QUARTER 1 INSIGHTS 2018 SEE MONEY DIFFERENTLY - Nedgroup Investments
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QUARTER 1 INSIGHTS 2018 SEE MONEY DIFFERENTLY
FEATURES
2 When the dust settles – four themes for 2018 Nic Andrew
4 What opportunities will TFI transfers bring? Denver Keswell
6 Why a written investment plan is a good idea Jannie Leach
9 Investing offshore versus investing in offshore assets Denver Keswell & Seugnet de Villiers
13 Are Money Market funds too good to be true? Sean Segar
16 Rattling the cage – changing the view on sustainability in investments Peter Willis
18 End of an era JP Landman
OUR INVESTMENT APPROACH
We help you find Best of Breed™ fund managers and the right investment solution
When you invest, you want the most appropriate fund manager to look after your savings.
We assist you in this process by actively researching and appointing fund managers to manage our fund range.
Our independence is our strength
Our fund manager research process helps us to identify managers with specific traits that we believe will enable them to deliver superior
results over the long term.
We focus on monitoring fund managers so that you don’t have to
Things do change. To help you manage this, and to ensure that our range remains Best of BreedTM, we actively monitor and review the
appointed fund managers. If we think it is necessary, we will replace specific fund managers that are no longer deemed appropriate.
1
WHEN THE DUST SETTLES –
FOUR THEMES FOR 2018
I always find the December-holiday braai scene to be a good
gauge of what is on everyone’s minds. At the many that I
attended over the break, there were four clear and recurrent
themes which I believe have set the scene for the start of
2018.
1. THE ANC ELECTION
After a nerve-wracking build up to the ANC elective
conference in December, the country breathed a collective
sigh of relief with Cyril Ramaphosa’s victory. Although the
optimism was tempered somewhat by the compromised
nature of a number of top appointments, a number of
positive steps have been taken in the past few weeks. These
include credible appointments at our deeply troubled state-
owned enterprises and some proactive moves by the Asset
Forfeiture Unit. Encouragingly, the balance of power appears
to be shifting fairly quickly and strategically away from Zuma
and his cronies.
NIC ANDREW Sadly, after a decade of corruption and neglect, the
EXECUTIVE HEAD OF institutional capacity and financial position of the state
NEDGROUP INVESTMENTS means the recovery will be difficult and there is very little
wriggle room. Fortunately the base is so low, that simple
actions can make a material difference - especially to
confidence.
We all owe a debt of gratitude to both the independent
media and brave members of civil society who have played a
significant role in both exposing wrongdoing and championing
good governance. My wish is that as the honeymoon period
of CR17 subsides, the positive energy that has forced the
change so far is channelled towards sustainable growth and
inclusive nation building.
2. STEINHOFF
In early December news of irregularities at Steinhoff and the
sudden departure of CEO Markus Jooste broke, triggering a
precipitous decline in share price and enormous destruction
in value for millions of investors. It was a stark and shocking
reminder to us all that corruption is not limited to the state.
2
What is extraordinary is the number of experts who were 4. WATER CRISIS
seemingly misled including investors, auditors, banks, Cape Town’s worsening water crisis - and the likelihood
directors, rating agencies and employees. Right up until that the city will reach Day Zero is terrifying. As with all
November, many executives (including the CFO and good crises, the finger-pointing is rife, but the truth is that
Chairman) who were significant shareholders added to their consumers, industry, provincial and national government
investments. A number of our Best of Breed™ managers had should all shoulder some of the blame for the poor planning
exposure to Steinhoff and these funds have been negatively and insufficient activity that has brought us to this point.
impacted. It is likely a number of parties will litigate against
Steinhoff and its auditors and, while the nature of this is Now we need to unite and become a part of the solution.
uncertain, we will be sure to act in the best interests of our This is likely to be multi-faceted with new sources of supply
clients. coming from a combination of households, government
and entrepreneurial technology. While these efforts are
At the time of writing there have been frustratingly few underway, they are unlikely to be enough to avoid Day Zero
meaningful updates other than the company dealing with unless we all reduce demand, become as educated as possible
liquidity issues. I assure investors that as the facts emerge, and commit to doing everything we can to contribute.
we will continue to communicate on developments as well as
reflect carefully on what went wrong and what lessons can
be learnt. SO WHAT CAN WE LEARN FROM THIS?
