollars, after fees, has comfortably been ahead of its benchmark. Sassoon says that the establishment of a global equity fund made strategic sense for the business, whose clients are always looking out for offshore opportunities.  “For several years, we have been cognisant of the sluggish performance of the All-Share index. The local market is obviously limited, and we want to continuously provide global investment opportunities to our clients across a range of asset classes,” Sassoon says.  “Whether our clients want to send their children to offshore universities, acquire assets offshore, or simply want to broaden their existing portfolio into a global one, our priority is to ensure they can access any stock or instrument to assist in building global wealth,” he explains.  Sasfin Wealth chose Luxembourg to domicile the fund primarily for its reputable regulatory environment together with the strong distribution administrative framework and the country’s renowned distribution expertise and support.

Bruce Ackerman, Co-Fund Manager: Sasfin Global Equity Fund

Bradley Mitchell, Co-Fund Manager: Sasfin Global Equity Fund


Every business starts small. And that’s where Hollard’s enterprise and supplier development initiatives come in. Together with South African entrepreneurs, we grow their big ideas with funding, mentorship and business support. It makes good business sense, and human sense too.

To learn how we’re ensuring better futures every day,


visit Art from the Creative Block Programme, The Hollard Insurance Co. Ltd (Reg No 1952/003004/06), Hollard Life Assurance Co. Ltd (Reg No 1993/001405/06) and Hollard Investment Managers Pty Ltd (Reg No 1997/001696/07) are Authorised Financial Services Providers.



31 August 2017

The rebellion needs YOU! Nobantu Masebelanga joined Liberty in October 2012 as Head of HR for the company's life and investment arm. In April 2015, she was promoted to Divisional Director HR: Individual Arrangements, at the retail Customer Facing Unit.


here was a virtual ululation from women (and men) across the world when the book, Goodnight Stories for Rebel Girls by Elena Favilli and Francesca Cavallo, was published by Penguin earlier this year. As a mother to three young girls, Nobantu says she was overjoyed to finally find an “anti-princess” role model storybook without the gender-stereotyping often found in stories aimed at girls. The authors wrote mini-biographies of one hundred extraordinary women from ancient to modern times. With inspiring profiles, representing various nationalities and ethnicities, the real-life stories open readers’ minds to the possibilities and range of what women have achieved and can achieve by ‘rebelling’ against conventional notions of their limitations. Nobantu’s story would be worthy of telling

in its own Rebel Girls book. During her childhood, Nobantu’s father was employed at Gold Fields as a Health Inspector. At school, she excelled and had ambitions of furthering her education. Not wanting to burden her parents to fund her post-graduate studies, 20year old Nobantu staged a sit-in at the bursary manager’s office, refusing to move until they agreed to offer her a bursary. They did. Her brave action, and the mining company’s good faith investment in her, paid off in her qualifying as a clinical psychologist and led to a career trajectory that Nobantu feels humble and privileged to have experienced. Perspective is everything, she says, describing her introduction to the corporate world as both traumatic and an unexpected gift. “I was retrenched from my first job where I worked as a clinical psychologist. That was an incredible blow, but had it not happened, I would not have unearthed the inner resilience and resourcefulness that I could draw on to survive it. My path thereafter stayed close to my clinical training with a stint in the public sector and in the private healthcare industry. But my career took an unconventional yet serendipitous turn when I decided to join Liberty. Financial services and the aspirational Liberty brand and legacy in particular, presented me with the gift of being able to work to the fullest of my training and potential in my passion for developing people,” (self-actualisation, she

winks). “The serendipity is that I find myself in the very industry where my personal dream of women being able to lead economic inclusion and impact from any position in society, is powerfully possible.” She explains that companies like Liberty have long been social change agents in South Africa. “As a scholar, I used to watch the Liberty Life Learning Channel, which provided free and accessible supplementary educational content. Liberty, and our parent company – Standard Bank, have a comprehensive enterprise development programme for women entrepreneurs, giving them free business-skills support and access to markets they would not have been able to approach on their own.” She points out that financial services companies invest not only in women’s employment and women-owned businesses, but also open women’s access to personal financial planning, insurance products to protect themselves and their families against the financial shocks of unexpected events, and savings and investments to secure their financial freedom in the future. “Research repeatedly confirms that promoting financial parity and enablement for women has a multiplier effect on society. Women tend to reinvest in their families and communities, which creates impactful trickle up economics and boosts the next generation to keep the cycle going. How radically transforming is that?!”

‘There is no end to the learning experience’ Dudu Tembo, Portfolio Manager/Equities Analyst at Argon Asset Management, had no idea that she would eventually make a career for herself in the financial services industry.


he studied engineering at university at a time when technical students weren’t exposed to the humanities, so she knew “absolutely nothing” about financial services. “However, three years into a PhD programme, I had a chance encounter with a recruitment agent who persuaded me to change direction and to explore the banking sector. That evolved to working in the financial market and I haven’t looked back since.” She advises young women who are hoping to have a similar career to, “read, read, read”. “In order to optimise your experience and to enjoy the journey, you have to invest time in developing and growing your knowledge base. This requires you to apply yourself and to be comfortable that you will be

constantly learning. It is one of the gifts of this industry; that there is no end to the learning experience.” Turning to gender equality in the South African corporate world, she adds that most companies already have these policies down on paper and what is really needed is an attitudinal change, “and an honest embracing of all that it means to be truly and genuinely inclusive. We need to engage and talk more about this to get it right.” Tembo says that attaining the balance between work and family life is “an art in my opinion and, for me, it is a work in progress”. “I think you need to understand upfront that it can be difficult at times. If you do that and manage the expectation gap, then life will proceed more smoothly. You have to be resilient and happy with the idea of living with ambiguity.

You probably also have to carve out a way of life that works for you, which may not work for the next person. Finally, nurture your relationships and ensure you have a support base that can support you in times of need.” In her investment career, she has been inspired by investor and philanthropist, Charlie Munger and psychologist, Daniel Kahneman, as well as by working alongside Rowan William-Short who was her CIO at a previous employer. “From these three, I learnt many principles regarding investment rigour and practice that have informed my investment philosophy. In my personal life I have been inspired by American psychologist James Hillman and US psychotherapist, Thomas Moore, whose works gave me tools to navigate my journey through life. Other than that, I continue to be amazed and inspired by the examples of close family, dear friends and exceptional work colleagues. I consider myself very lucky in this regard.”

From her own experience, Tembo says she has seen too many women abdicate responsibility for their financial affairs to others. “I feel quite passionate about this and believe we have to empower ourselves with the knowledge required to manage our financial destinies. I know that as a nation, our savings rate is not high, but I do think many women face immense social challenges which make it difficult to allocate resources to long term savings.”


31 August 2017

Celebrating Heidi Brauer Hollard’s latest insurance advertising campaign that has South Africans smiling and paying attention is the brainchild of Heidi Brauer, the company’s Group Chief Marketing Officer.


eidi’s skill and vision as an innovative communicator has propelled the Hollard campaign beyond ‘commoditised messaging’ – by using what she calls ‘truth-based sprinkles’. “There is nothing new under the sun, so in talking to your key audiences [clients, partners and staff] it is essential to stand out and connect,” says Heidi. “For me, the way to do that is to add creative ‘sprinkles’ and avoid copycatting. But fundamentally you have to know exactly who you are, where you’re going, and what you can genuinely do to fill needs and uplift your customers. You need to make sure that everything you say is true to these elements of your brand. “Innovative communication is also about avoiding ‘matching luggage’. The TV commercial does not have to look exactly like the billboards or sound just like the radio ads. There simply needs to be an identifiable common thread that is sufficiently attention-grabbing.” On the topic of avoiding boring communication, Heidi says, “It’s about building layers within your marketing message. You have to distinguish your brand from others, while recognising that you’re operating in an extremely commoditised environment. You need to build a depth to your offering, based on what you stand for.” Avoid double talk Heidi is passionate about avoiding double talk. “Mixed messaging is the mortal enemy of innovative communication,” she emphasises. “Companies cannot talk differently when communicating with diverse groups of people. Messaging needs to be consistent, whether it is aimed at internal or external audiences. “In Hollard’s case, we ensure that communication that goes to team members is consistent with messages to intermediaries and suppliers – and that, in turn, is aligned with what consumers receive. Anything else can result in an organisation sounding insincere, or even two-faced.” Encourage and uplift Hollard’s latest campaign, called Better Futures, delivers a serious, yet optimistic message. There is a light touch as well as a generous dose of the unexpected. Under Heidi’s careful guidance, the campaign highlights the company’s pursuit of positive social impact

and illustrates how simple things can improve lives and uplift communities. One of the most unusual scenes in the television ad that kicked off the campaign is that involving the Hippo Roller, a South African invention. The Hippo Roller makes the backbreaking task of carrying water to rural homes a whole lot easier by making it possible to roll a huge drum of water over ground – not unlike a large lawnmower. Heidi explains “Everyone likes to see lives improve and that is the central idea behind the campaign. We want to share the fact that we do so much more than just insurance; that we make a world of difference in the lives of the people around us through the business that we do as well as the way we do business. We want to communicate the idea that we enable more people to create and secure a better future. “We also believe that by describing some of the many initiatives in which we are involved, we will inspire fellow businesses to play a far greater role in improving society. We can all, thereby, contribute positively to the communities in which we operate in small as well as big ways.” Happy Women’s Month all … and Heidi keep on inspiring and uplifting.

The future workforce is an equal one


omen graduating from university in developed markets in 2020 could be the first generation to close the gender pay gap in their professional lifetimes, according to research carried out by Accenture earlier this year. “Business, government and academia all have an important role to play in closing the gap. Collaboration among these organisations is key to providing the right opportunities, environments and role models to lead the way for change.” The report, Getting to Equal 2017, reveals that, within decades, the pay gap could close if women take advantage of three career equalisers and if business, government and academia provide critical support. With these changes, the pay gap in developed markets could close by 2044, shortening the time to pay parity by 36 years. In developing markets, the changes could cut more than 100 years off the time to reach pay parity, achieving it by 2066 instead of 2168. “The future workforce must be an equal workforce. The gender pay gap is an economic and competitive imperative that matters to everyone, and we must all take action to create significant opportunities for women and close the gap more quickly,” says Julie Sweet, Accenture’s Chief Executive Officer, North America. Accenture’s research found that, globally, a woman earns an average $100 for every $140 a man earns. Adding to this imbalance is the fact that women are much less likely than men to have paid work (50%  and 76% respectively). This contributes to a hidden pay gap that increases the economic inequities between men and women: for every $100 a woman earns, a man earns $258, the research shows. The research also identifies several critical factors that affect a woman’s ability to achieve equal pay as early as university. Female undergraduates are currently less likely than their male counterparts to choose an area of study that they believe offers high earning potential (27% vs. 40%), have a mentor (45% vs. 58%) or aspire to senior leadership positions (41% vs. 51%). Additionally, young women are less likely than their male counterparts to adopt new technologies quickly (45% vs. 63%) and take coding and computing courses (68% vs. 83%). The report, which builds on Accenture’s 2016 research on closing the gender gap in the work place, suggests three powerful accelerators to help women close the pay gap: Digital fluency – the extent to which people use digital technologies to connect, learn and work. Career strategy – the need for women to aim high, make informed choices, and manage their careers proactively. Tech immersion – the opportunity to acquire greater technology and stronger digital skills to advance as quickly as men. Applying these career accelerators, combined with support from business, government and academia, could reduce the pay gap by 35% by 2030, boosting women’s income $3.9 trillion.




