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31 March 2018 |

First for the professional personal financial adviser




MoneyMarketing's guide to investing offshore in volatile times

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Growth of blackowned IFA practices key to transformation


upporting the growth of blackowned, independent financial adviser (IFA) practices is not only a key requirement for achieving meaningful transformation in South Africa’s savings and investment industry, but it is also critically important in helping to address the country’s poor savings rate as well as improve financial literacy. This is according to Leon Campher, CEO of the Association for Savings and Investment South Africa (ASISA).

Over 170 black-owned IFA practices have participated in business development and growth support programmes run by ASISA’s Enterprise and Supplier Development (ESD) Fund over the past three years. The Fund, managed by Edge Growth, was launched in March 2013 and it exists to speed-up job creation by unlocking the growth potential of the country’s small and medium enterprise sector. Campher says the ESD Fund’s black

The 22nd Raging Bull Awards took place on 31 January in Cape Town Page 6

LONG-TERM INVESTING NEEDS A LONG-TERM MINDSET Staying invested during times of market stress is extremely important

Page 13

IFA Development Programmes, run in partnership with ASISA member companies as well as the Insurance Sector Education and Training Authority (INSETA), aim to accelerate significant transformation in the savings and investment industry by growing black-owned enterprises, creating jobs, and developing skills. “The amount of money that’s gone into the fund from some of ASISA’s members for the development of IFA practices is substantial. There is a strong focus on the training of independent black financial advisers, but it needs to be understood that this is a journey that is going to take time. To ensure deep learning and meaningful development, only a certain number of IFAs can be trained every year.” The ESD fund participating black IFA practices receive business development support over 12 months, which may include upfront diagnosis of constraints to growth, specialist practice development consulting and targeted mentoring and skills development. The following programmes have been successfully completed: • Some 30 black-owned IFA practices are about to graduate from the 12-month ASISA IFA Development Programme launched in collaboration with Allan Gray, Coronation, Investec and Prudential in 2016.

Last year, 33 IFA practices graduated from the first phase of this programme. • In August last year, eight blackowned IFA practices graduated from the Momentum Masibambane Broker Initiative programme, which was delivered by the ASISA ESD Fund in partnership with MMI Holdings. • Also last year, the ASISA ESD Fund completed the Sanlam BlueStar project, which provided practice management training to 88 independent financial planners across seven regions to empower them with practical business knowledge and toolkits in order to develop their businesses. In addition, the Sanlam Catalyst project provided specialist business development support to five black financial planning practices linked to accounting firms. • In 2015, the ASISA ESD fund in partnership with the INSETA developed eight black owned IFA practices around the country over a 12-month period. Following the success of the first INSETA Broker Development Programme, a second programme has just been launched. Continued on page 2

Laurium Flexible Prescient Fund turns 5 The Fund aims to achieve a return of at least 5% above CPI per annum, measured over a rolling 3 year period by investing in a diversified range of local and foreign asset classes.


Launched 1 February 2013, the Fund is ranked 2/46 funds in the South African Multi Asset Flexible Sector since inception to 31 January 2018, with an annualised return of 15.3% after fees (104.0% cumulative) vs. average peer annualised return of 8.3% (46.0% cumulative). (Source: Morningstar 31/01/2018)

We know Investments T +27 11 263 7700 E

Laurium is an authorised financial services provider (FSP No 34142).Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. Prescient Management Company (RF) (Pty) Ltd is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). CIS’s are traded at the ruling price and can engage in scrip lending and borrowing. Performance has been calculated on the A1 class using net NAV to NAV numbers with income reinvested.There is no guarantee in respect of capital or returns in a portfolio. For any additional information such as fund prices, fees, brochures, minimum disclosure documents and application forms please go to




31 March 2018

Continued from page 1

Campher says a Measurement and Evaluation (M&E) Report is completed for each programme. “The M&E process is a key component of the programme as it enables continuous improvement based on feedback from participants. Each programme is evaluated at the half way mark and again at conclusion.” Jobs for graduates In 2016, a unique skills development component was added to the ASISA IFA Development Programme. The IFA internship programme, run by the ASISA Academy, provides black graduates interested in pursuing a career in financial planning with the opportunity to intern with established IFA practices for 12 months. Interns participate in a structured programme that offers a powerful combination of workreadiness input, theoretical knowledge and practical work experience delivered by the Academy in partnership with the IFA practices. “We are exceptionally proud of the fact that of the 2016 cohort of interns, eight were offered permanent employment by the IFA practices where they interned, while the remaining 11 found employment in the financial services sector or opted to further their studies,” says Campher. The 2017 interns completed their internship last month. There are 21 interns with 16 IFA practices in Cape Town and Johannesburg. The Academy’s third IFA internship programme gets underway this month with some 30 successful applicants participating in the Academy’s work readiness programme, before joining their IFA host practices. (For more about the internship programme, both financial planning graduates and IFA practices should go to index.php/programmes/ifa-internship). Campher says an important realisation for participating IFA practices has been that many of the interns are the first in their families to have achieved a degree and to have entered a professional occupation. He says understanding this is significant in providing meaningful guidance to the interns.

“The challenges facing black IFA practices will hopefully begin to receed,” he says. One of these challenges is that black IFAs have had to start from scratch. “In the past, IFAs have been white-owned because historically a lot of wealthy people who would use their services were white. “Another point is that the white advisory practices were started by people who had originally been tied agents with big life offices and this meant that they already had a cohort of clients.” Funding for black IFAs Securing affordable funding is sometimes a challenge for black-owned IFA practices and the ASISA ESD Fund has therefore created a loan facility for practices that have completed a developmental programme with the Fund and meet the funding criteria. “The interest rates under the facility will be lower than those offered by traditional financiers, especially for smaller developmental practices. The funding will largely be used by IFAs to unlock organic growth opportunities through hiring new staff, developing systems and boosting marketing initiatives,” says Campher. Fostering the Future The ASISA ESD Fund and the ASISA Academy, together with the ASISA Foundation, make up ASISA’s Foster the Future initiative. These three independent entities aim to empower vulnerable communities through financial literacy, facilitate employment for graduates and create jobs by building businesses. “I have to say that it’s commendable that ASISA members support these initiatives,” says Campher. “It couldn’t have happened without the support of the ASISA Board and the ASISA members.”

Leon Campher, CEO of the Association for Savings and Investment South Africa (ASISA).


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ast month, President Cyril Ramaphosa announced what many are calling a ‘compromise cabinet’ in a late-night and delayed announcement. A third of sitting cabinet members were fired while others were reshuffled. As NKC African Economics pointed out in a note to clients the following morning, this was a first-stage cleanout, with the rationalisation of portfolios expected to follow in a few months likely to see further casualties. Together with Budget 2018, ratings agencies should view the reshuffle as positive. Nhlanhla Nene is once again finance minister, Pravin Gordhan is the new minister of public enterprises, while Gwede Mantashe has replaced Msebenzi Zwane as minister of mineral resources.  I must confess I’m disappointed that certain individuals who are alleged to be implicated in state capture remain in office, a sign that the ANC puts its interests first and the interest of the country second. But, as RMB said in a note to clients: “President Ramaphosa still needs to win a general election next year, and to the extent that some of these ministers can help deliver an election, we view this to be a short-term compromise for long-term gain.”    And then there’s the matter of David Mabuza becoming South Africa’s deputy president. Allegations of corruption and violence have been levelled against him in the past. He is even accused of creating his own soldiers in Mpumalanga to carry out political killings against those threatening his business interests. Yet, NKC African Economics states that the hand wringing over the appointment of Mabuza as deputy president at the expense of a capable woman is off the mark. “The ANC national conference last December did not elect a woman as deputy to Ramaphosa and he cannot unilaterally override the congress decision – for better or worse Mabuza was always going to be deputy president of the country.”  On the whole, South Africans appear to see the new cabinet as positive, as it will surely place economic growth high on its agenda. We should all give President Ramaphosa our support. Janice @MMMagza

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31 March 2018




How did you get involved in financial services – was it something you always wanted to do? Like most kids, when I was growing up in a rural Limpopo village called Ga-Masemola, I aspired to be a medical doctor. Lack of finance made it impossible to pursue this dream. When I was awarded a scholarship to study in the USA, the dream was reignited. I then discovered that to do medicine in the USA, you first need what it is referred to as a Pre-Medicine degree; after that you can then do post graduate studies in Medicine. So, I decided to do an undergraduate degree majoring in mathematics. After completing my PhD in Mathematics, I thought lecturing and research in mathematics was what I was going to do for the rest of my life. The area of mathematics I specialised in (Functional Analysis) can be applied in finance/investments, hence the natural progression. In 2000 I was made an offer to work as a quantitative analyst. I could not say ‘no’ to that. Later in 2002, I was approached by an investment management firm – now called Taquanta and I have been in the investment management space since then.   What makes a good investment in today’s economic environment? This depends pretty much on one’s investment objectives and risk appetite. Investors with different objectives and risk appetites will need a different mix of investments, even if the prevalent economic environment is the same. That’s why seeking investment advice is key as a rule.  

What was your first investment and do you still have it? I had a flat in Pretoria that I was forced to sell, due to the challenges of having to deal with tenants and body corporates. Relocating to Cape Town did not make it easy to manage, especially considering that the area where the flat was located had deteriorated in value tremendously. What have been your best – and worst – financial moments? Landing my first job was my best financial moment, as that provided a reasonable foundation for my relationship with money. I struggle to recall the worst, so please let me get away with not answering this. Do you own Bitcoin? If not, why not? No. I don’t understand what drives Bitcoin, and  I consider putting money in the cryptocurrency a speculative activity, that I frown upon. For me, to invest in something, I need to have a reasonable grasp of the corresponding fundamental drivers, if any.


The SA Reserve Bank (SARB) has established the Financial Technology (FinTech) Programme to strategically assess the emergence of FinTech in a structured and organised manner, and to consider its regulatory implications. The SARB says the main goal of the programme is to track and analyse FinTech developments and to assist policymakers in formulating frameworks in response to these emerging innovations. Ashburton Investments is listing the Ashburton World Government Bond ETF on the JSE on 13 March 2018. The new Exchange Traded Fund (ETF) will track the Citi World Government Bond Index (WGBI) which invests in fixed-rate, local currency, investment grade sovereign bonds from over 20 developed and emerging market countries. The JSE will be the first exchange in the world to list the WGBI ETF and the new listing will, for the first time, give South African investors the opportunity to invest in global bonds on the JSE.  Award-winning global financial services group, Prescient Holdings, has announced two major leadership appointments within the group. Cheree Cheree Dyers, CEO, Dyers, CA (SA) & CFA, has Prescient Investment been appointed as CEO Management. of Prescient Investment Management, with Christopher Craddock appointed to fill Dyers’ former role of CEO of Prescient Securities. BDO South Africa has signed a Memorandum of Understanding with Independent Advisory, for Independent Advisory to form part of the BDO group from 1 April 2018. Once the transaction is concluded, Independent Advisory’s service offering will be offered as BDO Business Restructuring. Service offerings will include business rescue, restructuring, advisory, insolvencies and liquidations. The intention is for the company to trade as BDO Business Restructuring. The staff of Independent Advisory will become employees of BDO Business Restructuring and will continue to operate from their existing office locations in Stellenbosch and Johannesburg (Constantia Kloof). The intention is to establish an office with the complete BDO service offering in Stellenbosch.

31 March 2018

RICHARD RATTUE Managing Director, Compli-Serve SA


he collection and analysis of data is an area that has certainly grown in the last few years. Various activities undertaken in this field are colloquially known as ‘big data’ and the current narrative indicates that ‘big data’ is a really big deal, and that all businesses – large, medium and small – should take note now. The sheer volume of data produced in the world is simply mind-boggling. By way of example, American super chain store Walmart handles a million worldwide customer transactions every day, which it imports into proprietary databases estimated to contain 2.5 petabytes of data (that's what you get when you run out of terabytes to count). The world's banks are running 2.1 bn account transactions a day worldwide, proving just how big ‘big data’ is. It enables surfing and analysing vast fields of data to assist with customer segmentation, predictive customer support, predictive customer buying, behavioural analytics, and to predict security threats for detection, to name



A really big deal but a few areas, putting businesses at an advantage. The possibilities are endless for the financial sector, and banks and insurers have begun taking advantage of this – they are using increasingly sophisticated algorithms to profile customers and assist in predicting how, when and where fraud will occur. Providers of online systems to trade forex and other financial instruments likewise use big data analysis to place adverts where they sense it is more likely to hit home. This is all well and good for big businesses – but does it translate down to the SME environment? The answer is a resounding ‘yes’. Whether your business is large or small, it is an absolute necessity to understand what your customer is really thinking and wanting, rather than what you assume. There is a clear differentiation between businesses that analyse client data and behaviour against those that do not. As we move into an increasingly wired world, if we are not plugged in, we are going to be left behind.