Apart from being scary and potentially controversial, these
braai-side conversation themes show how unpredictable
3. BITCOIN things are - especially when it comes to politics, investments,
I openly acknowledge that I do not fully understand the technology and the environment. They also highlight how
Bitcoin phenomenon. However, because I am asked regularly, often the experts get it wrong and the impact of emotions
I will offer a few thoughts. such as fear and greed. Finally, they show us the influence
of social media (think Viceroy, Bitcoin billionaires and
Firstly, while some proponents argue that it offers a store #guptaleaks), which is likely to grow throughout 2018.
of value to allow future transactional capability (like a
normal currency), the volatility and uncertainty around the As we wait to see how these themes will develop I want to
regulation seems, for the foreseeable future at least, to thank you for entrusting us with your savings and assure you
render this argument void. Others argue for its decentralised we are committed to doing everything in our power to help
efficiency, robustness and lack of costs, but the reality as I you achieve your investment goals.
see it features delays, friction costs, inefficient exchanges,
hacking and numerous rule changes and copycats. Even Wishing all our investors a prosperous and successful 2018.
experts I respect have not been able to convince me of a true
user-case other than money laundering, exchange control
and tax avoidance (which, to be fair are all big markets).
Until I learn more and am convinced otherwise, my view is
that Bitcoin offers no income and is extremely difficult if not
impossible to value. Buying Bitcoin is not an investment – it’s
speculation. My advice is, just as at a casino; only participate
with money you can afford to lose. And remember, just like a
casino, while the winners shout the loudest, the house always
wins.
3
WHAT OPPORTUNITIES WILL
TFI TRANSFERS BRING?
As of 1 March 2018 transfers between TFI product providers
will be possible. What factors should investors consider?
On the 28 February 2017 National Treasury announced
that Tax-Free Investments (TFI) transfers between product
providers will be allowed from 1 March 2018. On the 31 March
2017 Treasury also published Regulations in terms of Section
12T (8) of the Income Tax Act that set out the requirements
of transfers between product provider providers.
WHAT OPPORTUNITIES, IF ANY, WILL TRANSFERS BRING
FOR TFI INVESTORS?
We have seen from research done by Intellidex that investors
have opened up around 460 000 accounts by 28 February
2017 even though TFI was only launched on 1 March 2015.
DENVER KESWELL Only 2 years after TFI was launched the Intellidex report*
SENIOR LEGAL ADVISOR showed that investors contributed almost R5.2 billion into
different types of TFI accounts. The report indicates that
just over 88% of assets under management (AUM) sits in
either cash, life assurance products or collective investment
schemes (unit trusts). The majority of AUM sits in the cash
space (40.7%) while life assurers are next best placed (26.5%)
followed by collective investment schemes (20.9%).
The benefit of the new transfer legislation is that investors
will be able to assess their tax-free investments and ensure
that they are in an investment structure that works best for
the individual circumstance.
CONSIDERATIONS FOR INVESTORS WHEN SELECTING
TAX-FREE INVESTMENT VEHICLES
Cash products offer fixed deposit and notice-deposit type
options. However it would seem that notice deposit products,
which provide more flexibility in terms of access at a lower
interest rate than a fixed deposit product, are proving to be
more popular.
• TAX AND INFLATION
One challenge that cash products (including Money Market
and Income unit trusts) have in comparison to life assurers
and the wide range of risk-return profiles available within
the unit trusts space, is competing with inflation. Whilst a
* A study of tax-free savings account takeup in South Africa 2017: Intellidex
4
tax-free investment is technically a liquid product that allows • PRODUCT FEATURES
for immediate access to one’s cash, the annual and lifetime Another consideration for TFI investors to determine whether
contribution cap reduces every time the investor contributes they are in an appropriate product, is the product features.
- and once withdrawn, the investor cannot “replace” the An investor should ask the following questions:
withdrawn amount against the contribution caps. From a • Am I able to access my cash if need be from day 1?
tax perspective, it is therefore best to remain invested for as • Do I intend on using the product as a legacy product and
long as possible in order to maximise the tax benefits. not withdrawing the market value over my lifetime - in
which case the allowance of a beneficiary on the product
may be important to an investor?
• INTEREST EXEMPTIONS • Am I able to invest without accessing my funds for a
Another consideration for cash TFI investors is that every number of years?
natural person in South Africa is entitled to an interest
exemption of R23 800 (under 65) or R34 500 (65 and older).
If a 45 year-old, cash TFI investor has contributed the • EXIT PENALTIES
maximum of R93 000 annual contributions (over the last Another big consideration especially considering the negative
three years) and is not utilising any of the interest exemption publicity that dreaded “exit penalties” has received over the
elsewhere, then it is safe to say - from a tax perspective - last few years is whether or not there is in fact an exit penalty
that it wouldn’t matter at this stage if the investor was in a on your TFI product.
TFI product or a normal notice/fixed deposit product.