31 August 2017

Women bring different skills to the workplace KIM HUBNER Head of Business Development and Marketing, Laurium Capital

‘Defending the Caveman’ is the longest-running and most successful solo comedy in South African theatre history. It explains why men and women see the world so differently. The reason that it has played to over a million people, is that we can all relate to this hilarious comedy through our own experience and interactions with the opposite sex. On a more empirical level, research shows that female brains are highly connected across the left and right hemispheres through white matter, and connections in male brains are typically stronger between the front and back regions. Men’s brains tend to perform tasks predominantly on the left-side, which is the logical/rational side of the brain. Women, on the other hand, use both sides of their brains which means women can transfer data between the right and left hemispheres faster than men. These differences translate into a number of generalised observations, which have advantages and disadvantages. As with almost everything in life, there are always exceptions to every rule and gender based ‘rules’ are no different. I have highlighted a few differences below: MULTI-TASKING: Multitasking can result in time wasted due to more errors caused by insufficient attention. Fortunately, women tend to be good at this, while men tend to be task-orientated and better at performing a single task at once. Being task orientated means that men are good at getting things done.   STRATEGIC THINKING: Men do better on more specific spatial thinking (problem solving, and pattern prediction involving objects and their spatial relationships), while women perform better at ‘bigger picture’ thinking. Both are vital in every organisation. COMMUNICATION: Women are better at social thinking and interactions than men. Achieving strong work relationships through communication and collaboration are highly valued to achieving success in the workplace. Being intuitive and working collaboratively means that women are well placed to take leading roles in organisations and to manage diverse teams of individuals. RISKS VS. REWARD: The male brain is wired for risk-taking more than the female brain. Faced with a risky or challenging situation, the male brain responds by getting a bigger burst of endorphins. Men are therefore more likely to take risks. Taking a risk, provided that it is weighed against the reward, is important. Being too risk averse often results in missed opportunities. Many organisations recognise that women bring different skills and energy levels to the workplace, resulting in better decision making by bringing together different perspectives. Women are as equipped as their male counterparts to succeed, given the same drive and ambition. However, later in their careers, many women have to make decisions about the sacrifices to be made for family responsibilities, a trade-off that men typically don’t have to make. Companies able to offer more flexible working arrangements to accommodate woman means that these companies have access to the full talent pool.


Change is happening

uring August, one can almost see and feel that spring is only a month away. In many sectors, including the financial planning industry, the mood will change for the better as winter drifts away. Many will say that there’ll be little change in this industry, and that it is still a male dominated space – yet a new picture is slowly emerging that is bright, confirming that change is in the air. I am excited about the future of the financial planning industry and everybody in it, especially women. Not only do we have a solid regulatory system, but we are also moving a lot closer to meeting the needs of our consumers. Understanding the needs of customers is an aspect that a female financial adviser will excel at.

Eldari Visser, Registered Financial Planner and Managing Director of Picketfence.Life

Women tend to be more empathetic listeners; they view issues from a different perspective and opt for a different way of solving problems. Mix that with tenacity and professional drive and you will find ladies working long hours at the office as a given, with the intention of assisting the industry as well as their clients. Consumers are moving into a more active and involved space and they are also becoming engaged in their financial future at a much earlier stage in their working lives. They share a lot more about themselves and their goals. They are going to be more selective with whom they want to discuss their hopes and financial plans. What will the consumer look like in five years? Who will own the business and who will create more jobs? Could it be the era of the female entrepreneur? It’s amazing to notice young inspiring female graduates choosing a male dominated field such as financial planning, an industry that they wouldn’t previously consider. They’re embarking upon their journey with a mindset of creating change and bringing a solid skillsset to the table. I have met some of these ladies and the humbleness with which they are entering this space is appreciated and shows respect for their peers and the industry as a whole. The glass ceiling is still a challenge but these graduates know that the financial sector has a lot to offer women and that they will be able to handle it with flair!

Every 8 minutes, Liberty pays out a claim, and changes a reality. Sarah* probably won’t remember hearing that Liberty paid out R4.3 billion in claims last year. What busy foodie, with so many flavours to explore, would? But she will remember the one day she was diagnosed with breast cancer. She’ll remember receiving a monthly income to support her family while she was unable to work, allowing her time to recover. She’ll also remember us paying her a lump sum to help cover the additional costs that cancer brought into her life. And most recently, she’ll remember preparing her friends’ and family’s favourite feast. For the past 60 years, we’ve been working every day for your one day. Speak to a

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31 August 2017

‘Women bring an amazing dynamic to the workplace’ To mark Women’s Month, MoneyMarketing spoke to Elize Botha, Managing Director of Old Mutual Unit Trusts, about her career in the financial services industry. Did you always know that you’d work in the financial services industry? Not at all. As a child I was an eager scholar and desperately wanted to be a teacher. Later in life I was convinced I was going to be a lawyer but after finishing my LLB degree at the University of Johannesburg I realised I loved the theory of law but I was not cut out for law as a lifetime profession. I started working in operations at a large financial company (loading policy documents, help run payroll at month end) and progressed over a period of six years to heading up the retail operations area. This happened merely by chance as I needed something to pay the bills (and I realised LA law was not going to be a fixture in my future). I was then offered an opportunity to work for a platform in negotiating their contractual and fee agreements with Collective Investment schemes. It is during this time that I got to know more about the intricacies of the unit trust industry. Eventually I felt a more front facing role (away from regulations and constant fee discussions) would be more interesting. Engaging with financial advisers and clients quickly became a passion and I started building and growing teams (locally and abroad) in the distribution space. These were exciting times. Learning about markets in the Middle East, UK and the USA was very interesting. I realised how different these markets are and that you cannot paint every market with the same brush. You need to tweak your strategy to cater for the unique complexities of every market. It was a brilliant and exhilarating time. Late last year I was offered the amazing opportunity to head up the retail arm of the Old Mutual Investment Group – the Old Mutual unit trust business. Helping people secure their future and achieve their dreams is something that helps me get up in the morning. The most rewarding part of my career has been building teams and helping people become what they visualise to be. Building businesses offers us all the opportunity to grow and challenge ourselves to new heights.


Who inspires you? Giordano Bruno – a thinker ahead of his time. In my opinion he had his head wrapped around the relativity theory long before Einstein (he just lacked the mathematical aptitude). He was burnt at the stake on 17 Feb 1600 as a heretic as he was completely misunderstood. Coco Chanel – She built a fashion empire in the time when it was extremely difficult for women to be taken seriously in the business world. She left a fashion legacy and a brand that far outlived her physical presence on our planet. All the women that helped shape our country throughout its turbulent past. They are the real heroes of our transformed country. What should companies do to ensure equality for women? The Businesswomen’s Association of South Africa (Bwasa) 2015 Women in Leadership Census reveals alarming statistics that point toward the urgent need for South African corporates to rethink their approach to women leadership empowerment if gender parity is to be achieved. According to this study, women account for only 11.6% of directorships and chairperson positions, of which 9.2% hold chairperson positions and 2.4% are CEOs*. In order to make sure we change this landscape there is a couple of things that is essential for companies to do. Firstly, pay them the same as men. This is the first thing I do when starting at a company - ensuring that people get compensated equally for the same jobs. The pay gap has improved but in the past there has been up to a 30% discrepancy in remuneration in certain companies. Also companies and managers need to have understanding (and cater for) the different family responsibilities women might have in their households. Having said that, I believe it’s a double edged sword. As women we need to ensure that we take every opportunity awarded us. Sometimes it is easy to believe the Hollywood fairy tales that state that life begins when you meet Mr Right - whilst no one person can make you whole and complete. We are the ones that craft our destiny, our future. A multifaceted future. We can be a partner, mother, wife and successful business woman. It does not have to be one or the other. It just comes down to prioritisation and true intrinsic values.

Describe your work-life balance I have a wonderful husband of 16 years and chose not to have children. Finance requires long hours (and weekends) but I listen to my body and when need be, I switch everything off and go to nature to regain perspective. I also enjoy running and it helps me to switch off when life gets very stressful and busy. It is essential to make time for yourself. It is the only way you can truly give to others. And there is nothing like visiting Europe in the summer to restore energy into a tired body. What advice do you have for women wanting to work in the financial services industry? As illustrated above, there is still a shortage of women in senior positions in financial companies. It is a challenging, ever changing and competitive industry that always requires you to grow, learn and reinvent yourself. Political, economic and environmental factors all influence finance and there is seldom a day that goes by that something interesting or unexpected does not happen in the markets. It is essential to prepare for that. From a technical perspective reading is essential. Spend as much time as possible understanding terms and jargon and don’t be scared to ask if you are not clear on something. If this is what you are passionate about there are multiple opportunities for you to grow and excel. Some of the things I believe are essential to be successful in finance: • Read and study • Be brave – don’t be scared to be a lone voice • Always put clients first. They are the reason you are in business and you are working with their hard earned life savings • Treat people as you want to be treated • Be present – I all too often see people losing opportunities because they are on technology during meetings. When you are somewhere – really be there. With your entire being. Women bring an amazing dynamic to the workplace and we need to appreciate and accentuate our roles in shaping the environment of our business, communities and countries. We set our own limits. So reach for the impossible.

LB 114454L/2


We believe that when you are personally invested in something, you are even more driven to make it succeed. That’s why Meryl Pick invests her own money alongside yours. Meryl is part of the Old Mutual Equities boutique, which manages South Africa’s longest running unit trust in the country - the Old Mutual Investors’ Fund. The fund has delivered a return of 8.1% above inflation since inception. But this is more than just Meryl’s success, it’s yours too. Invest where the fund managers invest by contacting an Old Mutual Financial Adviser or your Broker, call 0860 INVEST (468378) or visit

Old Mutual Investment Group (Pty) Ltd (Reg No 1993/003023/07) is a licensed financial services provider, FSP 604, approved by the Registrar of Financial Services Providers ( to provide intermediary services and advice in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. Old Mutual Unit Trust Managers (RF) (Pty) Ltd is a registered manager in terms of the Collective Investment Schemes Control Act 45 of 2002. The fund fees and costs that we charge for managing your investment are accessible on the relevant fund’s Minimum Disclosure Document (MDD) or table of fees and charges, both available on our public website, or from our contact centre. The Net Asset Value to Net Asset Value figures are used for the performance calculations. The performance quoted is for a lump sum investment and in respect of the Old Mutual Investors’ Fund. The performance includes income distributions prior to the deduction of taxes and is reinvested on the ex-dividend date. Actual performance may differ as a result of actual initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. Past performance is not a guide to future performance. Annualised returns are the weighted average compound growth rate over the performance period measured. The actual highest, average and lowest 12-month return figures since inception to 31 March 2017 are 96.0% (highest), 19.8% (average) and -45.7% (lowest). The fund was launched on 01/10/1966. Morningstar and Old Mutual Investment Group calculated the performance of the fund as at 31 March 2017. Old Mutual is a member of the Association of Savings & Investment South Africa (ASISA).