Even simple steps for small businesses, like sending out customer surveys, are either not done at all, or done as a matter of routine. The response ratios are so low, it really makes no sense applying the results. We will undoubtedly see an increase in professional service providers. They will analyse your clients’ data using ‘big data’ principles at a small data level to give you the results needed to ensure that your business matches the requirements of your customers – and that you are not overtaken by technology.

It pays to be working with a prepared team.


Keeping the Protection of Personal Information Act (POPIA) in mind, however, is very important to remain compliant with data mining regulations. Small advisory businesses can start with small data, applying similar techniques that one sees in ‘big data’. All businesses – whatever size – hold useful data on their clients, which can be utilised for the customers' benefit. Data is a valuable information resource that can improve your client interactions.



31 March 2018

Raging Bull Awards celebrate unit trust industry’s star performers


he 22nd Raging Bull Awards took place on January 31, in Cape Town. These awards acknowledge the top performing unit trust funds across a range of sectors and recognise the best-performing unit trust management companies.  Raging Bull Award winning companies South African Management Company of the Year:  Allan Gray 2nd place: PSG 3rd place: Coronation    Offshore Management Company of the Year:  Investec and Nedgroup Investments (tie for first place)  Chairman’s Award for the Best Black Owned Asset Management Company: Vunani Fund Managers    The winning funds Straight performance over three years  1. Best South African Equity General Fund: Fairtree Equity Prescient Fund 2. Best South African Interest Bearing Fund: Fairtree Flexible Income Plus Prescient Fund  3. Best (SA Domiciled) Global Equity General Fund: Allan Gray-Orbis Global Equity Feeder Fund  4. Best (FSB Approved) Offshore Global Equity Fund: Orbis Global Equity Fund Riskadjusted performance over five years    Risk-adjusted performance over five years 1. Best South African Equity General Fund on a Risk-Adjusted Basis: Fairtree Equity Prescient Fund  2. Best South African Multi-Asset Equity Fund on a Risk-Adjusted Basis: NFB Ci Cautious Fund of Funds 

Second year in a row win for Platinum BCI Worldwide Flexible Fund

3 Best South African Multi-Asset Flexible Fund on a Risk-Adjusted Basis: Centaur BCI Flexible Fund 4. Best (FSB Approved) Offshore Global Asset Allocation Fund on a Risk-Adjusted Basis: Orbis Optimal SA Fund Winners of Raging Bull certificates include: Risk Adjusted Performance over five years: The top performers to December 31, 2017 on a risk-adjusted basis in the multi-asset and real estate sectors, plus the largest other Asisa sectors based on market capitalisation. South African Funds • Best Multi-asset Low-equity Fund: NFB Ci Cautious Fund of Funds • Best Multi-asset Mediumequity Fund: Aeon Balanced Prescient Fund • Best Multi-asset High-equity Fund: Investec Managed Fund • Best Interest-bearing Variableterm Fund: Absa Multi Managed Bond Fund • Best Interest-bearing Shortterm Fund: Atlantic BCI Stable Income Fund • Best Multi-asset Income Fund: Pan-African IP Income Hunter Fund • Best Real Estate Fund: Absa Property Equity Fund • Best Global Equity General Fund: Allan Gray-Orbis Global Equity Feeder Fund • Best Global Multi-asset Lowequity Fund: Allan Gray-Orbis Global Optimal Fund of Funds • Best Global Multi-asset Highequity Fund: Allan Gray-Orbis Global Fund of Funds • Best Global Real Estate Fund: Catalyst Global Real Estate Prescient Feeder Fund • Best Global Multi-asset Flexible Fund: Marriott International Growth Feeder Fund • Best Worldwide Multi-asset Flexible Fund: Platinum BCI Worldwide Flexible Fund

Mel Meltzer and Charolyn Pedlar, Platinum Portfolios.

For the second year in a row, the Platinum BCI Worldwide Flexible Fund was awarded a Raging Bull Certificate in the category Best Worldwide Multi-asset Flexible Fund: Top performance based on risk-adjusted returns for the five-year period to the end of December 2017.


he Platinum BCI Worldwide Flexible Fund was launched on 1 July 2011. The portfolio is managed by Mel Meltzer and Charolyn Pedlar at Platinum Portfolios. They have managed the portfolio since launch and have a combined experience of more than 50 years. The Platinum BCI Worldwide Flexible Fund can invest in a wide range of asset classes, including equities, fixed income, property and money market instruments, and the portfolio has the maximum flexibility to vary investments between local and offshore asset classes. Platinum’s primary focus is to own good businesses anywhere in the world. “We prefer companies with strong brands, sustainable debt levels, good free cash flow and a growing dividend,” says Meltzer. “We aim to buy these companies at a discount to fair value and hold them for the long term.” As with all Platinums portfolios, risk is top of mind. “To produce good risk-adjusted returns in the portfolios we focus on two main areas, which are process and quality. Firstly, we operate a systematic and disciplined investment process. This process has been developed and tested over many years. Secondly, Platinum’s stock-selection methodology focuses on finding good quality companies,” says Pedlar. “The portfolio currently has 75% of its investments offshore and a large portion of the local investments are fixed income instruments, which are providing the portfolio with returns of between 7% and 8% pa, with considerably less risk than local equities. Over the next few years investment returns will ultimately be driven by our stock selection process.” Meltzer adds: “As long-term investors, we do not buy companies based on how they are going to perform in the next six or twelve months, and importantly, we are not seduced by stock market noise. Having a longerterm view, allows us to buy companies based on their fundamentals and wait out periods where markets might be mispricing them.” Pedlar says that looking at the year ahead, they are moderately bullish on equities. “Improving global growth as well as tax reforms in the USA should be supportive for our companies.”

Thoughtful Investing for Private Clients our success is a result of our positive addiction to continuously improve our investment process

The Platinum BCI Worldwide Flexible Fund takes top spot - for the second year! BEST (SA DOMICILED) WORLDWIDE MULTI-ASSET FLEXIBLE FUND Top Risk Adjusted Performance by a Domestic Collective Investment Scheme - For the five-year period to the end of December 2017

T. 011 262-4820 | Block F, Pinmill Farm, 164 Katherine Street, Strathavon, 2031 PO Box 782755, Sandton, 2146 |

Platinum Portfolios (Pty) Ltd is an authorised Discretionary Financial Services Provider (FSP No. 641).



31 March 2018

Winners of Imbasa Yegolide Awards announced T he Batseta Council of Retirement Funds for South Africa (Batseta) announced the 2018 winners of the prestigious Imbasa Yegolide Awards at a ceremony held at the St George’s Hotel in Pretoria last month, rewarding providers of service excellence in the South African retirement fund industry. Speaking to over 350 members of the retirement fund industry present at the ceremony, Anne-Marie D’Alton, CEO of Batseta said: “The Awards have evolved since their inception in 2009. They no longer focus only on rewarding service providers, they have evolved as a platform to recognise retirement fund industry talent and celebrate excellence.”

Reducing employees’ financial vulnerability Motheo Financial Dialogues, developed by Momentum, won the Imbasa Yegolide Awards Fund Challenge in the category ‘Financial Control - Managing Expenditure’.


he latest Momentum/Unisa Consumer Financial Vulnerability Index (CFVI), which measures consumers’ perceptions of their financial state, shows that a lack of financial literacy is the main reason consumers are financially vulnerable. The term ‘Consumer Financial Vulnerability’ implies that consumers experience a sense of financial insecurity or an inability to cope financially. Many consumers are of course also retirement fund members by virtue of their employment. Katherine Barker, Head of FundsAtWork, says retirement funds should actively improve members’ financial literacy, thereby reducing their financial vulnerability. Barker encourages financial advisers to consider holistic and integrated retirement fund solutions, which include financial education programmes for addressing the crucial need to improve financial literacy. “This will help to reduce employees’ financial vulnerability, which in turn will protect business performance from the negative impact that distracted, unengaged employees, worried about personal money matters, have on productivity,” she says. The CFVI results for the fourth quarter of 2017 show small improvements in all four subindices, which suggest consumers felt slightly less financially insecure than during quarter three. However, consumers still remained in the ‘very exposed’ category with regards to income, savings and debt, and moved into the ‘mildly exposed’ category for expenditure. Why are consumers vulnerable? The research shows consumers are generally not financially literate and fail to plan for their

IMBASA YEGOLIDE AWARDS WINNERS LIST 2018 No Category Winner 1 Risk Benefit Underwriter of the Year 2 Custodian of the Year 3 Equities Manager of the Year 4 Manager of Managers of the Year (Multi-Manager) 5 Emerging Asset Manager of the Year 6 Alternative Asset Class Manager of the Year 7 Law Firm of the Year 8 Investment / Asset / Solutions Consultant of the Year 9 Training Provider of the Year 10 Overall Investment / Asset Manager of the Year 11 Employee Benefits Administrator of the Year 12 Employee Benefits Consultant of the Year 13 Transition Manager of the Year 14 Trust and Beneficiary Fund Administrator of the Year 15 Actuarial Firm of the Year 16 Bond Manager of the Year 17 Balanced Fund Manager of the Year 18 Technology Provider of the Year 19 Communications and Marketing Provider of the Year 20 Responsible Investment Manager of the Year 21 Responsible Investment Consultant / Service Provider of the Year

Sanlam Employee Benefits Group Risk Standard Bank Coronation Fund Managers Old Mutual Multi-Managers Legacy Africa Fund Managers Futuregrowth Asset Management Jonathan Mort Inc.

Old Mutual Corporate Consultants The Association of Savings and Investment SA (ASISA) 27four Investment Managers Verso Financial Services (Pty) Ltd Robson Savage (Pty) Ltd RisCura Solutions (Pty) Ltd Absa Trust Limited ARGEN Actuarial Solutions Futuregrowth Asset Management Allan Gray (Pty) Ltd Old Mutual Corporate EBnet Futuregrowth Asset Management Sukha and Associates

Fund Member Education Challenge Winners 1 Financial Control – Managing current expenditure 2 Financial Planning – Managing future income and expenditure 3 Product Choice – Choosing the right financial product 4 Financial Knowledge and Understanding 5 Special Recognition Award

finances in advance. It also highlights that consumers don’t budget and therefore tend to spend on their wants rather than on what they need. As a result, they end up spending more than what they earn. Consumers also don’t consider the risks when taking on more credit. Who is most vulnerable? The Momentum CFVI results show people earning below R50 000 per annum are most vulnerable. This suggests that the majority of South Africans experience serious financial challenges. According to the CFVI, 18 to 39 year olds are the most financially vulnerable age group. Another important insight is that it is fulltime employees, despite their salaries, wages and their high levels of job security, who are highly indebted. Pursuing a holistic and integrated retirement fund solution Momentum’s Effective Employee Index research confirms a very definite link between an individual’s financial wellness, their physical health and their ability to function optimally when they’re at work. Employees who are over-indebted are disengaged and their productivity levels drop, which in turn impacts

Momentum FundsAtWork Umbrella Funds PathCare Retirement Fund PathCare Retirement Fund No award was made in this category. Special Recognition Award handed to BP SA Provident Fund Natal Joint Municipal Pension and Provident Funds (NJMPF)

on a business’ performance. Barker believes that a holistic and integrated retirement value proposition, which includes financial education to reduce employees’ financial vulnerability, is crucial for protecting business productivity levels, and vital for unlocking greater value for both employer and employees. “This is why Momentum developed Motheo Financial Dialogues, a financial literacy programme that helps retirement fund members and all South Africans to create a solid foundation for their financial wellness journey.” The programme recently won the Imbasa Yegolide Awards Fund Challenge in the category ‘Financial Control – Managing Expenditure’, an accolade from the Batseta Council of Retirement Funds. The 300 000 plus members on Momentum’s FundsAtWork Umbrella Funds have access to the programme. “Quality consumer financial education, which can be accessed by members of retirement funds, can play an important role in helping them to become financially well, engaged and productive,” Barker says. “This is why we are extending the scope of the Motheo programme and hope to reach even more retirement fund members in the future.”

How much are distracted employees costing your clients’ business? When employees have financial worries, they cannot concentrate at work. Over-indebtedness causes physical and mental stress. Their productivity drops and the business’ bottom-line is at risk. Momentum’s FundsAtWork Umbrella Funds won the 2017 Imbasa Yegolide Awards Fund Challenge in the category ‘Financial Control - Managing Expenditure’ with Motheo Financial Dialogues. A financial education programme which helps employees to understand their payslip deductions, how to budget, get on top of debt and talk to their wider family about money. The FundsAtWork Umbrella Funds offer employers a holistic solution to ensure employees are financially healthy and engaged through: • Retirement savings • Preservation • Post-retirement annuities

• Flexible insurance • Health solutions • Rewards and incentives

• Financial literacy • Investment flexibility • Contribution flexibility

Don’t allow employees’ declining productivity, driven by money worries, to shipwreck your clients’ business. Let’s talk. Contact your Momentum specialist.