Let’s look at an example assuming a generous return on a CAN A PRODUCT PROVIDER REFUSE TO ABIDE BY
notice deposit product of 8%. This would generate interest of TRANSFER REGULATIONS?
R7 440 for the year which would fall well below the interest A product provider may refuse to accept a transfer in based
exemption of R23 800. This investor, who does not utilise on their product rules but is not allowed to refuse a transfer
their annual interest exemption of R23 800, would not pay out, except under a few exceptional circumstances. In fact,
tax even if they were in a normal notice deposit product. It if a product provider is unable to transfer any amount on
would be interesting to note how many of the investors in request to another product provider, then the product
cash TFI’s have utilised all of their annual interest exemptions provider will not be able to accept any further amount in
elsewhere and are actually benefitting from a tax perspective respect of any TFI nor can it administer any TFI other than
in being invested in a cash TFI. a TFI administered before the date on which that product
provider is unable to transfer that amount.
5
WHY A WRITTEN INVESTMENT
PLAN IS A GOOD IDEA
If you have started saving or are about to start, a written
investment plan can keep you on track.
If you have ever been in formal employment you would have
likely belonged to a retirement fund provided by your employer
or you may have taken out a personal retirement annuity.
Ideally you should be contributing to some form of retirement
savings vehicle throughout your career - without dipping into
these savings before you retire. And, while most people know
and acknowledge this – when it comes to executing a long-
term savings plan it can become overwhelming. This is where
a written investment plan can be invaluable.
If you have started saving for retirement or are about to start,
do you know how much you will need for retirement? Secondly,
do you have an investment plan to achieve this goal? These
JANNIE LEACH questions also can be extended to other savings goals, like
HEAD OF CORE INVESTMENTS saving for a home or for a child’s education.
START AT THE BEGINNING: HOW MUCH DO YOU NEED
TO SAVE?
The table below provides a simple guideline for how much
you need to have saved up at the various stages of your
working career.
Required retirement savings to fund an income of 70%
of your final salary for at least 20 years
Working years Retirement savings
10 years 2 times current salary
20 years 5 times current salary
30 years 10 times currently salary
At retirement (40 years) 16 times final salary
CONCEPTUALISE THE ROAD AHEAD – WHAT ARE SOME
OF THE POTENTIAL PITFALLS?
During the early stages of your career it may be tough to
achieve these goals. However, instead of simply giving up, you
can steadily increase your retirement contribution as your
salary increases and you reap greater benefits from the tax
deduction on retirement contributions1. Numerous surveys2
1
See “A tax-efficient strategy to enhance your savings during your career”,
Newsletter Q1 2017.
2
For example the Sanlam Benchmark survey 2017.
6have shown that investors struggle with long-term savings
goals such as saving for retirement. People are generally
better at saving for shorter term goals but still struggle with The following example will be used to illustrate what the IPS
how they should go about achieving these goals given the should potentially look like.
myriad of different investment and savings options available
in the market. The latest fads such as Bitcoin and other hot
investment tips makes it even more difficult to put a sound EXAMPLE: SAVING FOR RETIREMENT3
investment plan in place. Let us consider Mark who started working at the age of 25
earning R250k per year with annual increases of 5.5%. Over
It is therefore helpful to know how much you need to save the span of his career he was promoted and received a 15%
and to put an investment plan in place on how to achieve increase after 5 and 10 years, 10% after 15 and 20 years and
these goals. 7.5% after 25 years of service. At retirement 40 years later, he
was earning R 2.7 million.
UNDERSTANDING THE INVESTMENT POLICY STATEMENT
(IPS) SETTING AN INVESTMENT PLAN
If you belong to a pension fund provided by your employer
then the investment portfolios made available to you would 1. INVESTMENT OBJECTIVE
follow the Investment Policy Statement (IPS) of the specific Mark will require at least 16 times his final salary at
pension fund. retirement which is around R43m. Because he needs
more liquidity in his younger years to buy a car, travel, buy
This IPS is essentially the investment plan for the whole a house and save for his children’s education, he increases
pension fund which includes members (employees) of his retirement contribution as his marginal tax rate
all working ages and defines the investment framework increases throughout his career. He therefore contributes:
for achieving their future retirement needs. The IPS also • 12.5% for 4 years (i.e. until 31% tax bracket reached)
defines the governance framework of the investment plan, • 15% for 4 years (i.e. until 36% tax bracket reached)
for example the setting an appropriate asset allocation, • 17.5% for 4 years (i.e. until 39% tax bracket reached)
monitoring the investment plan, risk management and • 20% for 4 years (i.e. until 41% tax bracket reached)
reporting. It furthermore assigns accountabilities to all the • 23.5% for 13 years (i.e. until 45% tax bracket reached)
different parties and entities involved in implementing the • Maximum allowed for the last 11 years
investment plan.