31 August 2017

Liberty Corporate celebrates three wonderful women


It’s important to acknowledge that even though there is work being done by many companies to ensure that women are provided with recognition and access in the workplace, more work is required from business, government and individuals to ensure inclusivity and diversity in the work place. That’s the word from Mbali Dlamini, Contract Manager at Liberty Corporate. “Government and business need to create spaces in which women can pragmatically access pathways to positions of authority, where women are identified and mentored to access and retain those positions of authority,” she says. Her advice for young women starting a career in financial services is that they must be prepared to face challenges of both sexism and racism within corporate South Africa. “Each woman must know how to use the discrimination she may face as an opportunity to become more resilient, as an opportunity to  strengthen her resolve and as an opportunity to mentor and guide other young women in her space.” For a woman to succeed, she must be irrepressible and unwavering in the pursuit of achieving her goals and dreams.  “There will be resistance in having women in the work place in many companies; many people are still not used to having a woman in a position of authority. This, however, should not deter women from taking executive positions.” She has been inspired by many people in her life. “I am blessed with a wealth of friends and family who are continuously supportive and encouraging. Of course, the women in my life, like my grandmother, mother and sister give me strength; however, my father and grandfather have always taught me that preparation and strategic planning is vital.” She is also inspired by women who have achieved a great deal despite the obstacles they have had to face. “These women have achieved world recognition and success and are known to us all: Oprah Winfrey, Serena and Venus Williams, as well as Condolleza Rice.  “These women we admire greatly. However, I am in awe of the women all across the third world that continuously make something meaningful out of their lives, despite the vast challenges they face.”


Women still battle with what is expected in the workplace and the social norms around having a family, says Sihle Sikakane, Client Services Manager at Liberty Coporate. “This conflict can sometimes be considered as keeping some women from climbing the corporate ladder. It may be difficult to achieve a balance and it requires us to simply have a strong support system.” Women are also opting to have babies later to cover certain milestones in their careers before starting a family. “The fact remains that there is still low representation in leadership roles. Women are still a minority. The stats speak from themselves.” There is change, however, she says, but the pace is slow. “Employers now recognise productivity instead of long hours and allow employees to work remotely to allow for workplace flexibility. The glass ceiling is splintering slowly. I look forward to when it shatters.” Sikakane says she is inspired daily by men and women who don’t let their circumstances define them and who continue trying to find solutions. “For example, elderly women who are raising orphans and making a buck stretch from their old age grant, millennials who challenge the status quo and find new ways of doing things.” She has some advice for young women starting a career in financial services: • Recognise that in everything you do, you are part of someone’s journey to be financially free • Understand your purpose every day when you walk into your office • There are great rewards that are not just financial but personal , if you stick with it • Lifelong learning is a given; you will be continuously challenged.


“Women still face a number of challenges as they balance between personal and professional aspirations,” says Hazel Nthambeleni, Compliance Manager at Liberty Corporate. According to Nthambeleni, studies show that in 2016, the percentage of women in leadership positions dropped from 27% to 23% in South Africa. “There is still a challenge in society when it comes to trusting women with leading organisations, due to the fact that the majority of companies have conventionally been steered by men. It must be recognised though, that a number of companies in the financial sector are slowly making progress in bridging this gap”. She adds: “I think a good support structure and programmes put in place in the workplace to assist women from all backgrounds in maintaining a balance between work and family, (for example flexible hours and crèche facilities), can go a long way in assisting women to further their career aspirations. She derives her inspiration from women around her, “who in many areas of their lives have managed to push through various hurdles to achieve their goals”. She says that those who have inspired her include Nomkitha Nqweni, the Chief Executive of Wealth, Investment Management and Insurance at Barclays Africa. “Nomkitha was one of young members of the Absa board when she joined the company in 2010. She managed to grow the wealth and investment management division to where it is currently, amidst the challenges faced in the financial industry.” Nthambeleni’s advice to young women starting a financial services career is to believe in themselves, to define their career goals, to utilise developmental opportunities in the workplace as well as to surround themselves with mentors and individuals who will continuously challenge and inspire them to achieve their goals. “ I think having mentors earlier on in my career has helped me to approach challenges differently and I've reciprocated this by investing time in building and empowering others where I can”.

10 000 employers trust us with their employee benefits. We don’t know what keeps your employees up at night. We don’t know whether it’s worrying about the future, or their finances. But we do know that lost productivity due to sleepless nights can cost your company up to R46 000 per employee. That’s why we give your employees real support, and peace of mind, with comprehensive benefits like Trauma Counselling, Retirement, and Life Cover. It’s why more employers trust us with their employee benefits than any other. To give your bottom line the Liberty Corporate Advantage, speak to your Financial Adviser, visit, or call us on 011 408 2999.

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31 August 2017

Who’s the better investor: men or women? When it comes to saving and investing one’s hard earned money, who has greater overall success: men or women? If your immediate reaction was ‘men,’ then a new study from US financial services giant, Fidelity Investments, may come as something of a surprise.


n fact, when asked who they believed made the better investor this past year, a mere 9% of women thought they would outperform men. And yet, a growing body of evidence, including an analysis of more than eight million clients from Fidelity, shows that women actually tend to outperform men when it comes to generating a return on their investments. “With this in mind, it’s concerning that so many women have such a dim view of their money management capabilities,” Fidelity Investments said. Regardless of education levels, personal or professional achievements, many women still have doubts about their ability to invest effectively. In fact, when asked what financial life skills they wished they learned earlier, the number one answer was ‘how to invest and make the most of my money’. But perhaps women have learned far more than they realise, considering these findings: Women earn higher returns: Fidelity Investments client data analysis showed on average, that women performed better than men when it came to investing by 40 basis points, or 0.4%. At first glance, this may appear to be a minor difference, but can have a significant impact over time. Women save more: Fidelity’s analysis also found that when comparing annual savings rates, women come out on top:

Looking specifically at workplace retirement accounts, women consistently saved a higher percentage of their paychecks than their male counterparts at every salary level. Women saved an annual average of 9% of their paychecks, compared to an average of 8.6% saved by their male counterparts. Looking at accounts outside of workplace savings, the data showed that in proportion to their account balances, women saved more. Women added an average of 12.4% to their account balance, compared to 11.6% for men. “The good news is many women are putting themselves in the financial driver’s seat, taking positive steps to save and invest effectively for their future,” said Kathleen Murphy, President of Personal Investing at Fidelity. “But there are still many who need to do more. The reality is that saving alone is not enough to even keep pace with inflation, so if you’re not investing, you’re likely losing money. Taking the next step to ensure that savings are invested properly and generating growth is critical to helping women progress toward their financial goals and live the lives they deserve.” Breaking it down: Women’s skills and strengths Despite their own perceptions that they may not be prepared to manage their personal finances when women

invest, Fidelity’s customer analysis shows many of the characteristics some view as being inherently female are actually factors that may be helping women see strong returns on their investments.


Plan with purpose, think holistically. Women often build financial plans in terms of life goals for themselves or their families, rather than focusing on performance alone. Women tend to hold a more longterm, conservative view with their investments, tending to buy and hold stocks, versus taking quick action during market fluctuations.


Take on less risk. Women are more likely to have their savings allocated in a more age-based allocation of investments than their male counterparts. In fact, looking specifically at Fidelity retirement savings accounts over the last three years, the percentage of women allocated appropriately for their age increased by approximately 40%. Furthermore, fewer women have their savings fully invested in equities than men – which could represent too much risk and not enough diversification.


Practice patience. When comparing likelihood to buy/sell stocks, Fidelity’s client data revealed that men are 35% more likely to make trades than women – which means that trading fees eat away at men’s portfolios

more than they do women’s. Furthermore, men who trade made an average of 55% more trades in 2016 than their female counterparts.


Education spurs action. Fidelity’s experience has shown that taking part in live and digital events designed as part of the firm’s women’s education programme can be a catalyst to taking action. Fidelity has seen a 25% increase year-over-year in the number of guidance interactions among women participating in these opportunities. “The results of Fidelity’s latest analysis reinforces that women too often underestimate their strengths as savers and investors,” added Alexandra Taussig, Senior Vice President of women investors at Fidelity. “It’s time to celebrate our abilities and maximise them by making a commitment to get more involved with our money.” Women eager to catch up: more financial education wanted Fidelity Investment’s research among professional women in the US showed that 88% of women think that more financial education would provide them with greater confidence in managing their money. When asked what they would most like to learn with 60 minutes of professional financial advice, women across all generations listed ‘learning more about how to invest my money’ as their No. 1 choice. But many still hesitate to reach out for help. Women across all generations are less likely to reach out to an adviser than men, with six out of 10 saying they have never consulted with a financial professional. Among this group, the top reason why was feeling like they didn’t have enough money. Other barriers holding women back from addressing their finances: not knowing where to start and simply not making it a priority.












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31 August 2017

The face of insurance risk in an IoT-enabled world


e live in an increasingly connected world, and if the Internet of Things (IoT) has its way, technology is poised to change life as we know it – by interconnecting everything around us and integrating technological insight into physical everyday items. This means every device you own, whether it’s your smartphone, TV, fridge or microwave, will be connected to the internet, and will ultimately have the independence to perform some basic functions without much physical human touch. A 2016 Cisco study estimates that 50 billion devices will be connected to the internet by 2020 due to the rapid growth in the popularity of IoT. Research company, African Analysis, forecasts that the IoT installed base in South Africa will reach 35 million by 2020. As the adoption of IoT increases, a new dimension of cyber vulnerability will open up. Lizette Erasmus, Insurance Expert at IntegriSure, says IoT will change the nature of insurance risk. “Insurance providers will have to change the way we look at risk. Risk assessments will no longer be just about the physical security measures customers put around their home or vehicle, but will extend to security in cyber space.” Erasmus believes it is a matter of understanding what risk and loss will look like in an IoT-enabled world. “Will breaches in cyber security result in cars being stolen or smart homes being set alight? What should underwriting models look like in a smart world? Technology companies are already building sensors into everyday items – this could provide advanced warning on potential maintenance issues such as a leak before a pipe bursts – saving the insurance provider from dealing with an expensive claim and the client from a headache.” While IoT-based risk may seem a few years away, Erasmus says that consumers should always be alert when doing anything online. “We speak of cyber security in terms of hackers and spyware, but sometimes criminals do not need to be so technologically sophisticated,” She says, referring to the incident where reality TV personality Kim Kardashian West was robbed of £8 million (R133 million) in jewellery by gunwielding men at a hotel in Paris.