Momentum is a division of MMI Group Limited, an authorised financial services and credit provider.


Understanding the National Budget Speech isn’t easy. So we’ve made it easy for you.


How does this year’s Budget affect you? The budget proposals involve strengthening the public finances by raising taxes, reducing and reprioritising government spend.


REVENUE Announcements Value-Added Tax rate increases from 14% to 15% on 1 April 2018

Estate Duty rate increases from 20% to 25% on dutiable amount of estates of more than R30 million


Where is the money going to? Learning and Culture

Social Development

R351.1 bn

R259.4 bn

Economic Development


R200.1 bn

R194.2 bn

Peace and Security

R200.8 bn

Limited relief for the effect of inflation in adjusting Personal Income Tax rates resulting in additional tax of R6.8 billion

Donations Tax rate increases from 20% to 25% on donations of more than R30 million

Minister of Finance to approve six special economic zones for tax relief General Fuel Levy increases by 22 cents per litre and Road Accident Fund levy increases by 30 cents per litre on 4 April 2018

Increased Excise Duties on tobacco and alcohol



Community Development

General Public Services

R196.3 bn

R64.0 bn

Who won’t pay income tax? The amount an idividual can earn before being required to pay personal income tax. TAX THRESHOLDS

Increased Environmental taxes on plastic bags, incandescent light bulbs and vehicle emissions tax, and health promotion levy on sugary beverages are effective from 1 April 2018


R205.4 bn

TAX YEAR 2017/18

TAX YEAR 2018/19

Below age 65

R75 750

R78 150

Age 65 to 74

R117 300

R121 000

Age 75 and over

R131 150

R135 300

The new tax thresholds are due to increase in the tax rebates for individual taxpayers. TAX REBATES

TAX YEAR 2017/18

TAX YEAR 2018/19

Primary (aged below 65)

R13 635

R14 067

Secondary (aged 65 and over)

R7 479

R7 713

Tertiary (aged 75 and over)

R2 493

R2 574

How do we pay tax? Where is the money coming from?

Value-added tax

The money that government spends comes from taxes and levies. Government proposes raising additional tax revenue mainly from Value-Added Tax (VAT) and other taxes.

The VAT rate will increase from 14% to 15% from 1 April 2018. This increase will raise an additional R22.9 billion in revenue. Raising VAT is estimated to have the least harmful effect on growth over the period ahead.


R billion




















Increases in fuel levies effective on 4 April 2018


R1345 bn 100%

The General Fuel Levy will increase by 22 cents per litre and the Road Accident Fund Levy will increase by 30 cents. This will push up: •

the General Fuel Levy to R3.37 per litre of petrol and to R3.22 per litre of diesel

the Road Accident Fund Levy to R1.93 per litre for both petrol and diesel.


Increased sin taxes on alcohol and tobacco INCREASES BY


Malt beer

15c per 340ml can

Unfortified wine

23c per 750ml bottle

Financial years ending on any date between 1 March 2018 and 28 February 2019

Fortified wine

28c per 750ml bottle

0 – 335 000

0% of taxable turnover

Sparkling wine

73c per 750ml bottle

335 001 – 500 000

1% of taxable turnover above 335 000

Ciders and alcoholic fruit beverages

15c per 340ml can

500 001 – 750 000

1 650 + 2% of taxable turnover above 500 000


R4.80 per 750ml bottle


R1.22 per packet of 20

750 001 and above

6 650 + 3% of taxable turnover above 750 000

Cigarette tobacco

R1.37 per 50g

Pipe tobacco

39c per 25g


R6.45 per 23g

Income tax at what rate? TAXABLE INCOME OF INDIVIDUALS (R)

From 1 March 2018, the dutiable value of an estate exceeding R30 million will be taxed at a rate of 25% instead of the current rate of 20%.

The amount of donations exceeding R30 million will be taxed at a rate of 25% instead of the current rate of 20%.

Tax payable for the 2018/19 tax year

0 to 195 850

18% of taxable income

195 851 to 305 850

35 253 + 26% of taxable income above 195 850

305 851 to 423 300

63 853 + 31% of taxable income above 305 850

423 301 to 555 600

100 263 + 36% of taxable income above 423 300

555 601 to 708 310

147 891 + 39% of taxable income above 555 600

708 311 to 1 500 000 207 448 + 41% of taxable income above 708 310 1 500 001 and above

Estate Duty and Donations Tax

532 041 + 45% of taxable income above 1 500 000

Providing social support to the poor 18.1 million South Africans will be receiving social grants by 2020/21. In the 2018 Budget, government has increased social grants at a higher rate than before in order to compensate the poor for the increase in VAT.

TRUSTS Trusts other than special trusts

Rate of tax 45%




State Old Age Grant



Financial years ending on any date between 1 April 2018 and 31 March 2019

State Old Age Grant, over 75



War Veterans Grant




Disability Grant



Foster Care Grant



Care Dependency Grant



Child Support Grant



28% of taxable income

INCOME TAX: SMALL BUSINESS CORPORATIONS Financial years ending on any date between 1 April 2018 and 31 March 2019 Taxable Income (R)

Rate of Tax (R)

0 – 78 150

0% of taxable income

78 151 – 365 000

7% of taxable income above 78 150

365 001 – 550 000

20 080 + 21% of taxable income above 365 000

550 001 and above

58 930 + 28% of taxable income above 550 000



31 March 2018

Minimise pressure on financial teams during high-stress periods


he South African fiscal year has ended, but not without the stress associated with managing a business’ finances and operations when they are significantly intensified by additional regulatory requirements and comprehensive retrospective reporting. South African business leaders and financial teams have had to cross every ‘t’ and dot every ‘i’ and they also had to spend even more time double-checking their financial reporting whilst getting on with work as usual. Rich Preece, Global Leader of the Intuit QuickBooks accountant business, notes that these stresses and long hours take a toll on the morale and performance of business owners and their staff. “This is even more applicable to small businesses that have far fewer employees to designate tasks to,” he says. Preece provides three tips to eliminate financial year-end stress:

information and having that data available anytime, anywhere and quickly cross-referenced with just one click. Not only does online technology offer a convenient solution to many of the problems that arise at financial year-end, it is also a far more cost-effective option for small businesses working with tighter budgets. Leading companies across the globe, like Intuit QuickBooks, are constantly working on products to help businesses be more efficient in their processes. A recent example would be the use of Artificial Intelligence (AI). QuickBooks has recently introduced the QB Assistant, an AI-powered chatbot that combines data-driven insights and natural language processing. The QB Assistant was designed to help business owners stay on top of their finances with ease. Using a smartphone, business leaders can ask the bot questions about their businesses or finances and get answers instantly.

1. Technology is key In today’s business environment, it is crucial for organisations to incorporate technological innovations into every aspect of their business – sales, marketing, operations and (of course) financial procedures. Making use of the right digital tools and online accounting software can mean the difference between spending hours manually gathering

2. Draw on a network of experts Owning and managing a small business requires many skills, from marketing to inventory management to customer service to accounting. Some of these skills require an expertise that can be outsourced, allowing an owner and their staff to focus on better serving customers and growing their business. Drawing on a network of experts in tax, marketing and other specialised fields can help


minimise the strain on employees during highstress, time-intensive periods. 3. Keep ahead of the game Where business owners can, they should have anticipated requirements well in advance – whether they are related to the company’s finances or other aspects of the business that may pick up around financial year-end, such as vendor on-boarding or product restocks. Addressing requirements in advance can also help alleviate any added stress that results from unexpected hurdles or delays in process. Leveraging online tools that enable owners to assign tasks with due dates on a monthly, quarterly and annual basis can help plan long-term for known deliverables. “The next fiscal year-end doesn’t need to be so daunting. The secret to a successful and less stressful financial year-end is to plan where possible and to make use of the expert support that is available,” Preece says.

Rich Preece, Global Leader of Intuit QuickBooks

2018/02/21 5:25 PM

March 2018 | VOLUME 16



ity Volatilis back

(page ii)

Global equities are still the place to be (page iv)

Strong growth opportunities in China and India (page xi)



VOLATILITY IS BACK Last month, global stock markets suffered their worst sell-off in years. The plunge started in Wall Street which led to a fall in Asian markets as well as European markets. Volatility also rose, according to the VIX index. Despite all the rumbling, the market managed to come back rather nicely, but with a lesson for investors: the days of low-volatility markets are over. MoneyMarketing considers the question: Was this market turmoil just a bump in the road – or could it be an indication that another sell-off isn’t far away?

Why you should embrace market sell-offs

No new bear market for equities


ichael Spinks, co-Head of Multi-Asset Growth at Investec Asset Management, says the market sell off was interpreted as a broad correction triggered by rising bond yields. There was also a fear that evidence of accelerating wage growth in America would translate into a more rapidly rising inflationary environment than previously expected – and hence require further Central Bank tightening. “It is hard to see this sell-off as an inflection point into a new bear market for equities,” Spinks adds.  “This earnings season has been positive and broad economic growth has been better than forecast.” He points out that bear markets typically develop when growth expectations are undermined by monetary policy tightening, designed to reduce inflation through curtailing the pace of underlying economic expansion.   “This is not the case currently with future rate increases broadly expected by the market and in line with economic strength. That being said, we entered this year ‘priced for perfection’ and earnings expectations were increasingly reflected in prices, a situation that was very different to the start of last year.” While the fundamental backdrop does not give cause for concern and recessionary indicators are benign, he says the valuation case has been increasingly hard to justify and positioning has also become increasingly crowded in equities.  “This shift was notable over the past few months with many investors getting pulled into what has been a distrusted and generally under-invested bull market.”  Last month’s sharp drops in equity markets are consistent with ‘an unwind’ of leveraged positions causing their own self-fulfilling market falls.  “In our view, this volatility is caused by crowded positioning more than a fundamental rethink of corporate prospects or recessionary {II}

fears, a position which is justified by the sell-off taking place across the board and not focused on particularly cyclical sectors.” Interestingly, currency market volatility has remained benign and emerging markets have outperformed, which is suggestive of positioning being most heavy in the US equity market, he adds.  “We had reduced risk in our Growth multiasset strategies over the latter part of last year and at the start of this year have given back some of our returns generated by profitable strategies held last year.   “Among defensive positions, our US and Canadian government bond exposure have detracted from returns over the short year to date period, however the structural macro-economic rationale for their inclusion is maintained. These positions continue to play a role in balancing portfolio risk for the market environment ahead.”  Other defensive currency exposure, such as the position in the Japanese yen, is expected to provide an offset to any continued Growth asset weakness, supported by positioning and its own economic fundamentals, he says. “In terms of recent actions, we cut further our directional equity exposure prior to the worst of the February US equity falls and we will maintain an active approach in re-allocating those assets.  “Given the indiscriminate nature of the sell-off, our stance is to look for specific companies that we want to own on a long term view and where prices are now more attractive. Overall we maintain a defensive stance and stand ready for a more volatile environment.” The question arises as to whether last month’s sell-off means that the US Federal Reserve will still raise rates this month.  “To quote the President of the NY Fed, who commented that, ‘so far, I’d say this is small potatoes’ – a March hike is still 85% priced,” says Russell Silberston, Head of Multi-Asset Absolute Return at Investec Asset Management. “I would change my mind if the selloff in equity markets becomes something more pernicious, or has systemic consequences. At the moment, I believe the barrier for the Fed to pause is very high. On the other hand, I think some of the more rate-bearish narrative is overblown. The Fed will continue to be slow, steady and considered.”


eople claiming competence in predicting market movements should be approached with a fair degree of caution. That’s the word from Philipp Wörz, Fund Manager, at PSG Asset Management. “That said, we are now nine years into the current bull market. On many measures, global markets are trading at expensive valuation levels, with fewer attractive opportunities and lower expected future returns. Fortunately, the divergence in company valuations within the market and across geographies is wide, which provides investors that are willing to turn over stones and take a long-term view with a continuous flow of great opportunities.” Wörz believes that a sell-off can hold attractive buying opportunities for those with a long-term outlook. “Not many people object when goods go on sale at their favourite store. As difficult as it can be at the time, one should embrace market sell-offs. They are the ideal breeding ground for fear and uncertainty, which patient investors can use to their advantage to generate superior long-term returns.” In fact, Wörz says that being contrarian and having a long-term approach are two of the few competitive edges available to investors in a world where everyone has access to the same information and where market pricing is increasingly driven by short-term events. “We would, however, caution investors that even post the sell-off, overall valuations are still expensive when compared to history and one should be selective when allocating capital.”  He cautions that while faster-than-expected rate rises have generally been described as the main drivers of the recent correction, in his view markets are too complex to apportion blame on a couple of factors. “To put the recent February market drop into context, after a prolonged period of calm where the S&P 500 Index delivered a positive total return for a record 15 consecutive months, a small correction should come as no surprise. “People tend to extrapolate the recent past and forget that corrections happen regularly – the S&P 500 last saw corrections of 10% or more in early 2016 and 2015. In our view, one shouldn’t lose context of the fact that even after the recent sell-off, global markets were merely back at December 2017 levels.”