The robbers later revealed that they relied on social media where the star had outlined her travel plans, including her time of arrival – and had targeted her because they had seen the expensive jewellery she poses with on social media. Erasmus advises keeping to the basics of cyber security and ensuring personal security in the online environment: Consider what you post on social media. Be aware of posting information which criminals can use to track your movements. Turn off location settings when posting updates especially when you are away from home. Invest in cyber security software. Perform regular anti-virus checks and make sure your antivirus software is up to date across all devices. Update your software regularly. Pay attention to your computer or mobile device prompts for software updates. Allowing for automatic software updates will make sure your device is updated with the latest software patches. Guard personal information. Be wary of giving out personal information to unfamiliar websites. Hackers can create phony websites which look like real sites, check for obvious grammar and spelling errors, and rather type the address into your browser than clicking through a link provided in an email. Create a strong online password. Strong passwords are still one of the best forms of security. Change your passwords regularly, including special characters, and don’t use the same password repeatedly. Back up your data. Make sure your important files and data are stored in an external hard drive. Educate yourself. Cyber criminals are constantly reinventing themselves. It is important to regularly read cyber security articles and blogs to keep abreast with the latest scams. Erasmus advises that while you may not believe you are interesting enough to be a target nor have particularly important data to protect, when it comes to personal cyber security, a bit of paranoia helps more than it harms. “Much like insurance, it is quite easy to see cyber security as a nuisance; that is, until the worst happens and you wish you were covered. A principle in insurance is to not leave anything to chance; try as much as is within your power to prevent avoidable incidents. The same can be applied to cyber security,” Erasmus says.

Lizette Erasmus, Insurance Expert, IntegriSure

Heavy haulage clients must understand insurance contracts


ccidents can prove costly for transporters within the heavy haulage industries. Having the correct comprehensive insurance in place is a legal requirement, however insurers can have legal recourse should it be found the conditions of the contract between the insurer and the insured has not been fully met in the event of a claim. “It’s essential for heavy haulage clients to understand the terms, conditions and exclusions on their insurance policies especially as any breaches to the contract could lead to a claim being rejected and result in a costly setback for the hauler,” says Anton Cornelissen, Head of Heavy Haulage at Santam. Transport operators and heavy haulers should take heed of the following:


Always notify the insurer of the status of the drivers licence: It is the responsibility of the transport company or heavy hauler to notify the insurer if the driver’s licence has been endorsed, suspended or cancelled, or if the driver has been charged or convicted of negligent, reckless or improper driving.


Make sure all drivers licences are valid: According to the National Road Traffic Act (Act 93 of 1996), any person who drives a vehicle on a public road must be in possession of a valid driving licence. In the event of a collision, an insurer will not honour any claims where individuals driving a vehicle are not in possession of the relevant valid driver’s license, as required by the terms and conditions of their policy.


Ensure that all drivers have the appropriate licences: A driver who is not licenced to drive a heavy haulage vehicle or one who drives without a Professional Driving Permit (PDP) means that a claim might be rejected. A PDP is issued in addition to an ordinary driving licence and is a requirement for people driving on a public road transporting goods, dangerous goods or passengers for an income. All drivers are required to have the correct permits according to the type of vehicle being operated. 


Drive roadworthy vehicles: It is a legal requirement that all cars on South African roads – including trucks – must be in a roadworthy condition. All trucks must undergo a roadworthy test annually. Owners will not be able to renew their licenses without the presentation of a valid roadworthy certificate. The insurance policy stipulates that truck/fleet operators must ensure their trucks comply with the Road Traffic Act in terms of roadworthy conditions. Cornelissen further advises that any misrepresentation, incorrect description or non-disclosure that may have a bearing on the insurance policy can render a claim null and void. “Having full knowledge of the stipulated terms and conditions and knowing the responsibilities of both the insurer and insured party is therefore essential for those engaged in the heavy haulage industry,” he says.

31 August 2017

GARETH FRIEDLANDER Head of Research and Development, Discovery Life

The life insurance industry has changed substantially over the past sixteen years. Advancements in technology, supported by big data analytics, the growing burden of noncommunicable diseases and significant strides in medical research, have substantially changed the playing field. These changes have given rise to a host of challenges and opportunities for life insurance companies. One particular innovation is the development of personalised medicine to manage certain chronic diseases. The rise of noncommunicable diseases The World Health Organization (WHO) has noted that the majority of deaths and disability cases worldwide are a result of chronic conditions. Chronic conditions, particularly non-communicable diseases, pose a large and growing health problem. These diseases include cardiovascular disease, type-2 diabetes, certain cancers, chronic lung disease and depression. In 2004, a quarter of all deaths in the sub-Saharan Africa region were due to non-communicable diseases,



Personalising life insurance to address clients’ individual needs

and this is projected to increase to 46% by 2050. Research reveals that 60% of mortality risk is driven by four lifestyle factors ‒ smoking, poor nutrition, physical inactivity, and alcohol use ‒ that fundamentally affect the way we approach the development of protection products. The move to personalised medicine Personalised medicine is a revolutionary way of separating patients into different groups based on their particular health situation. Medical professionals are then able to target medicine at them more accurately in order to manage and treat their conditions more effectively. They are also able to tailor healthcare programmes for patients to help them manage their diseases. Personalised medicine can also be used proactively as a way of avoiding certain conditions. This is accomplished by testing a person’s genes to find out which medical conditions they are likely to develop. For example, if it is found that a person carries certain genes that are associated with type 2 diabetes, the

individual can start making certain lifestyle changes to lessen their chances of getting this disease. Dynamic underwriting Traditionally, life insurers only measure a client’s risk once and then base all future premiums on the result. This results in clients paying a premium based on the average risk the insurer is covering. However, with dynamic underwriting, clients’ risk profiles are continually assessed to make sure their cover stays relevant and their premiums are in line with their risk. Effectively, dynamic underwriting gives insurers the ability to gain more insights into how individuals are managing their health and wellness ‒ and passing substantial value back to them for staying healthy.

journey to better health. Discovery Life allows clients to link their Managed Care programmes to their Life Plans through the Managed Care Integrator, providing them with dynamic underwriting and significant rewards for managing their conditions. Clients are able to reduce their health loading, meaning lower premiums based on the state of their health. The result is that individuals – who would have traditionally been considered a high risk – now have the ability to obtain comprehensive life insurance, improve their health, and pay standard rates over time.

Tailored life insurance solutions Discovery Health and Vitality have developed a number of Managed Care programmes for individuals who have specific chronic conditions or illnesses, such as diabetes, HIV and obesity. These programmes are tailored to support an individual’s health needs, enabling them to enjoy a personalised

The growing R28.8 trillion insurance gap


outh Africans face a combined insurance shortfall of R28.8 trillion. The 2016 life and disability insurance gap study conducted on behalf of the Association for Savings and Investment South Africa (ASISA) by True South Actuaries and Consultants, highlights concerning statistics. The protection gap is the difference between the protection needed and the protection in-place to maintain living standards following an unfortunate event. The amount of insurance cover needed to close the gap between the total existing life and disability insurance cover in place currently, is not enough. What’s concerning is that since 2012, the insurance gap increased by R4.8 trillion. According to the report, if South African households wanted to maintain their standards of living after: • A death event – The insurance need for all earners is in the region of R20.2 trillion. There is a death insurance gap of around R12.9 trillion • A disability event – The insurance need for all earners is in the region of R28.9 trillion. There is a disability insurance gap of around R16.0 trillion. Liberty’s Claim Statistics for 2016 show that insurance remains critical across all demographics and life stages. In 2016, Liberty paid out R4.3 billion in valid claims, 13% more than 2015. This amounts to a claim being paid every 8 minutes or R17 million

paid every working day. These statistics reveal concerning trends in health and lifestyle risks with cancer, cardiac and cardiovascular conditions being the main causes. This emphasises the dire need for the correct level of life and disability insurance for South Africans. Johan Minnie, Group Executive of Sales, Distribution and Bancassurance at Liberty says: “Many people believe that misfortunes won’t happen to them but these statistics highlight the importance of life protection insurance. A shock event, such as the death of a breadwinner, can see a family’s entire asset base decimated.” Too many South Africans think about insurance as a grudge purchase, when it really acts more like an investment that cashes in when uncertainties arise and risks become realities. For example, Loss of Income and Policy Protection during a recession is essential. Business expansion slows, retrenchments increase dramatically and unemployment becomes a serious problem. Minnie explains: “When you buy a car, the first thing you do is insure it against accidents. Your life and physical body that enables you to work and earn an income, often gets neglected. That’s the real investment; you need to secure the incomegenerating entity – you.” He firmly believes that financial advisers have a pivotal role to play in closing the ever-widening insurance gap. “A good financial adviser should see

the gap as an opportunity to make a real difference for South Africans by continuously engaging, reviewing and adapting their cover to suit their lifestyle. Liberty Advisers are trained to guide customers to plan for any eventuality, make sensible decisions and achieve their financial goals, even in a tough economic environment.” David Kop, Certified Financial Planner and Head of Public Policy and Consumer Affairs at The Financial Planning Institute (FPI) agrees. “In times of crises, the true value of a professional financial planner is realised. Consumers may be considering cutting back on expenses such as life cover to make ends meet. However, the implication of this change to their financial plan can be detrimental. This is where a consumer should sit down with a professional financial planner, not for the next best product, but to help restructure their budget and make informed decisions on how to manage their current spending, while providing for their future spending.”

Johan Minnie, Group Executive of Sales, Distribution and Bancassurance at Liberty




31 August 2017

How to avoid the retirement cliff


ith the South African economy in recession and households under increasing financial pressure, South Africans need to urgently review their financial situation and consider adjusting their lifestyles.    This is according to Old Mutual Investment Group Strategist, Rian le Roux, who spoke at last month’s 2017 Old Mutual Savings and Investment Monitor briefing. He warns that the decline of South Africa’s already low savings rate holds dire consequences for the long term financial health of many South Africans. The harsh reality is that by spending more than they earn many households are not accumulating enough of a financial nest egg to finance future liabilities, such as their retirement. “Look out for the cliff,” he cautions. The cliff refers to the inevitable drop in income and living standards for most people at retirement. “How steep this cliff will be is entirely dependent on how well people have provided financially for this day,” he explains. Most people maintain living standards that are too high during

the working years, causing a major cliff at retirement. “A less lavish lifestyle during your working years can mean much less of a cliff at retirement,” he says. “The weak economy, increases in personal taxes, and rising youth and elderly dependency ratios are making it even harder for households to save, let alone save more. And just as it is becoming more difficult to save, lower investment returns are making it imperative that people actually do just that: save much more,” explains Le Roux. “This developing financial landscape will place an even bigger financial squeeze and strain on households.” The collective savings of a country play a major role in bolstering the national economy through financing investment in social and physical infrastructure. Le Roux states that a shortage of national savings for investment spending increases dependency on foreign financing to cover the shortfall. “The issue is that when there’s a drop in foreign investment, and domestic savings remain low,

investment in physical and social infrastructure inevitably declines too. This is precisely what is playing out at present, as fixed investment fell from 20.4% of GDP in 2015 to 19.6% in 2016 and national savings declined from 16.3% of GDP to 16.1%. If this trend continues over the medium term, it will further undermine the already weak performance of our economy.” The weak economy is putting considerable pressure on government finances, leading to higher taxes that make it even more difficult for people to save. “Low savings lead to low growth, which leads to even less saving, creating an ongoing vicious cycle,” says Le Roux. “All of this is currently being aggravated by policy uncertainty and concerns over political and socioeconomic stability.” Longevity is another issue that is not adequately factored into many people’s personal financial planning. “Healthier lifestyles and ongoing medical breakthroughs mean that people live longer, with many actually outliving their retirement funds and forced to

become dependent on others.” It is not surprising that the 2017 Old Mutual Savings and Investment Monitor shows that 66% of our working metropolitan households do not feel confident in the SA economy. “We urge South Africans to empower themselves by reviewing their financial situation and adjusting their spending decisions accordingly. Adjusting your lifestyle now could prevent financial problems later in life,” he says. Le Roux adds that seeking advice from a registered financial planner is a sensible starting point. “They will help you to assess your current financial situation and plan appropriately for the future.”

Rian le Roux, Old Mutual Investment Group Strategist

Planning needed to meet retirement goals


ow consumer confidence aside, the recently released 2017 Old Mutual Savings and Investment Monitor showed an increase in the number of individuals utilising provident or pension funds (51% to 53%) and retirement annuities (25% to 30%) between 2016 and 2017. While this highlights that more South Africans are understanding the value of saving for retirement, only the right financial provisions will ensure that retirees can remain financially stable during their golden years. Malusi Ndlovu, Head of Old Mutual Corporate Consultants, explains that careful planning and dedication is key to live their desired lifestyle during retirement. “While the figures from the Savings and Investment Monitor are hopeful given current challenging economic times facing South Africans, many members need all the assistance they can get from employers to reach these goals.”  He refers to research from Old Mutual Corporate’s 2017 Retirement Monitor, released earlier this year in March, which revealed that Human Resource Officers are the most widely accessed point of advice on retirement and employee benefits, followed by friends and family. Ndlovu says that employers

are therefore one of the most important influencers in helping members make better financial decisions. “Companies should start considering how they are able to support their employees with the necessary education, structures and guidance so that they can achieve their targeted retirement outcomes.” Ndlovu says that while more members may be seeing the value of using a company’s investment vehicle to save towards retirement, the more concerning issue is that the average household wealth in the country is actually declining in real terms. “South Africans have a high propensity for debt, a concern confirmed by the Old Mutual Savings and Investment Monitor, which suggests that 16% of household income is spent on debt. “To put into perspective, an increase in the cost of monthly consumer debt, such as home loans and car repayments, further decreases the average wealth held by South African households, leaving even less money for retirement savings. But, while incomes are stretched now, households will only become more vulnerable in retirement if retirement savings measures aren’t implemented as soon as possible,” says Ndlovu. Ndlovu warns that just because it appears that more members are using provident

and pension funds and retirement annuities (RAs), it does not mean they will definitely have a better retirement outcome than those not saving, but it illustrates how having an investment vehicle in place, can create more financial security. “It is then crucial these retirement fund members are communicated on how to effectively ensure they are in fact saving enough for a comfortable, secure retirement.” Ndlovu concludes, “With better health care and a longer expected life span, many South Africans may very well find themselves working longer than they had originally planned, despite saving for retirement. However, by having a ‘golden years’ goal and making sound contributions to a retirement fund you can retire at 65 and still have the financial resources to sustain the lifestyle you love.”

Malusi Ndlovu, Head of Old Mutual Corporate Consultants,

31 August 2017



Allan Gray launches umbrella retirement fund


The way fees are disclosed varies from one provider to the next, as does the level of fee disclosure. In addition, the fee structures are often bundled with those for group life and disability insurance cover,” explains Sonday. Many members end up saving in opaque products, without knowing what portion of their contribution is actually going towards retirement. However, if structured correctly, umbrella funds are excellent vehicles for saving for retirement. “Umbrella funds club together multiple employers and their employees into a single IN THE GROUP SAVINGS fund with standardised rules and a single board SPACE UMBRELLA of trustees. Due to their FUNDS HAVE A BAD economies of scale, they REPUTATION are able to offer lower

distribution costs for providers, as well as lower fees. These advantages should result in better outcomes for members than many employer-sponsored funds can offer,” says Sonday. “Many umbrella funds offer a choice of different investment options but this can often come at a high cost. We believe that members shouldn’t be penalised for their investment decisions.” He adds that fee disclosure is critical to ensure that where a member or employer representative is exercising choice, they understand what they will be charged for and how much, and are equipped to make the right decisions. The Allan Gray Umbrella Retirement Fund offers a single fee for administration, with no additional fee for investment

choice. Group risk benefits are provided separately, which means that retirement fund contributions are only used for their intended purpose, i.e. saving for retirement. “Our product aims to make things simple for employers and puts member needs at the centre by offering an unbiased, limited range of high quality managers, fair and transparent pricing and great service,” Sonday says.

Saleem Sonday, Head of Group Savings and Investments, Allan Gray


llan Gray has announced that its highly anticipated new commercial umbrella fund, the Allan Gray Umbrella Retirement Fund, is now officially open for business. Saleem Sonday, Head of Group Savings and Investments at Allan Gray, believes that the industry needs a new entrant that can cut through the clutter and offer a simple, transparent and competitively-priced solution. “In the group savings space umbrella funds have a bad reputation due to opaque cost structures and complexity.


Allan Gray Proprietary Limited is an authorised financial services provider.


96034-Kingfisher 155x220.indd 1

This isn’t a lucky shot. It’s one of 720 000 exposures, taken over six years of visiting the same kingfisher hide. Scottish photographer Alan McFadyen’s goal was to capture the exact moment a diving kingfisher was perfectly symmetrical to its reflection. It had to be flawlessly straight and without a single splash. The result speaks for itself. At Allan Gray we value this kind of commitment. It’s the same philosophy we apply to investing and it has worked well for our clients for 43 years. Call Allan Gray on 0860 000 654 or your financial adviser, or visit

7/14/17 3:14 PM





31 August 2017

INSIDER CHRONICLES ADRIAN MEAGER General Manager of Asset Management, Warwick Wealth


n economics, loss aversion refers to people’s tendency to prefer avoiding losses to acquiring equivalent gains: it’s better to not lose R100 than to find R100. Some studies have suggested that losses are more than twice as powerful, psychologically, as gains. This theory was formulated in 1979 and further developed in 1992 by Amos Tversky and Daniel Kahneman. Even with a brilliant investment plan, it takes diligence to overcome our emotional biases and avoid making investing mistakes. Investors must avoid succumbing to the fallacies of behavioral economics. It doesn’t take extensive research to determine that we are much happier when our portfolio values go up. When they go down even slightly, however, we are tempted to make poor choices. To avoid these unfortunate choices, we need reassurance and a sense of how our instincts can deceive us.

Loss aversion

To illustrate loss aversion, consider a coin-toss where you could either accept R100 or face 50-50 odds on winning R250 or nothing at all. Most people would take the R100. Psychologists suggest we feel a loss about two and half times times as much as the equivalent gain. That means if you see an equal number of ups and downs, you feel miserable. You feel some pleasure when the markets move up and a great deal of discomfort when the markets move down. Therefore, the more frequently you look at the markets, such as daily or weekly, the more discouraged you may get. Even with a well-crafted investment strategy, you may be tempted to make changes in order to alleviate your suffering. When we base our investments on emotions, we make bad decisions which can lead to losses. A nervous investor may liquidate their investment portfolio and invest into a money market account, attempting to time getting back into the market, causing each investment decision to become more and more stressful. Almost all studies show that loss aversion actually causes greater than average losses. Consider that over the past decade, the daily movement in the markets was positive approximately 52% of the time. That means if you watched the markets

every day, you were content on 190 days and despondent on 175 days. Because you feel distressed on the down days two and half times times more than you celebrate the positive ones, instead of remembering the reality that the markets move down only 48% of the time, you feel as if they go down 70% of the time. This is not to suggest that you neglect your investments by any means. You still need to periodically track your performance, make sure your asset allocation is in line with your risk profile and rebalance your portfolio. Indeed, with the ease of access to real-time information these days, it is very hard not to look at the markets. A study by Thaler, Schwarz, Kahneman, and Tversky in the 1997 Quarterly Journal of Economics found that investors who received the most frequent short-term information took the least risk and grew their portfolios the least. This situation, known as myopic loss aversion, challenges perceived opinion about how much communication advisers should have with their clients — more isn’t always better. The ‘less is more’ philosophy seems to work in almost all areas of the portfolio management process. Checking the value of your investment is no different in this respect. Remember, as you lengthen your time horizon, the effects of loss aversion slowly start to fade.

$190 000

What Michael Jordan’s 1984 Olympic games Converse shoes were sold for by SCP Auctions.

$380 000

The record auction price of a Hermes Birkin Bag sold by Christies in Hong Kong. The bag, featuring white crocodile skin, 18 carat gold and 10 carats of diamonds, was manufactured in 2014.

$664 300

The recent selling price of a 188-square-foot parking space in Hong Kong.


The cost of Zimbabwe’s ‘Disneyland in Africa’ concept near the prime resort of Victoria Falls that will be built with the backing of Chinese investors.

£90 000

The weekly rent for a five-bedroom flat on London’s Park Lane in the iconic Sir Edward Lutyens building.


The price of the most expensive car in the world, the Rolls-Royce Sweptail.

31 August 2017



Opportunities continue to be found in global markets While South Africa is now in a technical recession, global growth appears to be steady, so it’s little wonder that local investors are continuing to invest offshore. MoneyMarketing spoke to Sukumar Rajah, Managing Director and Chief Investment Officer - Asian Equity, Local Asset Management at Franklin Templeton Investments. Are global markets seen as expensive right now? While select equity markets such as those in the US are trading at historically high valuations, many other markets still look relatively reasonable on a PE basis. Even for the US, the implied equity risk premium is lower relative to the long-term average. Unless we assume that bond rates move back to longterm average, this implies that there is still support for the US market to trade at current valuation levels. As bottom-up investors, we continue to find opportunities despite potential pockets of overvaluation as the dispersion within individual markets continues to be high.