31 March 2018

What caused the market rout


ccording to Dave Mohr (Chief Investment Strategist) and Izak Odendaal (Investment Strategist), at Old Mutual Multi-Managers, last month’s sell-off in global markets was triggered by rising bond yields. “Bond markets priced in higher interest rates due to stronger economic growth in the US, Europe and elsewhere. Through the first month of this year, equities rose in tandem with bond yields, but the trigger for the equity slump was the release of the US employment report for January. It showed that wage growth had jumped to 2.9%, the fastest pace since 2009 (although not a historically high rate).” According to Mohr and Odendaal, central banks, including the US Federal Reserve, place great weight on the Phillips Curve – the idea that rising wage growth will translate into higher inflation. “Hence the market worries that the Federal Reserve will now hike interest rates faster than expected. However, the evidence that wage growth causes inflation is ambiguous and central banks are still likely to proceed gradually and carefully in removing the post-financial crisis emergency stimulus.”  In fact, the Fed will welcome faster wage growth as it is also a sign of a healthy labour market. “They wanted to achieve wage growth and inflation and it seems unlikely that they will overreact when it materialises. Rather than causing panic among Fed officials that the economy is overheating and rates need to be jacked up quickly, it should provide comfort that the era of ultra-low rates has achieved some success and that they can continue to gently raise interest rates to more normal levels. “It’s important to remember that interest rates are rising for the right reason, namely that economic growth has picked up, and not because of runaway inflation.”  According to Mohr and Odendaal, the sell-off seems to have been exacerbated by the unwinding of trades betting on low volatility. “The market rally of the past few years occurred with historically low volatility. Throughout 2017, there was not a single day when the S&P500 lost 3% or more, and the CBOE Volatility Index (VIX), a measure of implied volatility on the US equity market, fell to a record low level by the start of the year. “Volatility in other asset classes has also been historically low. In the process, volatility went from a by-product of market conditions to an asset class in itself, with a range of strategies, some of them geared, betting on low volatility and driving it lower in the process.”   This included new-fangled products sold to unsuspecting retail investors who suffered huge losses last month. “One exchange traded note that moved in the opposite direction to the VIX enjoyed a 600% return between January 2016 and 2018. However, it plunged 95% in February and had to be shut down when the VIX jumped from 10 to 37. The return of volatility will shake off some of the excesses and is therefore not entirely a bad thing. However, it’s not pleasant.” 

Mohr and Odendaal say that in the midst of the market turmoil, the latest ISM Index, one of the most up-to-date economic indicators from the US economy, showed very healthy levels of activity in manufacturing and services. “So the market is not expressing concern over falling growth or even deflation (as the big corrections in 2015 and early 2016 did), but rather over rising interest rates. Economic fundamentals remain solid and this means companies can still grow profits, which is what long-term investors should care about.”  The buoyant global economy in turn is unlikely to be impacted by market volatility. “Financial market volatility can impact real economic activity mainly through three channels: credit, wealth effects and exchange rate fluctuations.”  In a banking crisis, as seen in 2008, banks freeze provision to households and firms, and even call in loans, which severely curtail production and trade. However, Mohr and Odendaal point out that there is no sign of stress in the banking system yet, or in the corporate bond market. “A wealth effect is when consumers feel richer or poorer and adjust spending accordingly. Gains in equity markets have been wiped out for this year, but at the end of December, US household net wealth was at a record high level relative to income. “Finally, massive exchange rate movements can cause havoc, as South Africans know only too well. But there hasn’t been a huge surge in the dollar as was the case in 2008.” The lesson to be learned from the market plunge in February, they say, is that the US still matters most. “The sell-off started in the US and then spread across the world from there. As riveting (and frustrating) as our local politics are, investors need to keep an eye on what happens in America.  “Markets often shoot first and ask questions later. The sell-off was triggered by a single data point on wage growth from a month when the labour market was influenced by a heavy storm across the northeastern US. This could be revised away in future and is therefore hardly a convincing sign of inflation.”  Mohr and Odendaal say that to never be a forced seller of assets is a huge advantage as highly-geared investors are often forced to sell as asset values fall below outstanding loan values. “When the squeeze is on, these traders sell what they can, not what they would prefer. On the other hand, long-term investors in simple but sturdy products like balanced funds don’t have to respond to such market moves and can just sit tight. If anything, volatility creates opportunities to pick up a few bargains. “A related point is to avoid investments that you don’t understand even though they might have enjoyed stellar returns. This includes the short-term volatility products and cryptocurrencies.”  Mohr and Odendaal are of the opinion that over the long term, corrections such as those of the past weeks don’t meaningfully influence returns, but investors’ reactions to them do: “As Jason Zweig wrote in the Wall Street Journal: “The stock market didn’t get tested – you did.”

Selloff no surprise


he recent turn of market volatility and related global equity sell-off shouldn’t have taken market participants by surprise, says Steven Schultz, Head of Investment Marketing at Momentum Investments. “The US economic expansion is certainly starting to look long in the tooth, but importantly, it could still have a way to go. “It has been running for 104 months; this is just 16 months short of the longest economic upswing experienced in recorded history. Evidence of this heightened investor euphoria can be directly referenced in the perpetual US and global stock market gains that have been observed over the past decade.” He views the largest known risk to the global economy and investors alike to presently be the prospect of a hasty increase in interest rates by global central banks. “It is, however, worth noting that much of this recent market anxiety derives directly from the prospect of US rate interest rate increases, as opposed to several of the other major global central banks, which are likely to remain accommodative well into 2018.” {III}


JOHN CHRISTY Orbis investment team



he FTSE World Index rose 24% in 2017, keeping the current bull market alive for a ninth year. While this has been glorious for global equity investors – and it is gratifying that the Orbis Global Equity Fund has performed even better – future stock market returns hardly look appealing at current valuations. However, the world looks different to a bottom-up stock-picker. Financial services From a global perspective, few parts of the market have offered abundant bargains in recent years. Financial services is one exception. Over the past two decades, the sector has rarely traded at this big a discount to the global index. KB Financial Group, Korea’s largest bank, and American International Group, a global insurer, are both reasonable quality businesses on a firmer footing than they were in the past. Sberbank, the dominant retail bank in Russia, offers the kind of investment credentials that have become all too rare these days. How often does one find a dominant, competitively advantaged market leader with 20%+ return-on-equity trading at only seven times earnings? A less traditional financial business is PayPal, the payments technology leader. As a newer business model, it is the hardest of the group to value. The stock looks expensive at first glance because the company’s profits are perennially weighed down

DUGGAN MATTHEWS Chief Investment Officer, Marriott Asset Management 


fter a number of good years for global equities, recent market swings have caused financial anxiety for many investors. Although periods of short term volatility should be expected when investing in equities, the protracted period of relatively ‘smooth’ returns has heightened investors’ sensitivity towards short term market declines. Marriott is of the view that equity investors, who are able to ride out the volatility by maintaining a long term perspective, will be rewarded with returns well ahead of cash and bonds in the years ahead due to the following: Dividend yields in line with historic averages In his 1989 letter to Berkshire Hathaway investors, Warren Buffett famously stated that he, ‘would rather buy a wonderful company at a fair price than a fair company at a wonderful price’. Marriott only invests in high quality dividend paying companies. The chart highlights that current dividend yields, for the companies we hold, are not far off levels considered to be fair from a historic perspective. {IV}

31 March 2018

by heavy marketing and product development expenses, but we regard these as investments that should produce benefits well beyond the short term. Cybersecurity Along with greater online transaction activity, cybersecurity breaches are also becoming more common. Their cost to global economic activity is already comparable to narcotics, piracy, and car crashes. Companies have rushed to plug gaps in their security, but despite a surplus of options there is a scarcity of firms that can provide unified, highquality expertise. We believe Symantec is an attractive exception. The company sells software to consumers under the Norton brand, and to enterprises under a variety of product lines. Tobacco At the opposite end of the technology spectrum, the Fund holds shares of two UK-based tobacco companies: British American Tobacco and Imperial Brands. Tobacco shares have underperformed over the last six months, in part due to the US regulator exploring whether to reduce the nicotine in cigarettes to very low levels. That could happen – but the evidence so far suggests it would hurt smokers, who seem to respond by smoking more cigarettes to get their usual nicotine hit. We therefore expect the current regulatory stance to

remain in place. If that be the case, the future for tobacco companies could look a lot like the past. Japan In 2017, Japan quietly outperformed other world stock markets (in US$ terms). But all Japanese shares have not benefited equally; Japan is home to some of the widest valuation dispersions of any region. The Fund currently holds a cluster of value shares in Japan, including trading company Mitsubishi and oil and gas producer INPEX. China Outside of Japan, holdings elsewhere in Asia constitute the most noticeable concentration in the Fund. Much of that exposure is to Chinese shares. But this exposure is a result of our stock selections, not a driver of them. The Fund’s weight in China is almost entirely in just a handful of internet-related shares, including NetEase and The Fund’s positioning Overall, the stocks discussed account for roughly a quarter of the Fund and less than 2% of the World Index. Individually, these shares represent some of the ideas that our investment professionals find most compelling on a bottom-up basis. As always, our own money is invested alongside yours, and we hope you’ll share our enthusiasm for the Fund’s positioning.


Below average inflation For almost two decades, inflation has remained in the region of 2% due to the benefits of globalisation and the impact of technology. Looking ahead, technology is likely to continue to keep inflation in check when contemplating its impact on wages (via automation), competition (via ecommerce) and production (via Artificial Intelligence and Data Analytics). Inflation erodes returns, thus below average inflation suggest better, real returns (returns over and above inflation) from equities over the longer term. Below average interest rates Whilst US interest rates are expected to rise in 2018, cash and bond yields are likely to be lower than they have averaged in the past due to lower inflation and the current over indebtedness of the global economy. According to the Institute of Institutional Finance, global debt levels rose to a record high of $233 tn dollars in the 3rd quarter of 2017. The global ratio of debt-to-GDP is above 300%. This huge debt burden will likely limit the extent interest rates can rise in the years ahead as too many hikes

would trigger a recession. Lower cash and bond yields increase the relative attractiveness of equities. A robust growth outlook The IMF forecasts that every major economy will grow in 2018. India is expected to be the fastest growing big economy, with China not far behind. Importantly the world’s biggest economy – the US – is also in good shape: business confidence is high; jobs are plentiful; wages are growing; and tax cuts are poised to stimulate the economy further. Even Europe, with all its previous headaches, is expected to grow at a rate close to 2%. A healthy

global economy provides an ideal platform for robust dividend growth, the biggest driver of capital growth over the long term. As such, we expect dividend growth in the region of 5-7% from our chosen global equities. Despite current market volatility, Marriott is of the view that global equities should remain investors’ asset class of choice considering the observations and trends discussed in this article. Although market volatility will likely be higher in the years ahead, the potential gains on offer from the world’s best dividend paying companies suggest it will be worth it.

International Investment Portfolio Personalised Share Portfolio with access to the world’s best companies.