We think the highest risks are geopolitical in nature. The key risk for emerging markets (EM) on the geopolitical side is the increasing tension in North Asia related to North Korea and the risk of potential changes to US trade policy. On the positive side, Eurozone election risks are now diminishing. If there was to be a correction, how would Franklin Templeton assist investors in not making the common mistakes that lose investors’ money? As bottom-up investors, Franklin Templeton focuses on the longer-term value and fundamentals of each individual stock we invest in. Because of this, we do not overpay for stocks and are able to find investment opportunities during market corrections. As such, we can mitigate the downside risk of pronounced market corrections and create upside when market conditions improve. We believe that this protects and enhances investor capital over the long-term.




Sculpture by Beth Diane Armstrong

What is the likelihood of a correction in global markets in the near future? Growth momentum is slowing, but should remain stable for the rest of the year. There could be a slowdown in growth from the first half of this year as expectations of US fiscal stimulus, tax reform and repatriation are lower, Where should investors place their Chinese growth moderates due to cooling measures money now? Developed markets (DMs) in the real estate sector and tightening liquidity in that are more stable or EMs that offer the financial system, and commodities move back exposure to new growth? into oversupply. We continue to find opportunities in global However, we do not believe that markets will equity markets given the dispersion within each significantly correct as growth should remain individual market. However, we currently find many at reasonable levels given that the US economic opportunities in EM markets due to the ongoing trajectory remains firm, China emphasises EM recovery and valuation support, with potential economic stability in the run-up to the Fall Party for a performance catch-up of EM to DM. LongerCongress, and Europe continues to see improving term EM market performance is also underpinned growth momentum and diminishing election risk. by structural growth trends (i.e. urbanisation, rising Importantly, the recovery of economic growth middle class, young population etc.). Importantly, since last year is translating into corporate earnings active stock selection contributes a high value-add growth, which continues to be broadly supportive in terms of performance in EM markets because of of global markets.  market inefficiencies, the frequent occurrence Prescient Money Mktg 1-4 Goose Ad_r1.pdf 3/17/16 4:12:39 PM

of structural changes and higher prevalence of new companies emerging and gaining share in the EM indexes. In China, private-sector borrowing is now more than two and a half times annual economic output. What sort of risk does this pose to the global economy? While we recognise that risks related to leverage in the Chinese financial system are significant and increasing, we believe it is inaccurate to evaluate the Chinese economy in the same way as its DM peers, given the high degree of government control over the economy and stock market. A good example of this government control is the implementation of stringent capital controls to prevent outflows and defend the capital account after the significant outflows earlier last year. After the turbulence in 2015 and 2016, we believe the risks related to the Chinese economy are well appreciated and that global investors and counterparties have put in place mitigating strategies to limit the negative impact should a sharp downturn in the Chinese economy occur. We continue to track the government’s efforts to de-risk the financial system and are hopeful that the government will be able to accelerate reforms after the expected leadership consolidation within the Standing Party Committee during the Fall Party Congress. We believe that a more rapid rebalancing of the economy away from investment and towards consumption will result in lower but more sustainable economic growth for the Chinese economy that would be more positive for the global economy in the longer-term.



Yo u r m o n e y i s s a f e a t P r e s c i e n t . T h a t ’s b e c a u s e o u r f u n d m a n a g e r s


c o n s i s t e n t l y f o l l o w a r e l i a b l e p r o c e s s c a l l e d Q u a n t P l u s ® . I t ’s t h e


proven way to reduce investment risk, and increase wealth.



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31 August 2017

Index funds for pre-retirement savings - can it work?


on’t dismiss index tracking as a central investment option for your clients. There has been a lot said about index trackers in the press over the years – both good and bad. This has led to confusion and sometimes doubt, which is unnecessary. The very basic premise is that most active managers struggle to beat a market cap weighted index over time and they charge a lot to do this. At a time when performance is scarce and fees (everywhere) are under pressure, it is necessary for you to consider index options for pre-retirement savings, especially for those with a long time horizon. Accelerated product development in the index tracking world has seen a supply of products which are really meeting investors’ needs, rather than just increasing product availability. Balanced index funds are one such innovation. Using index tracking building blocks, holistic funds have been created which allow exposure to all asset classes (both locally and internationally) at low cost (sometimes as low as 0.25% on LISPs) and with no performance compromise. Balanced funds are available in high equity or low equity equivalents. Depending on the mix of index funds chosen to represent each asset class, they can also include smart beta trackers which means circumventing all the arguments levelled at market cap weighted equity indices. This may be a reason you are avoiding using index tracking balanced funds in your clients retirement portfolios. Read the minimum disclosure documents to find out exactly how the portfolio is constructed. The beauty of index tracking is that everything is 100% transparent. By diversifying your investments, you lower the risk of some of the higher risk asset classes in the fund (e.g. equities), allowing a moderate or conservative investor to find a fund which suits their risk profile. Satrix does have two risk

profiled balanced funds which are Regulation 28 compliant, meaning they are suitable for retirement savings. Another useful thing to remember about Satrix multi-asset class funds is that the asset allocation is static. Rebalancing happens semi-annually, bringing the fund in line with the long-term asset allocation weights. This means that the high equity balanced fund has approximately 70% invested in equities at all times which serves two very important investment tenets: • Most outperformance comes from your asset allocation decisions • Equities give you superior real returns over time. Choosing either of the Satrix balanced funds should give you reassurance that these tenets are being met consistently. Remember that investing in index funds works best when you use funds that cover broad segments of the stock and bond markets as building blocks to create a diversified portfolio that matches your risk profile and that you’ll stick with through good markets and bad. Investing is always long term and a well-constructed, carefully thought through portfolio will help you benefit from all that indexing has to offer. For clients with a long time horizon or who have a high risk profile, you can even construct a more aggressive Regulation 28 portfolio using a combination of local equity index trackers, a property or bond index fund and the developed market global index tracking fund. Constructing a portfolio this way gives you the flexibility to dial up the risk for a qualifying client whilst retaining your flexibility to make appropriate choices for your client. As Seth Godin said – “In a world where we have too many choices and too little time, the obvious thing to do is just ignore stuff.” We urge you not to do this and to take a look at index trackers one more time.

Satrix Managers (RF) (Pty) Ltd (Satrix) a registered and approved Manager in Collective Investment Schemes in Securities and an authorised financial services provider in terms of the FAIS. Collective investment schemes are generally medium- to long-term investments. Unit Trusts and ETFs the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs are index tracking funds, registered as a Collective Investment and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur additional costs due to it being listed on the JSE.  Past performance is not necessarily a guide to future performance and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending.  Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio.  The index, the applicable tracking error and the portfolio performance relative to the index can be viewed on the ETF Minimum Disclosure Document and/or on the Satrix website. Performance is based on NAV to NAV calculations of the portfolio. Individual performance may differ to that of the portfolio as a result of initial fees, actual investment date, dividend withholding tax and income reinvestment date. The reinvestment of income is calculated based on actual distributed amount and factors such as payment date and reinvestment date must be considered.

Who are the largest wealth managers in Africa?


frAsia Bank and New World Wealth recently reviewed the wealth management space in Africa. They defined wealth management as the provision of banking services to wealthy individuals (HNWIs) and their families and included areas like financial planning, inheritance planning and the allocation of client funds.  The review values the African wealth management market at US$132 billion (as of December 2016). Around US$76 billion of this is held in South Africa.  Key findings:  • Approximately US$132 billion of African wealth is tied up with wealth management companies  • South Africa (mainly Johannesburg) is the hub for African wealth management with US$76 billion in AuM  • It is estimated that the African wealth management market will grow by 7% per annum over the next 10 years  • The most promising emerging African markets for private banking are Mauritius and Kenya.  Africa: Largest wealth managers by AuM, 2016 Rank by Africa Base African AuM sourced AuM (US$ billion) Investec SA / UK 24,0 RMB SA 11,0 UBS Swiss 8,0 PSG SA 7,0 Nedbank SA 6,0 Sanlam SA 5,0 Credit Suisse Swiss 4,0 Standard Bank SA 3,0 ABSA (Barclays) SA / UK 3,0 Old Mutual SA 2,0 Momentum Group SA 2,0 Citadel SA 2,0 Note: Ranked by AuM at the end of Dec 2016. Rounded to nearest billion. Source: Annual Reports, Investor presentations

Family offices Family offices are the growing wealth management segment in Africa (and throughout the world).  Family offices provide a far more personalised service than normal wealth managers. Additional services they offer include: managing household staff, property management, philanthropy coordination and managing family education.  Typically, family offices are exclusively for family members and their related trusts, foundations, charities, non-profit organisations and family-related investment vehicles.  Single-family offices (SFO)  Single-family offices generally take the form of a private company that manages the investments and trusts of ultra-wealthy individuals (normally with net assets of more than US$100 million) and their extended family. Typically, an SFO has a small team consisting of a lawyer, an investment specialist and an accountant.  Multi-family offices (MFO)  There are a significant number of families with between US$30 million and US$100 million in assets that do not have the economies of scale to establish stand-alone family offices. MFOs cater to these families and allow them to share administrative costs. Stonehage Fleming is a notable MFO with a presence in Africa. 


PIETER HUGO MD, Prudential Unit Trusts



Don’t be tempted by cash returns

Equity returns follow the interest rate cycle
















Inretest rate (%)

n recent times, South African investor confidence has been undermined by the news spotlight on the country’s higher political and economic uncertainty. This has been compounded by poor returns from local equities, which have underperformed money market returns over the past three years and not beaten inflation in the past two years (to 31 May 2017). These conditions, in turn, have pushed investors to sell their local equity holdings and other risk assets, and move more into cash. However, this is a serious mistake – cash is the more risky asset for long-term investors. Up to 31 May 2017, the average SA General Equity fund returned only 0.4% p.a. over one year and 3.6% p.a. over three years (both after fees), underperforming the average Money Market fund return of 7.8% p.a. and 7.0% p.a. respectively (after fees). Yet this should be recognised for what it is: a short-term cycle. Over the past 40 years, South African equities have returned 8.2% p.a. on a real (afterinflation) basis, much higher than the 2.8% p.a. real return delivered by SA bonds and the 1.8% p.a. real return from cash. This makes them an invaluable part of an inflationbeating portfolio over time and gives investors a compelling reason to hold them through the downturns. The graph, dating back to 1966, highlights how there have been many

31 August 2017

1-yea Rolling Difference Between SA Equity and Cash Returns (%)






-60.00 01-Jun-66


01-Jun-86 Equity outperforms cash

01-Jun-96 Equity underperforms cash


-15 01-Jun-16

Interest rate Source: I-Net

similar periods like the present during which equities have underperformed cash, with returns broadly following the interest rate cycle (the latter shown by the black line; red indicates periods where equities have outperformed cash over the preceding 12 months; gold depicts underperformance). It demonstrates how, although local equity returns do soundly beat cash over time, they underperform during relatively short periods, especially when interest rates rise, only to beat cash again as interest rates are falling. This underperformance is particularly evident when interest rates peak, as is the case currently. Based on this historic cyclical pattern, equity returns could begin to outperform cash again