Invest for Income Contact our Communication Centre on 0800 336 555 or visit


31 March 2018

Save 3% on your next overseas forex transfer


xchange4free is a South African owned global foreign exchange, money transfer and payments company servicing over 50 000 private and corporate clients in over 40 countries worldwide. The company – an authorised Foreign Exchange Broker (or Intermediary) approved by the South African Reserve Bank (SARB) – services the needs of private clients investing offshore, emigrating, buying property abroad or sending regular money transfers overseas. The company was started in London in 2004 and has since traded in excess of US$10bn globally via offices in the UK, South Africa, Australia, Switzerland, Canada and Israel. Private Clients: Annual Foreign Exchange Limits Explained South African Residents (including South Africans living overseas who have not yet formally emigrated) may utilise the following allowances ‘Per Calendar Year’ to move money


out of the country: • R10m Foreign Investment – SARS Tax Clearance required (we assist with obtaining SARS tax clearances free within 2-5 days) • R1m Discretionary Allowance – No SARS Tax Clearance required In addition to the above allowances, private clients can also make use of the following to move money out of South Africa: • Formal Emigration – South Africans living overseas, particularly those with funds tied up in retirement annuities, pension related investments or some form of ‘blocked funds’, have the option to ‘Formally Emigrate’ from South Africa. This involves going through a formal emigration process with SARB and SARS that changes your status from being treated for Exchange Control Purposes only as a ‘Non-Resident’ as opposed to a ‘Resident’. This gives South Africans living overseas the freedom to move funds out of the country and access

relevant retirement funds without the normal limits and restrictions. • Non-Resident Funds – Money that has been transferred into South Africa from overseas is freely transferrable out of the country as long as clients can prove that these funds came into the country from overseas (reasonable ‘source’ of funds). This way to a better foreign exchange service Private individuals in South Africa have traditionally been poorly serviced and pay high foreign exchange premiums and costs to move money out of the country. The industry has typically been characterised by slow, unresponsive and unprofessional service, low levels of product and exchange control knowledge and very high costs, (when considering hidden forex margins and international transfer fees). Exchange4free has delivered an international standard forex service for South Africans by developing

a simple, transparent, highly competitive and user-friendly solution without you ever having to leave the comfort of your home or office. This unique, innovative and highly competitive ‘one-stop shop’ solution to South African private clients includes the following: • Bank beating forex rates • No Swift fees or hidden costs • Free SARS tax clearances in 2-5 days • Apply Online at https://exchange4free. Exchange4free also works and partners with leading financial advisers, investment managers, offshore fund platforms, estate agents and emigration firms to offer a value added service and better deal to their customers. Please visit for more information or call Matt Lawson on 011 453 7818 for any assistance. Exchange4free is an approved Foreign Exchange Intermediary by SARB and is an authorised Financial Services Provider (FSP 47434).


Relaxation of foreign investment limits welcomed


reasury’s announcement in last month’s Budget Review that foreign investment allocation would be increased from 25% to 30%, is good news for South African investors. Both retirement savings and other forms of investment benefit from geographic diversification, and asset allocators having greater freedom to set investment strategy in the context of their specific needs. This is according to Gavin Ralston, Head of Official Institutions and Thought Leadership at global asset manager, Schroders, who says this follows the pattern of several other countries. “Nations such as Chile and Canada also widened their investment restrictions as confidence in the resilience of their domestic markets increased,” adds Ralston. “The increased foreign investment limits will give investors a much wider and more diversified range of investment opportunities to choose from.” Quaniet Richards, Head of Institutional at Nedgroup Investments also welcomes the announcement to increase the limits of offshore investments. “This opens up the opportunity for retirement funds to further diversify offshore and gain access to sectors and currencies they would not have access to locally – especially in terms of the technology and consumer electronics sectors, healthcare and pharmaceuticals companies, the airline industry (Rolls Royce and Airbus) and renewable energy,” he says, adding that this is a very positive development for the retirement fund industry.


With the current rand strength, now is a good time to move money offshore,” says Andrew Rissik, MD, Forex and International Projects at Sable International. “South Africans are really good at taking money out when the rand is collapsing, but what we have at the moment is a relatively strong rand, that may strengthen slightly in the next months before dropping back. “If you’re a serious offshore investor or you’re looking for a plan B, now is a good time to move your assets.” Rissik adds that he is seeing a steady growth in interest in Portugal’s investment programmes. “The Golden Residence Permit Programme (GRPP), Portugal’s residency by investment programme with its access to EU residency through a capital investment in real estate is proving popular, especially as the UK tightens its residency / citizenship terms and conditions.” The GRPP enables South Africans to invest offshore and gain the right to live and work in

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Portugal without onerous residence conditions. Investors purchasing properties in Portugal that comply with the requisite value and position criteria, are eligible for the Golden visa, allowing them and their dependants to live and work in Portugal as well as to travel throughout the Schengen region. What makes Portugal attractive? “South Africans like the fact that you don’t have to relocate,” says Rissik. “Family reunification under Portuguese law means that the main investor can bring his or her spouse and dependent children onto a Golden Visa on the same terms, which gives them residence in Portugal and visa free travel in Schengen states.” Demand for the Portuguese passport has been on the rise over the last five years. The passport is now considered to be the fourth most powerful passport on the planet. This is up from the number five position it achieved in 2016. This in itself makes moving to Portugal and becoming a citizen an attractive proposition. How the Golden Residence Permit Programme works Through the purchase of a property in Portugal with a minimum value of €500 000, South African investors will be given access to the Portuguese government’s GRPP. The programme is aimed at attracting foreign investment into Portugal by offering investors EU residency. With teams in Portugal and South Africa, Sable International is positioned to help South Africans invest their way to EU residency and eventually, full citizenship. “The GRPP has become one of the most cost-effective methods of gaining residency in another country, and the addition of this more affordable property purchase category adds to the appeal,” says Rissik. “The GRPP allows you to continue living in South Africa while holding your Golden Visa. This means you and your family can continue living in South Africa while still holding EU residency rights. You don’t have to give up anything in order to become a part of this programme,” adds Rissik. A Golden Visa holder needs to spend seven days during year one in Portugal, 14 days in the next two years and 14 days the following two years to remain a Portuguese resident. “After six years of consecutive residency, you are then eligible to apply to become a Portuguese citizen – when you get to this point you will have to satisfy a few other criteria, after which you will have an EU passport,” explains Rissik.

Andrew Rissik, MD of Forex and International Projects at Sable International


31 March 2018



cquiring a second citizenship or permanent residency is very appealing to many South Africans. The main reason is to implement a Plan B to assure the family’s future by protecting against political risk and economical instability. Europe is still the preferred destination due to being the world’s largest single market and global trading block; as well as the lifestyle aspects and business/work opportunities on offer. But up until recently, the weak ZAR made investing in Europe almost unattainable. The recent strengthening of the rand against the Euro has made securing a Plan B in Europe affordable. When comparing last year’s high of R16.98 to this year’s low of R14.40 – securing permanent residency in Cyprus is now R775 000 cheaper; and acquiring a second citizenship is now a whopping R5.1m cheaper. Having a second citizenship in Europe gives unlimited access to the EU and the UK. Chief benefits include travelling, living, working and studying anywhere

Permanent residency is granted in four to six weeks on the ‘Fast Track’ programme. • Minimum property investment is €300 000 • This is the only programme in Europe where three generations in the same family (including both the parents and in-laws) all acquire residency by buying one property • Dependent children up to 25 qualify • The property can be rented out • There is no requirement to live in Cyprus; nor be domiciled there for tax.

in the European Economic Area; plus visa-free travel to many countries. Permanent residency is also attractive because it gives the permit holders the legal right to live in that country without having to go through an onerous immigration process should they wish to make a permanent move. Cyprus, an English-speaking, exBritish colony and full EU member currently has the most attractive second citizenship and permanent residency programmes available. Citizenship is granted in three months via Cyprus’ ‘Citizenship through investment’ programme: • It’s the quickest process in Europe • All dependent children up to age 28 and the parents of the investor qualify • It’s an investment – not a donation • The property can be rented out; and needs to be retained for only three years • Citizenship is passed down through descent offering a legacy to future generations • Minimum property investment is €2m.

Some lifestyle attractions that Cyprus offers are: • Euro-accredited education gives your children an advantage when they enter the global job market • Low cost but high standard of living • Europe on your doorstep • First world medical facilities and affordable healthcare with highly qualified doctors and specialists.

An astute offshore property investment that works for the short, medium and long term is the achievement of a lifetime. In Cyprus investing in the ‘Citizenship through Investment’ or the ‘Fast Track residency’ programme not only makes financial sense, but it will tangibly benefit your family for generations to come. Can you afford not to take advantage of this while both programmes are still open; and also while the rand is still relatively strong? Cypriot Realty – a proudly South African company in operation since 2008 with offices in Cape Town, Sandton and Cyprus – can assist you. “We are recognised and respected as southern Africa’s authoritative offshore investment specialist, promoting Cyprus as an ideal destination for acquiring EU citizenship or permanent residency, property investment, immigration or retirement and starting an EUbased business – we understand investor’s needs.”



3 GENERATIONS in the same family qualify Permanent residency is granted in 4 – 6 weeks Everyone’s permit is PERMANENT and FOR LIFE! No need to live in Cyprus.

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31 March 2018

CHINA – THE NEXT 30 YEARS Liang Du, CEO at Prescient Investment Management China, gives his perspective on President Xi Jinping’s mission to modernise China by 2035


ctober 2017 saw one of the most important events in the Chinese political landscape – the 19th Communist Party Congress. President Xi Jinping solidified his power in China, but more importantly, he provided a vision for China by incorporating his philosophy of a modern socialist country. President Xi’s speech was by no means an optimistic puff piece. After 30 years of development, the basic needs of the Chinese people have been met, although the China of today is still an unbalanced, unequal, polluted country with risks of corruption and financial leverage. His plan for China is to tackle these issues one by one. The plan to lead the country to ‘socialist modernisation’ by 2035 is structured around a few big ideas: • A nation of innovators. One of the most recurrent themes throughout President Xi’s speech is that all solutions require innovation, and that

China must move up the value chain. China needs to be far more innovative by moving away from copying and improving to innovating. • Supply side reform. The second important part is continued privatisation and the reorganisation of state assets, with the goal that state-owned enterprise assets should be productive, efficient and supportive of China’s long-term goals. • Raising intellectual and moral standards. President Xi also focused on cultural aspects and improving attributes like adherence to rules, being friendlier, less money orientated and developing an ethical and moral sense towards the community and country. • Rural vitalisation. The programme will continue to modernise agriculture. • A greener China. President Xi’s speech stressed the value of the environment, undertaking that China is not only going to pollute less, but also develop methods to roll back previously polluted areas and clean them up.

• Political reform. Although the word ‘democracy’ was mentioned many times during the speech, in this context it certainly does not mean one person, one vote. Ultimately, the Chinese version of democracy is a government that works for the people. What is clear from the plan is that the Chinese government is aware of the challenges facing the country and the hard work required to achieve its long-term plan and vision. What does it all mean for the South African investor? Today, Prescient Investment Management has one of the best performing funds in South Africa, dedicated to investing in China. With stability and planning, we think China will become bigger and better, with more and more global investors investing in the country. For South African investors, we believe it is well worth getting an understanding of the second largest capital market in the world – one that can bring rich rewards over the long-term. About Prescient Prescient Investment Management Ltd, is an authorised financial services provider (FSP 612). Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. CIS’s are traded at the ruling price and can engage in scrip lending and borrowing. Performance has been calculated using net NAV to NAV numbers with income reinvested. There is no guarantee in respect of capital or returns in a portfolio. Prescient Management Company (RF) (Pty) Ltd is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). For any additional information such as fund prices, fees, brochures, minimum disclosure documents and application forms please go to


Sculpture by Beth Diane Armstrong

Prescient Money Mktg 1-4 Tortoise Ad_r3.pdf



Liang Du, CEO at Prescient Investment Management China

10:29:17 AM




At Prescient, we’re in it for the long run. In fact, our first clients are still


our clients. They trust our proven, pragmatic approach; something we call


QuantPlus ® . It’s how we invest – in the past, today, and in the future. T o k n o w m o r e a b ou t a n y o f


ou r p r o d u c t s a n d s e r v i c e s ,


v i s i t w w w . p r e s c i e n t . c o. z a





31 March 2018

CRAIG FARLEY AND SIMON FINCH Co-Managers, Ashburton Chindia Equity Fund



hile the Ashburton Chindia Fund was launched over a decade ago, both China and India still offer strong growth profiles, relative stability and clear reform mandates. However, last year has also shown just how different they are from other emerging economies – and each other. This reinforces the need to approach each market slightly differently – in the case of India, from an active and selective standpoint, while in the case of China, in a more systematic way. Here, we look at recent events and how to access the opportunities that could drive these economies going forward. China – No more bull China’s internal market dynamics leaned bullish throughout 2017. This has been reflected in our significant overweight allocation to China, funded by a significant underweight allocation to India. We have skewed this exposure towards cyclical, high beta sectors – notably automotive, material and real estate stocks. However, of late, market action has begun to waver, indicating that the market has been a sell from early December onwards. Currently, the model suggests China’s short-term equity market prospects are far less attractive than they have been recently. Considering the recent ‘bearish’ signal, we have reduced China to a significant underweight country allocation through a combination of equity sales and put options.   However, while China adjusts after its bullish year, India is now looking to a brighter future following some short-term, self-inflicted pain in 2017. India - Prime Minister Modi’s party creates history For the first time since independence in 1947, one party, Prime Minister Narendra Modi’s Bharat Janata Party (BJP), now controls 19 of the 29 Indian states. Election results in the northern Indian state of Himachal Pradesh in December 2017, as well as in Modi’s ‘home’ state, Gujarat, went better than expected for the BJP. In Gujarat, the BJP was facing huge anti-incumbency pressure having been in power for five terms. It was challenged by the Congress Party led by Rahul Gandhi, who was only recently appointed as the party’s president. Although it secured an outright majority, winning more than 54% of the seats, the margin of victory was perhaps not as strong as hoped.  In Himachal Pradesh, the BJP ousted the Congress Party, winning twothirds of the seats and nearly 50% of the votes. To gain another state, taking the party into new territory, bodes well for 2018 and the run in to the 2019 general election. Modi’s saffron coloured party colours are spreading across the map of India, lifting sentiment across the capital markets, given Modi’s taste for taking bold decisions, with the Sensex Index rallying on the result. Job creation, housing availability and rising food price inflation will be critical issues for Modi in the early parts of 2018. It is widely expected that the Union Budget will deliver further reforms and additional measures to ensure the BJP gains greater control of the Upper House to push onwards with its plans for India. This strengthening political picture means we remain positive on Indian equities for 2018. 

LOUIS STASSEN Head of Global Developed Markets, Coronation



he impact of political volatility, in particular concerns about populism in Europe, subsided in 2017 as the long-awaited goldilocks scenario finally emerged: coordinated and synchronised global economic growth. In addition, the approval of US tax reform towards the end of last year also provided support. This contributed to gains of 24% (in US dollar terms) from global markets – a phenomenal return. Technology stocks (+39%) delivered the stand-out performance, while the energy sector was the only laggard despite the oil price gaining some 17%. Emerging markets rallied 38%. Even global bonds returned decent numbers. Against this strong backdrop, gold should have declined – yet it delivered a return of 14%. It is clear that great expectations and a lot of good news have been priced into the market. Accordingly, we believe complacency is setting in, and it is time to be a little bit more circumspect with regards to expectations and portfolio positioning.  The question is: how long can shareholder returns keep on surprising the market? Something to consider, which we have been highlighting over the years, is that there are three stakeholders who lay claim to the ‘profit pie’ (the value added by businesses): government, shareholders and labour. In the US, government has basically given up its say, or its involvement, in that value add pie. Shareholders have had a very, very good time at the expense of labour.

The share of labour as a percentage of the overall ‘pie’ has gone down for the last fifteen years, stabilising around lower levels. Some large companies are acknowledging this, and have recently paid once-off bonuses or increasing minimum wages following the US tax reform announcements. As pressure from labour is building, shareholders will probably have to take a step back, and give up some of their stake in the profit pool. So while US profit margins are at an all-time high (excluding the energy sector), it is probably unlikely that these margins can go much higher. Given our cautious position, the equity exposure in our global multi-asset class funds are probably at the lowest levels since these funds were launched. Global Managed has around 55% equity exposure, while Global Capital Plus has 26%. Following a strong performance in both alternative assets managers and technology stocks, which were key holdings over the years, we have started to reduce our exposure. While the portfolios continue to be skewed towards the US, we have introduced some European names, including Airbus and Vivendi. We continue to be positive about global listed property, but still hold virtually no government bonds as we believe that the market is distorted and longer-term interest rates should be much higher than current levels.   Our focus is on building robust portfolios that can withstand most outcomes. We believe our funds are not structured to benefit from only one specific outcome.



Putting your money to work since Day 1. From the day Coronation opened its doors, with so much change in the air, our purpose has never wavered. For 25 years, through the highs and the lows, we work every day to earn your trust and make your money work for you.

To invest your money today, visit Coronation is an authorised financial services provider and approved manager of collective investment schemes. Trust is Earned™.


31 March 2018


Graph 1: Returns strong but uneven for 2017

ROBERT TOWELL Portfolio Manager, Sasfin Wealth



GRAPH 1: RETURNS STRONG BUT UNEVEN FOR 2017 20% Cumulative returns

his year got off to a disappointing start for South African investors, as we saw most asset classes perform poorly in January. South African listed property sold off heavily, posting a return of nearly -10.0% in January, and the FTSE/JSE All Share Index returned 0.1%. SA inflation-linked bonds also lost ground, delivering -1.4%. That left SA nominal bonds and cash among the strongest performers for the month, with returns of 1.9% and 0.6%, respectively. To compound this, international bonds recorded mixed results, and the impressive returns from international equities in January were pared by the subsequent market correction and by rand strength vs the US dollar. As a result, SA investors experienced disappointing rand returns across most unit trusts for the first month of the year, and well into February. It is helpful to remind investors that a few weeks’ performance is not an indicator of future market returns or of longer-term fund performance. If we look at 2017 as an example, our financial markets managed to produce surprisingly good returns for the year; however, these returns were delivered very




0% Dec-16


Source I-Net




BEASSA All Bond Index



FTSE/JSE All Share Index

unevenly over the year. Importantly, in order to benefit, investors had to be patient and remain invested. As shown in the graph, SA equities returned less than 5% until June 2017, but by year-end the FTSE/JSE All Share Index had delivered 21%. SA bonds returned only around 5% through October, but then rallied strongly in the last two months to produce 10.2% for 2017. And listed property managed to give investors an excellent 17.2% total annual return, yet again this came largely in the second half of the year, having delivered less than 3.0% through May. Consequently, those investors who had avoided riskier assets like local equity because of previous disappointing returns would not

Source: I-Net







FTSE/JSE SA Listed Prop Index

have fully benefited from the equity rally. At the same time, investors who had kept away from interest rate-sensitive assets like local bonds and listed property because of forecasts for credit ratings downgrades, or the outcome of the ANC elective conference, or other unpredictable events, also would have missed out on some of these impressive gains. The Prudential Balanced Fund and other Prudential funds – did not miss out. Our team of fund managers was able to capture many of the available returns for our clients’ portfolios. This is because we maintained appropriate exposure to South African equities, bonds and listed property based on our estimates of each asset

class’ longer-term valuation. We did not attempt to forecast events, but actively managed our positioning as valuations rose and fell during the year. For example, the Prudential Balanced Fund returned 11.8% p.a. for the 12 months to 31 December 2017, outperforming the 10.0% recorded by its benchmark, the average fund return in the ASISA Multi-Asset High Equity category. Over longer periods to 31 December 2017 the fund has also consistently outperformed its benchmark, ranking within the top 25% (or top quartile) of its peers. Over five years it is ranked sixth out of 85 funds, and over 10 years it is fifth out of 45 funds. In hindsight, 2017 was a year in which patient investors were rewarded for remaining invested in their selected funds: a valuationbased approach, active management and diversification paid off. They were very generously compensated for braving the volatile interest rate market and ignoring the generally negative news environment. This shows why, despite a poor start to 2018, investors should not be discouraged or lose faith in their investments – patience is likely to be rewarded over time.

Long-term investing needs a long-term mind-set

he title of this piece seems simple enough, but in today’s fast paced world, with news flow instantaneous, sometimes fake and all too often cleverly positioned using mass data analytics, it is very difficult to have a long-term mind-set, even though at the start of your investment this was your goal. The best way to invest long term is to try and continually add to your investment over the years. This will include during times when the market is falling. Let’s take food giant Nestle as an example. The graph is the Total Return of Nestle for 20 years, 1997 to 2018, a return of 694% with dividends. The total return with dividends reinvested in the share is 1 224% or 13.08% per annum. This period includes the Asian Crisis, 9-11, the Dot Com Bubble and the Financial Crisis. Yet Nestle still delivered on average over 11% return per year to the investor that stayed the course. Now twenty years for most investors can seem too long a period to comprehend, especially if you only start investing at or after retirement. However, the return from Nestle for 10 years is 8.38% p.a. and 7.12% p.a. for five years, all well above USD inflation and solid returns. While hedge funds will try to add alpha during

times of market volatility and show large returns over a year or two, you will find it very difficult to find any hedge fund that has delivered 13% return p.a. for 20 years if any. What is the lesson here? Firstly, staying invested during times of market stress is extremely important and staying invested for long periods of time delivers alpha. Secondly, investors must not discount the power of dividends especially when re-invested. Thirdly, if during times of market stress an investor has free cash at their disposal to add to their portfolio it will enhance their long-term returns. Don’t sell at the bottom out of fear, choose strong companies with strong cash flows and limited debt, and buy more of them. With thousands of shares worldwide to choose

Source: Bloomberg

from, sometimes the most boring company is the one that delivers the best returns. Growth stories such as Facebook, Amazon and Tesla need not be ignored, but it is prudent to have large, world-leading, dividend-paying companies such as Nestle at the core of your portfolio. This applies to local investing as well. Standard Bank is not a growth company like Naspers, but the long-term return is impressive. Standard Bank has returned 16.12% pa in rand for 28 years from 1990 to 2018. Buy quality companies, stay invested, re-invest your dividends and where possible add to your investment during times of market stress. Happy investing and stay invested!


2017’s investing lessons still apply in 2018

PIETER HUGO MD, Prudential Unit Trusts



31 March 2018

Laurium Flexible Prescient Fund celebrates five years


lthough founded in 2008, and the rest of Africa where we believe when Laurium Capital entered that we have a competitive advantage in the unit trust market in picking stocks. Furthermore, returns of February 2013 with the launch of the international fund managers have shown Laurium Flexible Prescient Fund, the that most managers do not beat the Laurium brand was largely unknown index over time. in the retail market. The company had This approach has worked well so just over R2bn in hedge funds, which far, with the Fund ranked 2/46 funds at that time were not allowed to be in the South African Multi Asset marketed in South Africa. Flexible Sector since inception to 31 The decision to launch a fund in the January 2018, with an annualised SA Multi-Asset Flexible category was return of 15.3% after fees (104.0% the most obvious choice, given the cumulative) vs average peer hedge fund mindset and investment annualised return of 8.3% (46.0% banking DNA of the investment cumulative). These returns have been team. In our equity hedge funds, achieved in difficult markets. Key to we vary our net equity exposure to this performance is asset allocation the market through long and short positions. In the Laurium Flexible Prescient Fund, we GRAPH 1: CUMULATIVE RETURN cannot go short, but may vary 1 FEB 2013 TO 31 JAN 2018 our net exposure to the market by including cash or bonds, depending on relative valuations of these asset classes. For the international component, we have taken the approach to invest passively via ETFs, as we do not believe that Laurium has an edge in picking international stocks. We prefer our Source: Morningstar. Total Return Bid-Bid performance analysts to focus on South Africa

and good stock-picking based on strong fundamental analysis by an experienced team. (See graph 1). The Fund has managed to protect capital without sacrificing performance on the upside and has outperformed the market, but with much lower risk, as evidenced by the graph below, which shows return, Compound Annual Growth Rate (CAGR) vs Risk (volatility). (See graph 2). From humble beginnings, Laurium Capital now has assets under management of R20bn across hedge, equity, and multi-asset funds, with a broad, diversified investor base, both local and foreign.

Laurium is an authorised financial services provider (FSP No 34142). Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. Prescient Management Company (RF) (Pty) Ltd is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). CIS’s are traded at the ruling price and can engage in scrip lending and borrowing. Performance has been calculated on the A1 class using net NAV to NAV numbers with income reinvested. There is no guarantee in respect of capital or returns in a portfolio. For any additional information such as fund prices, fees, brochures, minimum disclosure documents and application forms please go to

Kim Hubner, Business Development and Marketing, Laurium capital


(from 1 Feb 2013 to 31 January 2018)

INSIDER CHRONICLES ADRIAN MEAGER General Manager, Warwick Asset Management


A handful of shares drove the market higher in 2017

ast year proved to be a very eventful year for the South African economy. We witnessed a cabinet reshuffle, the downgrading of our local and foreign credit rating, a technical recession, business confidence at multiyear lows, unemployment at a 13-year high, questionable economic policies, the election of Cyril Ramaphosa as ANC president and the list goes on. Although most of these events appeared to be negative, we saw the local stock exchange record a gain of 20.95% for 2017. So, where have these returns been generated, given that the local economy is in such a precarious position right now? The answer lies in a few companies that generate most of their earnings offshore and make up a substantial portion of the JSE All Share Index (ALSI). The JSE ALSI is a very concentrated index and even though there are 167 shares that make up the index, the top 10 shares make up more than half (55%) of the entire index by value. Out of those 10 shares, only two companies (Standard Bank and FirstRand), can be classified as companies that have the majority of their exposure to the South African economy. This starts to give us a better understanding of why the ALSI performed so well last year, while the South African economy grew less than 0.6%. The top 10 shares, along with their current weightings in the index and their returns achieved in 2017 are listed in the chart.