The wealthiest cities in Africa

as our interest rates fall. And it’s worth noting that the Reserve Bank has indicated no further interest rate hikes are likely in the current cycle. A closer examination of the asset return cycle in 2003-04 shows that the average SA General Equity fund, with a 12-month return to 30 April 2003 of -15.7%, badly underperformed the average Money Market funds 12.2% return (both after fees) over the same period. However, 12 months later this was reversed: the average SA General Equity fund returned 50.3% for the 12 months to 30 April 2004, while Money Market funds returned 10.5% on average. Had investors decided to switch their equity exposure to cash following the poor 2003 equity

• JOHANNESBURG: Total wealth held in the city amounts to US$245 billion. Home to 18 200 millionaires (HNWIs), 970 multi-millionaires and two billionaires. Figures for Johannesburg include Sandton. Major sectors in the city include: financial services (banks, accountancies, insurance), professional services (law firms), construction, telecoms and basic materials. • CAIRO: Total wealth held in the city amounts to US$140 billion. Home to 8 900 millionaires, 480 multimillionaires and five billionaires. Major sectors in the city include: real estate and construction, financial services and basic materials.  • CAPE TOWN: Total wealth held in the city amounts to US$135 billion. Home to 8 200 millionaires, 440 multimillionaires and two billionaires. Major sectors in the city include: real estate, financial services (fund management), retail and tourism. Cape Town is also a second home hotspot for the wealthy with over 1 500 multi-millionaires living in the city during peak holiday months (many of these individuals are from outside South Africa).  • LAGOS: Total wealth held in the city amounts to US$120 billion. Home to 6 800 millionaires, 360 multimillionaires and four billionaires. Major sectors in the city include: real estate and construction, telecoms, transport, financial services and basic materials.  • NAIROBI: Total wealth held in the city amounts to US$55 billion. Home to 6 800 millionaires and 280 multimillionaires (no billionaires). Major sectors in the city

returns, they would have missed out on its exceptional returns the subsequent year. There are many other examples of these short-term turnarounds in asset returns (1998-99, 200809, etc.), due partly to the quick impact of moves in short-term (three-month) interest rates. It is impossible for investors to be able to foresee such turns in the cycle with 100% accuracy and take full advantage of them. This means that they miss out on periods of improving equity market returns. Therefore investors’ best option for successfully building wealth is to hold their equity exposure through cycles, over the longer term.

include: financial services, real estate and construction, retail, tourism, FMCG, telecoms and basic materials. LUANDA: Total wealth held in the city amounts to US$48 billion. Home to 4 100 millionaires, 240 multimillionaires and one billionaire. Major sectors in the city include: real estate and construction, transport and basic materials (oil & gas).  DURBAN: Total wealth held in the city amounts to US$46 billion. Home to 3 200 millionaires, 130 multi-millionaires and one billionaire. Figures for Durban include Umhlanga, Ballito, Zimbali and La Lucia. Major sectors in the city include: real estate, finance, healthcare, construction, retail and transport.  PRETORIA: Total wealth held in the city amounts to US$42 billion. Home to 2 600 millionaires and 110 multi-millionaires (no billionaires). Major sectors in the city include: basic materials, manufacturing and financial services.  CASABLANCA: Total wealth held in the city amounts to US$40 billion. Home to 2 300 millionaires, 110 multi-millionaires and two billionaires. Major sectors in the city include: basic materials, manufacturing and financial services.  ACCRA: Total wealth held in the city amounts to US$35 billion. Home to 2 300 millionaires and 100 multi-millionaires (no billionaires). Major sectors in the city include: basic materials, manufacturing and financial services.  Source: AfrAsia Bank and New World Wealth

31 August 2017

property a viable nest egg for SMEs Traditional savings vehicles may not always be the best option for small and medium enterprises (SMEs) and investing for growth may be more beneficial than sitting on a lump sum of cash. That’s the word from Jeremy Lang, Regional General Manager at Business Partners Limited. He adds that in the current economic environment, investing in property may be a viable option for SME owners to consider as a long-term savings mechanism. “In 2016, industrial property was the top performing sector in the South African property market, with a total return of 13.6%. Over the last 10 years, it has proven to be a relatively stable and resilient asset class in terms of generating positive returns over the medium to long-term. As such, both commercial and industrial property are good investment options for small business owners to consider in current economic conditions.”  However, Lang says that although property generally offers good returns, it does require effort to ensure that these are maximised. He provides SME owners with a list of factors to consider before taking the plunge into property investment:  TIMING: Although any form of savings should be kick-started sooner rather than later, it is imperative to only buy property once a business is established and operations are relatively stable.    AFFORDABILITY: If the business is currently operating from a rented space, consider the current rent paid and compare it to the proposed bond repayment (include the property rates and taxes, maintenance expenses and deposit). It is important to ensure that the business’ cash flow is healthy enough to cover all of these expenses and repayments. FINANCING: While property can be an income generating asset, borrowing too much money can leave the business over indebted. Be careful not to over pay for the property. DUE DILIGENCE: When considering investing in commercial or industrial property, business owners should conduct the necessary technical due diligence – especially around the structural integrity of the building, business zoning rights, site development plans and any other restrictions listed in the title deeds of the property.  DON’T RELY ON INFLATION: When planning to invest in commercial property, it is imperative to note that in the current economic environment rental escalation is under pressure, and that a 10% increase may be unrealistic. Business owners also need to be cautious about the rising costs related to owning a property. DIVERSIFICATION: As a property investor, consider diversifying the investment portfolio by investing in properties in different geographic locations and industry sectors.

Jeremy Lang, Regional General Manager at Business Partners Limited

Rental levels under pressure MoneyMarketing asked Estienne de Klerk, Managing Director of Growthpoint Properties about the impact of South Africa’s recent downgrades on the listed property sector, as well as what’s in store for the sector for the rest of this year. What sort of return is SA’s listed property sector expected to post this year? Expectations from industry analysts indicate that REITs are forecast to post total returns in the range of 8% to 10% for 2017. How will the sector weather SA’s recent downgrades and to what extent were these downgrades priced in? The downgrades make the sector less competitive internationally because of their negative impact on access to debt and its pricing. The downgrades were mostly priced in. However, there is some pressure on margins from the banks. In the short-term, the impacts will be limited. Over the longer term, the pressure exerted on finance houses will feed through to the sector’s pricing. It is not yet clear how it will play out in bond yields but, so far, impacts are marginal. While Growthpoint’s international rating is pegged to the sovereign rating, our local rating remains unchanged. Growthpoint remains one of only a handful of AAA-rated South African businesses. What’s in store for the sector for the rest of the year? The South African market is tough. Policy and political uncertainty are compounded by a weak economy, and this is influencing fundamental demand. Tenants are reluctant to take long positions and grow their space commitments, which have a negative impact on the industry. The retail environment is also weakening, which influences the new development of shopping centres. Activity is muted, and only a few planned new retail developments are likely get off the ground. Landlords are taking strain as rental levels come under pressure. Industrial property is positioned to be the best performing of the three commercial property sectors. It comes down to a combination of the industrial sector’s in-place rentals and a prevailing demand for new quality industrial space. With no material rental growth in the sector in recent years, a new facility, often with appealing built-in efficiencies, can be occupied at a price similar to an existing facility.

Growthpoint is seeing a lot of positive news coming out of our investment in the V&A Waterfront. It is one of the best-performing assets in the country, and we certainly expect this to continue. The next addition to the V&A Waterfront’s Silo District development is the reimagining of the historical old Grain Silo complex by internationally renowned designer Thomas Heatherwick, which will house the Zeitz Museum of Contemporary Art Africa (MOCAA) when it is completed later this year. In fact, Cape Town is proving to be a strong market across the board, especially its office and industrial sectors. Also, with improvements in infrastructure and functionality taking place in Sandton Central, we expect to see it commanding the best rentals. Durban’s property market is also seeing some positive activity. That said, local market fundamentals seem set to weaken further. International investment should continue or accelerate with the lacklustre local environment. However, fundamentals are not that strong internationally either, and offshore investment is mainly being driven by access to cheap capital. Anyone with a significant balance sheet can access this capital and do yield-enhancing transactions in other markets on this basis. The trick is to buy value and avoid overpaying. We see a better growth story in Eastern Europe than developed Western Europe, where there are no huge increases in rental levels to be had. While most of the sector’s big players are focused offshore, the current environment is right for sector consolidation, and we may see this with some smaller funds. There are also more niche offerings entering the sector, including Growthpoint’s own recently launched healthcare property subsidiary. Our aim is to grow its assets from the current R2.5bn to R10bn over the next five years. We expect to make the fund available to the institutional market initially from Q4:2017, with a possible listing further in the future.

Estienne de Klerk, Managing Director of Growthpoint Properties







31 August 2017

US is top performing listed real estate market


he FTSE EPRA/NAREIT Developed Rental Index recorded a net total USD return of 0.93% in June. The best performing listed real estate market was the United States, which recorded a total USD return of 2.41%. Japan recorded the lowest total USD return for June of -4.08%. “We recently visited London where we toured some prime retail and office locations and discussed the state of the property market with management teams, property brokers and analysts,” says Jonathan Kinnear, Investment Analyst at Catalyst Fund Managers. “We found London to be buzzing and the streets packed with locals and tourists alike, making the most of the short British summer. Management teams were unanimous in their belief that London is an iconic city and a magnet for people that would be incredibly difficult to replicate anywhere else in Europe over the short to medium term.

He adds that although office fundamentals have softened in the UK due to the political uncertainty surrounding Brexit and oncoming supply, Asian demand has continued to prop up asset prices, especially in the top end of the market. “Recent transactions lead us to believe that the primary motivation for many of these purchases is to move money offshore rather than a desire or need to earn a fair yield on acquisitions.” After London, Kinnear travelled to New York where he attended REITWeek 2017. “The major themes discussed at the conference were the divergence between public and private valuations in the retail sector and the strong tailwinds driving data centre and industrial performance. “Retail management teams fully acknowledged the difficult retail environment today and the change in spending habits of consumers towards more experiential and entertainment type shopping activities. Many believe that the sell-off has gone too far, fuelled in part by the negative media rhetoric regarding bricks and mortar retail.”

The REIT conference participants agreed that investment in stores and customer service needs to be a key focus area to ensure customers are given the best possible retail experience, Kinnear adds. “Capital expenditure requirements are likely to increase going forward as landlords modernise their centres and focus on adding more experiential attractions to increase footfall. Whilst there will certainly be further disruption in the ever evolving retail space there should be a clear differentiation in performance between high and low quality assets over time. “In contrast the industrial sector has benefited from e-commerce tailwinds which have created significant demand for warehousing space. Data centres have shared similar success due to the exponential increase in data consumption driven by the uptake of smart devices which have more advanced capabilities and computing power, necessitating greater data storage and connectivity.” Kinnear notes that Amazon has announced its proposed takeover of Whole Foods Market, a chain of organic grocers, for $13.7 billion in cash.