Company Naspers Richemont BHP Billiton Anglo American Standard Bank MTN Group Sasol FirstRand Limited British American Tobacco PLC Old Mutual

Current ALSI Return Weighting 19.40% 71.46% 7.53% 23.15% 6.88% 14.57% 3.33% 31.02% 3.27% 28.94% 3.24% 8.27% 3.12% 7.34% 2.84% 26.48% 2.62% 6.54% 2.42% 10.34%

Source: Bloomberg, Warwick Asset Management

If we consider the respective index weightings of these shares at the start of the year and the returns they generated in 2017, we will notice that more than three quarters of the ALSI’s 20.95% gain can be attributed to the top five shares in the index: Naspers, Richemont, BHP Billiton, Anglo American and Standard Bank. No wonder investors are questioning their individual portfolio returns when they see the index having performed so well. But the index as a whole has not performed that well and it is this handful of shares that drove the JSE ALSI to record highs in 2017. If you remove the impact of Naspers’ performance from the ALSI’s returns, we see a different picture, with returns significantly lower at around 9.2% for 2017.

Although most of our clients have been exposed to Naspers, Richemont, MTN Group, Sasol, FirstRand, and British American Tobacco for the last few years and have enjoyed the gains generated by these quality companies, we are acutely aware of the concentration risk they now present to the index, and as such we are not prepared to take on this risk at present, by taking an overweight position. At Warwick Asset Management, we not only have a duty to our clients to outperform our benchmark, but more importantly, we also have a duty to manage risk. Unfortunately, risk is something clients often forget when they see the market climbing higher, but it is not something we can overlook. Risk management forms an integral part of our overall investment process as we continue to search for investment opportunities that we feel will provide attractive risk-adjusted return for our clients.




31 March 2018

The rising popularity of socially responsible ETFs

Socially responsible investing is quickly becoming mainstream,” writes US independent investment analyst, Aaron Levitt on “No longer the realm of ‘hippies’, Environmental, Social and Governance (ESG) investing and its factors are now driving investment decisions in both large and retail portfolios. Several elements have caused the shift. But one thing is sure: ETFs continue to get more and more of those assets.” Levitt says the rise of ESG investing and the rise of ETFs have gone hand in hand. “As investors large and small have looked to incorporate socially responsible investment aspects into their portfolios, ETFs – through their low costs and transparency – have become a major recipient of investor money. After all, it’s easy to quickly hone in on an index or sub-index using ETFs.” ETF custodian and administrator, Brown Brothers Harriman & Co in partnership with, an independent authority on exchange-traded funds, annually carries out a survey to measure the expectations and preferences of sophisticated US ETF investors. The latest survey – published in December 2017 – finds greater interest in ESG ETFs, with 51% of investors finding ESG at least somewhat important compared with 37% last year. In the US, there are twice as many ESG ETFs now as there were two years ago, bringing the total to just 48, with a mere $5.9 bn in assets. “That’s just a fraction of the $77 bn sustainable fund universe, not to mention the $659 bn in smart beta ETFs. Of that 48, just 18 have a three-year track record,” says Barrons columnist, Abby Schultz. Indeed, ESG ETFs are very new. “The first one was launched in 2001 while the first ETF was launched in Canada in 1990. At the end of December 2017, the Global ESG ETF/ETF industry had 122 ETFs, with assets of over US$14bn,” says Deborah Fuhr, Managing Partner, co-founder, ETFGI. Fuhr adds that millennials have more interest in ESG than younger people did five to 10 years ago and she expects older people will also start to become more aware. Eaton Vance’s Q3 2017 Advisor Top-of-Mind Index (ATOMIX) survey

of 1 005 financial advisers, finds that areas within socially responsible investing that trigger the most client interest are clean energy (54%), followed by sustainability (44%) and climate change (41%). Human rights (33%), water issues (26%) and consumer protection (20%) follow on the list of client priorities. “Millennials are particularly drawn to thematic investments that provide

conduct intensive, online research and consult blogs and peer groups about investment choices and corporate track records,” says Eames. Fuhr says the ESG investment approach can be as simple as screening companies out from an investor’s universe that rank poorly on ESG criteria, or complex and rigorous where investors can incorporate specific ESG data to include companies or sectors.

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solutions to social and environmental issues,” says Anthony Eames, Director of Responsible Investment Strategy at Calvert Research & Management. “Beyond looking for companies that are doing good work, they are also concerned about avoiding companies doing perceived harm, with a bad human rights or environmental record, for example,” he adds. The way millennials invest is markedly different from their predecessors. “These digital natives have wholeheartedly embraced social media, financial websites, and apps to inform and make their investment choices. Transparency and accountability are high on their lists of demands. Moreover, they are more likely than previous generations to

For the purposes of gathering data for its annual Global Sustainable Investment Review, the Global Sustainable Investment Alliance (GSIA), a collaboration of membershipbased sustainable investment organisations, uses a broad definition of sustainable investing: 1. Negative/exclusionary screening 2. Positive/best-in-class screening 3. Norms-based screening 4. Integration of ESG factors 5. Sustainability themed investing 6. Impact/community investing 7. Corporate engagement and shareholder action. According to GSIA, the biggest sustainable investment strategy globally is negative/exclusionary screening,

followed by ESG integration and corporate engagement/shareholder action. Negative screening is the largest strategy in Europe, while ESG integration now dominates in the United States, Canada, Australia/New Zealand and Asia ex Japan in assetweighted terms. Corporate engagement and shareholder action is the dominant strategy in Japan. Millennials are undoubtedly heading the charge into socially responsible investing, according to Levitt. “Driven by the generations passion of social justice and equality, many millennials have taken a shine to socially responsible investing’s focus on environmental, social and governance requirements. The vast bulk of the generation believes their portfolio, through the value of dollar voting, is a way to express social, political and environmental values. They are willing to support an organisation with their money and boycott those that don’t align with their values.” Women are more than twice as likely as men to consider investments that both deliver positive returns and make a positive impact. “Several recent studies, such as a 2014 paper by Morgan Stanley, found that women are more than two times likely than men to consider investments that both deliver positive returns and make a positive impact. That’s an important figure to understand as the Harvard Business Review pegs that women will control $22 tn in personal wealth by 2020,” Levitt adds. According to Fuhr, other drivers include the increase of ESG Recognition by governments and corporations, the launch of the United Nation’s Principles for Responsible Investment, fund mandates demanding governance requirements, stakeholder advocacy for social objectives, client demand for sustainable investments as well as foundations, pension funds and family offices wanting to align to a mission. She adds that a number of bespoke ESG ETFs have been launched, such as the United Nations Joint Staff Pension Fund. The Fund has $53bn billion in assets and has provided initial seeding to two low-carbon ETFs from both State Street and BlackRock.


31 March 2018


Balanced funds: time for a relook


ndex-tracking has attracted a lot of attention from the media and active managers. The arguments for and against are well documented and, as with any debate, there are always three sides to the story. 2017 seems to have been the year for index-tracking to shake off any second rate mantle it may have been handed and show investors that index-tracking is anything but passive and a credible competitor for actively managed balanced funds. The Satrix Balanced Index Fund has demonstrated this best, ending the 2017 year as the second best performing balanced fund overall and the top performing index-tracking balanced fund. All index-tracking balanced funds are not equal. They tend to differentiate themselves in a few areas: • Asset Allocation – they do not all have the same strategic allocation to available asset classes • They do not all include an allocation to all investable asset classes • Whilst the vast majority of funds do include index trackers in each of the underlying asset classes, some of them do use enhanced indexing in an attempt to boost alpha • The frequency of rebalancing the strategic asset allocation differs. These differences become important when comparing performance over time and when choosing which index-tracking balanced fund to invest in. What makes the Satrix fund unique? The Satrix Balanced Index Fund has the following unique traits: • The fund has a strategic asset allocation which is rebalanced semi-annually • It has a unique equity SmartCore™ • A 70% allocation to equities – 55% local SA equities and 15% offshore equities • A small allocation to local cash of 5% • An annual management fee of 0.35% + VAT for direct retail clients and 0.25% + VAT via LISPs

Equity exposure matters The most differentiating feature of the Satrix fund compared to its peers in the same category is its equity SmartCore™. The SmartCore™ is a proprietary Satrix index and was launched in 2013. Three indices are combined to make up the SmartCore™, representing the 55% local SA equity exposure of the fund. • 13.75% S&P Quality South Africa Index • 13.75% Proprietary Satrix Stable Dividend Index • 27.50% Proprietary Satrix Momentum Index Each index brings complementary but different equity exposure to the core of the fund which makes sure it captures the type of returns it is targeting from the SA equity market. The Satrix Momentum Index invests in companies/shares which exhibit price momentum or positive price movements (over 6- and 12-months) as well as sentiment (expressed through sell-side earnings revisions and surprises) signals. It invests in companies that are already doing well or are expected to do well. The index is rebalanced every six weeks. The Satrix Stable Dividend Index invests in companies that have grown or maintained their dividend yield and have a higher dividend yield relative to the market. This index is rebalanced every six months. The S&P Quality South Africa Index invests in quality companies with higher profitability as determined by return on equity, accruals ratio and financial leverage. This index is rebalanced every six months. Two of the strategies mentioned (Momentum and Quality) are also stand-alone Satrix unit trusts. The Satrix Quality Index Fund was the top performing fund in the South African EQ General category during 2017, while the Satrix Momentum Index Fund ranked number two.

Source: Morningstar

Source: Satrix

How has the SmartCore™ measured up? By combining these three strategies the SmartCore™ has been able to deliver better performance relative to the FTSE/JSE SWIX index. This is what you want in a fund where the equity exposure is the primary contributor to its performance over time.

Source: FTSE/JSE and Satrix

Source: Morningstar

Through a considered strategic asset allocation, a well-researched SmartCore™ and adherence to discipline, the Satrix Balanced Index Fund has demonstrated that it is a compelling contender in the multi-asset space. The unique composition of its equity SmartCore™ also makes it an excellent diversifier which blends well with actively managed balanced funds. The Satrix Balanced Index Fund is available on all LISPs. In some cases it needs to be accessed by request.

Disclaimer 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.




31 March 2018

Employee benefits: FAQs Pan-African financial services company, Alexander Forbes, answers FAQs about employee benefits in South Africa. Q: How effective is the traditional South African employee benefits system when it comes to addressing employees’ needs? A: Over the last decade of pension and tax reform, the concept of ‘employee benefits’ has effectively been whittled down to simply: retirement savings, group risk for income protection and, for some employers, medical aid schemes. For most employees, these are treated as a deduction from the total cost to company for an employee and, as such, come directly from an employee’s total package. Other concepts, previously considered ‘employee benefits’ such as housing assistance, education assistance, further medical assistance, transportation, funding for data access are, to a large part, now regarded as fringe

benefits and are taxable in the hands of employees. It is little wonder, then, that many employers have backed away from offering only the absolute basic in terms of ‘employee benefits’. Perhaps of greater concern is the fact that saving for retirement is simply not seen as the most pressing need for either employee or employer. If anything, saving for retirement is probably more of a first world luxury in that it presumes an individual has been able to use their 40 years of income generation to secure a home, fund their children’s education and training (so that they can become financially independent) and essentially built up a breadth and depth of asset base that provides some underpin for the retirement years. Under this scenario, saving for retirement makes sense because it replaces the loss of income that would typically fund the maintenance of this lifestyle post-retirement. But after multiple generations under apartheid, as many as 80% of South Africans simply don’t have that depth or breadth of a financial base. More importantly, 74% of South Africans over the age of 60 still live in multigenerational households,

where the reciprocity of caregiving is seen as a family affair. So ‘funding for retirement’ is hardly the most pressing concern here. A far more pressing need for employees is how to get out from under the financial demands of a ‘lens of responsibility’ that addresses the needs to day-today family life – throughout one’s financial journey. This is the so-called ‘black tax’ or “sandwich generation” problem. Q: In what way could the current employee benefits model change to provide employees with support through their lifetime financial journeys? A: Compulsory savings still plays an important “control function’ in all our lives. But for South Africa, at this point in its economic trajectory, perhaps a more pressing need is to be able to use those compulsory savings to address more than just retirement imperatives. By marrying compulsory savings to a digital and consultative process that helps employees determine how to optimally redeploy their savings to better achieve family needs, employers can transform

the current compulsory savings model into what could be better thought of as ‘a guided financial planning programme’. The win/win for employees is that the more they can apply their savings to address their personal priorities, the higher the likelihood that they will commit and engage with the process; and the more they engage, the greater the probability that they, in turn, will gain greater financial literacy and insight. But not all of these needs can be addressed within the ambit of the Pension Funds Act’s provision for compulsory savings. From this perspective, the employer needs to get involved – but not necessarily in ways that add costs to their EB programmes. For example, employers could facilitate the inclusion of an emergency savings vehicle that is both low cost (institutional pricing) and easy to activate (contributions could come direct from payroll. This would significantly improve financial stability, reduce payroll wastage from absenteeism and presenteeism, and keep employees from cashing in their long term savings to address emergencies.

Look beyond the price of group disability insurance


roup disability insurance in South Africa is highly commoditised, with decisions driven largely by price in many cases. While premiums for this highlyvalued employee benefit have increased over the last two years, Regard Budler, Managing Executive: Momentum Corporate Client Solutions, says that to unlock the real value of group disability benefits, employers and their financial advisers need to look beyond price. “Over the last few years, many claimants are tending to stay on disability longer, choosing the relative security of a generous disability benefit over what they perceive as a less secure return to work in a stagnating economy. More claims of longer duration inevitably result in higher premiums.” However, Budler believes that in an environment of rising premiums, the focus should not only be on price but rather on a holistic approach to disability insurance. The changing nature of disabilities and the role that prevention, early detection, rehabilitation and reskilling plays in reducing the direct and indirect costs of disability, for both employer and employee, should be key considerations. Ultimately having a more appropriate solution for your needs has more value than simply looking for a lower price on something that you do not need. A report on global disability from the World Health Organization (WHO) and the

World Bank highlights how non-communicable diseases (or chronic diseases of lifestyle) are playing an increasingly more significant role in disability claims. An analysis of Momentum’s claims experience over the last five years reflects this trend. Only 8% of claims were related to a communicable disease (like HIV/AIDS). In contrast, 43% of disability claims are still related to cancers. Given the increasing impact of lifestyle choices on disability, Budler believes engagement programmes that encourage healthy lifestyles are an essential ‘preventative’ building block. These programmes help to prevent the onset of chronic illness, which in turn reduces the risk of a lifestyle related disability. Early detection of health risks and timeous management also helps to reduce the severity and impact of the disability. For example, health assessments at workplace wellness days or occupational health clinics can help identify individuals with serious health risks. Rehabilitation is also key in minimising the negative impact on the employer’s bottom-line. Insurers and employers need to work together to aid rehabilitation, reskill if necessary, and facilitate recovery. This paves the way for a successful return to work and reduces the employer’s recruitment and skills replacement costs. Budler says that the positive results of a close employer-insurer partnership and proactive

management are evident in Momentum’s psychiatric-related claims. “The South African insurance industry is currently witnessing a sharp spike in psychiatric claims, largely due to the increasing financial stress employees experience in the current economic climate. However, thanks to early notification and proactive management, Momentum psychiatric claims have remained relatively stable, with only a small increase. This approach has a significant impact on the amount and duration of the claim.”   Intensive engagement with disability claimants has given Momentum valuable insights into employees’ needs through the various stages of disability. Budler says a holistic approach considers these needs and focuses on keeping the employee’s financial wellness intact. For example, many claimants need additional funds during the early stages of disability to cover shortfalls between actual medical costs and what their medical scheme covers. Rather than push already indebted employees towards expensive loans, a cash assistance benefit should be considered to cover these costs.

Regard Budler, Managing Executive: Momentum Corporate Client Solutions


Applying global best practice to provide a lifetime of financial well-being


FOR A LIFETIME DID YOU KNOW? Financially well people are healthier, happier and more engaged with their families, employers and society. At Alexander Forbes financial well-being is not a product or a programme. It’s the way we do business.

EMPLOYER improving company balance sheet

EMPLOYEE improving personal balance sheet



LET US MOVE YOU FROM RED TO GREEN ON OUR DIAL We’ve applied global best practice to provide employers and employees with a lifetime of financial well-being through a solutions-based approach that’s informed by years of research into behavioural economics and expertise across our various divisions. It is also enhanced by our ability to leverage off the knowledge of Mercer, the largest employee benefits provider globally.

Overall outcome = shifting your dial from red (poor financial health) to green (good financial health) by securing your financial well-being for a lifetime. Alexander Forbes research indicates that South African employers waste a staggering 35% of their payroll costs. This is as a result of employee productivity being reduced by medical and financial problems. We can help you eliminate this waste through our targeted financial well-being interventions – speak to us today.


Speak to our financial well-being consultant or email

Alexander Forbes Group Holdings Limited (registration number 2006/025226/06) Various businesses within the Alexander Forbes group are licensed financial services providers.




31 March 2018

Breach of cybersecurity ‘real threat’ to any business


hen it comes to cyber security, businesses should not become complacent and think that the latest firewall and antivirus software are adequate to protect them, says Gillian Wolman, Head of Litigation at RBS. “Management needs to constantly monitor the growing and threatening landscape and change the mindset from ‘it will never happen to us’ to ‘when it happens to us we will be prepared’ “A simple loss of a laptop/cell phone or a staff member picking up a memory stick and plugging it into a computer is sometimes all the hackers require to access your systems. Hackers will find a way to compromise your systems when you least expect it,” Wolman says. She adds that the way business runs through social media, mobile, big-data, cloud and all other digital strategies, “it will unavoidably expose them to all kinds of cyber-attacks and will repeatedly test current security systems.”

Wolman believes that systems must be continually monitored and investments made to regularly update and hire skilled staff to operate them. “A breach of cybersecurity is a real threat to any business and should be a topic of discussion on all management meeting agendas.” But just how does a business choose the right cyber insurance provider? Simon Campbell-Young, CEO, MyCyberCare, says many traditional insurance policies might, to a very limited extent, provide some coverage should a breach or another security incident occur, but no business in its right mind would rely on that. “It’s important when choosing a cyber insurance provider to remember that it’s not as simple as choosing regular insurance. There is very little standardisation in the cyber insurance industry, and the offerings from the different providers are bound to vary massively in terms of what is covered, and what is not.”

Comparing the various offerings and selecting coverage that meets your specific business needs is tricky, and you don’t want to be left with any crucial gaps in your coverage. “Therefore, before picking a cyber insurance policy, an organisation must have a very clear and thorough understanding of the cyber risks specific to itself.” When choosing a policy, ensure that the policy covers your unique and exact needs, and to do this, conversations with the business team, legal team, and technical are essential, so the risks that really matter are taken into account, says Campbell-Young. There are two major types of cyber risk coverage that organisations generally consider, and those are first-party coverage and third-party liability coverage. “The former will cover direct costs associated with responding to an attack, such as the leaking of personal customer data, and the theft, destruction or loss of any information resulting from a breach. It will also cover removing malware, cleaning the system, and

data recovery.” He warns that a security breach can give rise to significant associated costs, such as forensics and investigation into the cause and impact of the breach, as well as interruption to systems and the business, including losses occurred due to downtime. “Then, there’s the legal cost associated with determining notifications and regulatory obligations in the wake of an incident, as well as the costs incurred notifying any affected parties.”

Gillian Wolman, Head of Litigation, RBS

Simon CampbellYoung, CEO of MyCyberCare

Insurance underwriting – the what, why and how


hen it comes to insurance, people may find pricing of their monthly premium a bit mysterious. You might have had to explain to some of your clients why their premiums differed when some variables are changed or why their friends of the same age pay less for insurance. Consumers are sometimes unaware that the answer lies in insurance underwriting. Dr Marion Morkel, Chief Medical Officer, Sanlam says being an underwriter is like being a tightrope walker, “Essentially, underwriters predict the likelihood and extent of a claims pay-out over a policy’s lifetime. This means constantly balancing potential losses for an insurance company combined with affordable prices for clients.” Here, Dr Morkel answers some of the most frequently asked questions. These will enable intermediaries to teach their clients more about underwriting: What factors determine the client’s risk? From a life and medical insurance standpoint, we usually look at both your biosocial and medical data. Factors considered include: • Age (the younger you are, the better the risk generally as you are considered healthier and less likely to pass away)

• Gender (this is dependent on benefit type, one gender may outperform another). For instance claims statistics proves more young men than young women are involved in motor vehicle accidents • Smoker status • History of chronic disorders or significant medical events Insurers compare the data of each individual case against the data from decades of claims experience and clinically-based medicine, to predict your risk compared to the normal population. How can clients build a positive risk profile to pay lower premiums? This depends on the type of insurance being applied for. Evidence of a healthy lifestyle is always a good risk indicator. Insurers look at Body Mass Index, cholesterol levels, etc. However, some consumers have chronic disorders which may affect their risk indicators. They may be under the impression that disclosing such a disorder will create an adverse risk rating. On the contrary, having evidence of a well-controlled disease is a powerful factor for improving one’s risk profile. Evidence would be supported by regular GP visits, compliance with treatment and other lifestyle programmes.

What happens if your client accidentally omits information about their family health history? It is generally accepted that not everyone will be aware of all illnesses that have ever affected their family members. However, it is reasonable to expect one to be aware of significant medical disorders that impacted the longevity of family members in the past, or diseases that may be genetically linked. Not disclosing this becomes problematic when the client wants to claim. The insurer will have to consider if its initial underwriting decision would have differed had they disclosed these key facts in the first place. The outcome of this risk reassessment is purely based on the new information, and it is not punitive. There is no ‘stricter’ or added risk rating for not declaring the history previously and therefore the outcomes could be any of the following: • No change in the client’s risk rating • An increased risk rating or exclusions could be added. • The insurer can decline application for cover. Dr Marion Morkel, Chief Medical Officer, Sanlam





THE EXPERT LANDLORD: MANAGE YOUR RESIDENTIAL PROPERTY LIKE A PRO BY DAVID BEATTIE             You have a residential investment property. Perhaps you are already renting it out. But are you doing it like a pro and do you know how to maximise your return from it? In this book, property management expert David Beattie distils two decades of experience into easy-to-implement steps and shows you how to manage your property like a professional landlord.  His goal is to help you make more money in less time and with fewer hassles, by showing you how to run your property investment like a business; navigate and comply with South African rental laws with ease; attract, screen, place and keep high-quality tenants; ensure successful and consistent rent collection; and maintain your property with the least effort and money. The book also includes templates for all the documents the prospective landlord needs.

THINK YOURSELF RICH: A STEP-BY-STEP GUIDE TO FINANCIAL INDEPENDENCE BY MOROKA MODIBA This book is aimed at first-time earners who want to put themselves on the right path to financial independence. It provides an easyto-understand guide that explains in clear terms how to consciously choose and plan for a debt-free lifestyle and not only survive, but thrive, on the long-term journey towards financial freedom.  The book covers crucial issues about financial planning clearly and succinctly, including: • Why it is important to get rid of all unnecessary debt as quickly as possible • When you should start saving or investing

• • • • •

How to plan for emergencies How much and what kind of insurance you need How much of your income you should save How much of your income you should invest Where, how and when you should invest.

Theoretical information about budgets, financial plans and investment (including all important terminology for various investment options) is interwoven with relevant real life examples and scenarios that will inspire readers to set aside the time to design and write up a proper financial plan – and execute it. Each chapter builds on the previous one to help readers achieve their goals by sticking to their plans.

A SHORT HISTORY OF MOZAMBIQUE BY MALYN NEWITT This comprehensive history traces the evolution of modern Mozambique, from its early modern origins in the Indian Ocean trading system and the Portuguese maritime empire to the fifteen-year civil war that followed independence and the continued after effects. Though peace was achieved in 1992 through international mediation, Mozambique’s remarkable recovery has shown signs of stalling. Malyn Newitt explores the historical roots of Mozambican disunity and hampered development, beginning with the divisive effects of the slave trade, the drawing of colonial frontiers in the 1890s and the lasting particularities of the provinces. Following the nationalist guerrillas’ victory against the Portuguese in 1975, these regional divisions resurfaced in a civil war pitting the south against the north and centre. The settlement of the early 1990s is now under threat from a revived insurgency, and the ghosts of the past remain. This book seeks to distil this complex history, and to understand why, twenty-five years after the Peace Accord, Mozambicans still remain among the poorest people in the world.

Encouraging your clients to leave Breadline Africa a legacy in their Will offers an opportunity to change the lives of thousands of children in South Africa – with our infrastructure providing a safe, healthy environment in which they are able to learn and grow. A bequest to an NPO qualifies as a deduction for estate duty purposes provided it is made to a qualifying registered public benefit organisation. Leaving a legacy in a Will is one of the most valuable and lasting ways that your clients can support Breadline Africa’s work in developing phenomenal children, creating a chance for them to move out of poverty and change the future of South Africa.

Leave a legacy ...

Contact Marion Wagner +27 (0)21 418 0322

... change a child's life

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MoneyMarketing March 2018  

As well as featuring the latest in insurance and investing trends, MoneyMarketing’s March issue also includes its first Offshore Supplement...

MoneyMarketing March 2018  

As well as featuring the latest in insurance and investing trends, MoneyMarketing’s March issue also includes its first Offshore Supplement...