“Whole Foods operates more than 460 physical stores, situated in prime retail locations in the United States, Canada and the United Kingdom. The merger represents a significant move for Amazon into the physical retail space and affords the tech behemoth the opportunity to participate in the estimated $750 billion grocery market.” On the local front, the SA Listed Property Index (SAPY) recorded a total return of 0.29% for the month of June 2017 with the historic yield of the SAPY ending the month at 6.93%, 11 bps higher than the 6.82% recorded the previous month. The yield-to-maturity (YTM) on the 10y South African government bond (R186) weakened by 19 bps to end the month at 8.78% (8.59% – 31 May 2017). Kinner says that the SA Listed Property Index continues to be under review by the JSE for possible changes. “We expect a market update on the new index methodology in the coming weeks.”



Listed property a long-term game

roperty has been a star performer by delivering double-digit returns in seven of the past 10 years. However, following the country’s recent credit downgrades, the sector has dropped from a high of nearly 6% in mid-March to 1.47% by the end of the same month. Year to date to the end of June, the sector has returned 2.29%, compared to 3.37% for equities and 3.99% for bonds. Although it is impacted by local events, listed property is much less of a domestic play than it was previously. The sector has proven partially immune to local events, given that almost 40% of earnings come from outside South Africa through local property with offshore exposure. When the rand weakens, it benefits almost half of the portfolio, and if the rand strengthens, local portfolios tend to do well because bonds do well. For investors currently exposed to property or considering diversifying into property, there is still value to be found in both local and global markets. Locally, the success of listed property can be best understood by looking at the underlying asset base.

Investments in good quality assets that produce sustainable returns outperform over time offering investors both income and capital growth benefits. In a retail setting, a successful mall will balance retail outlets with food, beverage and ‘shoppertainment’ opportunities to offer a fully rounded experience for shoppers. Beyond retail, self-storage provides an interesting investment opportunity. With more young people opting to live in central areas with smaller living space but less commuting time, self-storage has seen an increase in demand. South Africans currently spend around R8.9 billion annually on online shopping so demand for warehousing is set to increase. However, it is not simply bulk storage space that is needed but rather technologically driven warehousing using robotic systems that achieve maximum packing and distribution efficiency. On the back of this demand, there is potential for new builds in warehousing to grow going forward, as facilities are modernised to keep pace with online sales growth.

Globally, online shopping, which is expected to grow by 162% in the next five years, is a strong trend. Industrial sector investments in warehousing, distribution and logistics across the US, Asia and Europe is one of the biggest themes we see driving property returns going forward. Property has proven to be an inflation beating asset class over time. The difference between property and investments in cash or bonds is that cash may provide a yield of 6%, but that yield doesn’t grow. Property offers a similar yield to cash but also grows. Investors could consider riding through shortterm volatility. Many outcomes remain uncertain both locally and internationally. Short-term market volatility will continue to be driven by various factors, including the US interest rate hiking cycle, local interest rates, and uncertainty around the Brexit deal to be negotiated. Broadly, positive total returns (income and capital growth) are expected with a focus on assets with unique investment opportunities and a global flavour.


31 August 2017


NHI white paper ignores fundamentals of competition and choice The National Health Insurance (NHI) white paper has finally been gazetted following its approval by Cabinet.

The two most fundamental issues with how the NHI is being proposed in the newly released white paper are the use of a single payer fund and the effective nationalisation of the private healthcare sector without compensation” says Michael Settas, Director of KaeloXelus. In terms of the single payer fund, the white paper believes that the NHI can use bulk purchasing power to drive down the price of healthcare services. However, it then simultaneously declares that it will accredit medical service providers – public and private, and then set the prices at which they can sell their services to the NHI. It specifically states that it will deploy a uniform reimbursement strategy and that accredited service providers will not be allowed to deviate from that. “This raises a fundamental question. If the NHI is going to regulate the price at which the services are being procured, why does it need to use the bulk purchasing power of a single fund to reduce prices?” The white paper also declares that medical schemes will not function in parallel to the NHI but will only be permitted to offer complementary services that are not available under the NHI. This will destroy the current medical scheme market and effectively nationalise most private service providers, since they will have no choice but to contract with the NHI for the defined

services at regulated prices. Settas also asks: “In a further contradiction, the white paper states that citizens will not be forced to use NHI services but if medical schemes cannot co-exist with the NHI, how will this choice be achieved?” “The two fundamentals of removing competition between funds and service providers will have disastrous consequences. Quality will suffer and the ultimate longterm impact will be higher prices – it’s the undisputed consequence of removing competition from a market,” he adds. Settas outlines the following scenario: “As the Department of Health currently operates, it’s effectively a single payer fund. Citizens, who cannot afford medical aid cover, have no choice but to receive their healthcare from state-funded public health facilities. The obvious quality problems that currently beset the public system are exactly what will transpire under a single payer NHI.” The best option would be to allow multiple paying funds – similar to medical schemes – that compete with each other on the price, quality and efficiency of their service. “Prices for medical services should also not be set. These multiple funds should be allowed to freely contract with any provider public or private – based on the quality of their clinical outcomes, rather than on the price they charge. This structure would ensure competition between funders as well

Public-private partnerships will drive NHI’s success Speaking at the opening of the 18th Annual Board of Healthcare Funders (BHF) Conference, last month, Dr Clarence Mini, Acting Managing Director, BHF Southern Africa, pleaded with the Department of Health to consider partnerships with the private sector in implementing the NHI. “As we look ahead at the pending implementation of NHI, as with any change, the journey towards universal healthcare will present new challenges. However, the promise of partnership, political will and good leadership might make the journey ahead a lot easier than

we have all imagined.” In his welcome address Ian Douglas Neilson, the Executive Deputy Mayor of the City of Cape Town, echoed those sentiments with regard to the need for partnerships in implementing NHI. “The approval of the National Health Insurance white paper by cabinet represents a substantial policy shift that will necessitate a massive reorganisation of our healthcare, both private and public, and this will present a challenge to both the public and private healthcare sectors in South Africa. “Over the years, we have learnt

as providers.” Settas explains these are the fundamentals that underpin what is commonly known as Value-Based Health Systems, which are growing in popularity and success in many countries around the world. “By sharing clinical data, treatment methodologies and health outcomes, these value-based systems are achieving superior clinical outcomes at lower costs. They also allow consumers freedom of choice and lead both funders and providers to focus not on revenue generating, but on the clinical outcome of the patient. Competing on the quality of the health outcome results in a win-win situation. Costs are controlled and quality rises. “Further consequences of what NHI is proposing will be a brain drain, as doctors emigrate to friendlier markets, and corruption is virtually certain to be endemic in a state-run NHI fund that, in today’s value, will turnover in the region of R400bn annually”, says Settas.


that we will not succeed in achieving anything on our own, and we have to work in partnership with our communities, NPOs, and the private sector, as we have seen the threat of Republicans wanting to repeal ObamaCare, and how it is argued that, this will be a ‘death sentence’ for the US healthcare system. “Only sustained, successful partnerships will enable South Africa to overcome the many challenges of our rapidly urbanising environment, and will in turn ensure that we become more resilient.” Delivering the keynote address, Dr Precious Matsoso, Director General, South African National Department of Health, highlighted that, “with at least 3.2 million children screened for the NHI pilot phase between April 2014 to March 2017, at least 500,000 children were found to experience oral health

issues, eyesight problems, hearing and speech problems.” One of the findings from the NHI pilot phase shows the high prevalence of stunting, with 27% of children under five considered stunted and 10% severely stunted. “This is presenting a challenge to the Department of Education, as we are giving teachers children with hearing and sight problems, and waiting for them to be adults. This is a big problem, and South Africa cannot afford to sit back and not respond to the healthcare needs of vulnerable groups,” said Matsoso. Dr Clarence Mini, Acting Manging Director of the Board of Healthcare Funders (BHF) Southern Africa






31 August 2017

GET SOUTH AFRICA GROWING BY BRIAN KANTOR South Africans have been poorly served by the economic choices their government has made. The consequences of these choices are everywhere to be seen but most importantly in unemployment and poverty. In this book, Brian Kantor advances spirited economic arguments for freer markets and less government intervention and regulation of the South African economy. The book will add significantly to a layman’s understanding of how our economy works. It offers a succinct review of all the key drivers that determine a modern economy’s performance as well as the key institutions of a modern economy. It also presents an insightful review of the challenges facing SA's economy and its policy makers.  Kantor’s sound economic insights, enriched by his familiarity with current affairs and developments in the local political milieu and financial markets, make his work a key and important contribution to the continuing debate which rages around our failing economy – indeed, it presents solutions which policy makers ignore at their (and our) peril.


Mayweather’s finances set to take a blow


ndefeated US boxer, Floyd Mayweather Jr (nicknamed ‘Money’), owes the IRS a staggering $22.2 million in unpaid taxes from 2015, the year that he earned $220 million for a fight against Manny Pacquiao. Mayweather hasn’t fought in two years and may only be doing so because he needs to pay this enormous tax bill. Meanwhile, he’s asked the IRS for a short-term payment installment until his upcoming

fight with Ireland’s Connor McGregor later this month. The fight would pay Mayweather upwards of $100 million, some of which will go to the IRS. According to reports, the boxing legend has made $700 million during his career. However, in the US, many self-employed workers or people who come into a windfall often fall foul of the IRS, as they may be unaware that a percentage must be withheld for tax purposes.

And this isn’t Mayweather’s first run in with the tax man. “Even if you’ve been the same type of self-employed worker throughout your career, as Mayweather has for more than 20 years, it still pays to revisit your tax withholding on an annual basis. Mayweather hasn’t been great at that for the last decade or so, racking up numerous liens that his attorney says are part of an investment strategy,” says

South Africa has undergone dramatic changes in recent years. Political tensions are on the up, economic performance has weakened, and more and more South Africans are taking their frustrations to the streets. What does this mean for our future? Will a spark ignite the powder keg? In this book, leading scenario planner Frans Cronje analyses the latest trends and presents four new scenarios for the country’s future. Will South Africans take the socialist route and allow the state to seize all wealth and land? Will the status quo prevail, and the wealth divide widen while crime soars? Do we face a pernicious erosion of our democratic rights and freedoms? Or will a rainbow rise unexpectedly? Cronje’s new set of scenarios is a sober compass for SA's highly unpredictable future.

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Money Marketing August 2017  

MoneyMarketing’s August issue looks at the Financial Sector Regulation Bill and the Twin Peaks model. It also – for Women’s Month – focuses...

Money Marketing August 2017  

MoneyMarketing’s August issue looks at the Financial Sector Regulation Bill and the Twin Peaks model. It also – for Women’s Month – focuses...