One of the most important functions of the IPS is to provide 2. INVESTMENT STRATEGY
objective guidance and course of action during times of In order to retire with at least 16 times his final salary Mark
market turmoil when investors’ emotions may drive them will require an average annual return on his retirement
to not act prudently. It is therefore the document that can savings of around Inflation + 5% (10.5%) over the 40
always be referred when the investor is uncertain so that the year period. A traditional balanced such as the Nedgroup
investment strategy can stay on course. Investments Core Diversified Fund targets inflation + 5 %
over the long term and so would be well suited to achieve
Mark’s investment Goal.
MAKE IT REAL – DEVELOP YOUR OWN IPS Alternatively, if he is comfortable with taking slightly
You should ideally have your own individual investment more risk, Mark can opt for a more aggressive balanced
plan which includes all your different saving goals and just fund such as the Nedgroup Investments Core Accelerated
like an IPS defines how you will achieve these goals and Fund which targets inflation + 6%. Mark may also
whom you will give the responsibilities for the different consider using a life-stage strategy where he is invested
roles in this plan. If you have a financial advisor, most of in an aggressive balanced fund until about 8 years prior
this information should be included in your record of advice, to retirement and is then systematically moved into a
but ideally, you should ask your advisor to provide you with conservative balanced fund so that he doesn’t take on
a layman’s version of their IPS which covers the investment excessive risk just prior to retirement.
framework employed in your investment plan. If you don’t
have a financial advisor you may want to consider a virtual
advisor such as the Nedgroup Investments Extraordinary 3
Disclaimer: This example is for illustrative purposes only and does not constitute
Life™ Virtual Advisor Platform which will be launched over advice.
the next few months and will provide such an investment
plan.
73. ONGOING MONITORING OF THE STRATEGY
Mark periodically monitors whether he is on track by R60 m
Market value of retirement savings and target
Mark retired with 20 times his final salary
simply comparing his retirement fund savings to his
current salary, e.g. retirement savings is 1.4 times his R50 m
current salary. He also monitors whether his portfolio is
delivering the target return over meaningful periods. A R40 m
traditional balanced typically achieve it inflation + 5 %
target over 5 years and longer. Over shorter periods it R30 m
may be much lower or higher depending on recent market
performance. R20 m
If Mark is behind his target he may opt to top up his R10 m
retirement savings by increasing his retirement fund
contribution rate or investing in a Retirement Annuity or R–
Tax Free Investment. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Years worked
Retirement value Retirement target
RESULT OF IMPLEMENTING THE INVESTMENT PLAN
SUCCESSFULLY
Assuming mark followed his investment plan as it is stated;
he would comfortably achieve his retirement target of 16
times his final salary as illustrated. In fact, he could even
exceed it by a multiple of 4 which would allow his retirement
saving to comfortably last more than 20 years.
By writing down an individual investment plan you are able investors have access to their financial advisor who can to
to continuously access whether you are on track and if you assist them for a fee or make use of an electronic virtual
are following the correct investment plan. Furthermore, advisor.
8INVESTING OFFSHORE
VERSUS INVESTING IN
OFFSHORE ASSETS
Investing in international markets is an important
diversification building block to investors’ portfolios, but there
are different options investors can choose.
Weak economic conditions and political instability has
almost become the new normal in South Africa. Luckily, 2017
ended on a very positive note with the orderly election of
Cyril Ramaphosa as the new ANC president and the Rand
responded well to this news strengthening almost 10%
in December. But many investors are still sceptical. Can
Ramaphosa really turn this ship around? Or, will the February
budget still be weak leaving Moody’s – the last rating agency
that has us at investment grade – to downgrade South
Africa’s debt to junk status?
Since we can’t predict exactly what the future holds, investing
in international markets remains an important diversification
SEUGNET DE VILLIERS building block to investors’ portfolios.
INVESTMENT ANALYST
The good news is that you as an investor are spoilt for choice
in your search for investments uncorrelated to the local
economy, since the South African Gross Domestic Product
(GDP) represents only 0.5% of the world economy. This is an
exciting prospect, but it is crucial that you add or increase
offshore exposure in line with your long-term investment
objectives and clearly understand the ins and outs of the
offshore investing.
INVESTING OFFSHORE - “LITERALLY”
The purest form of investing offshore is physically moving
your money out of South Africa by converting Rand to a
foreign currency and then investing the foreign currency. This
can be as simple as holding cash in an offshore bank account
DENVER KESWELL or investing in funds domiciled outside of SA.
SENIOR LEGAL ADVISOR There are fund managers based all over the world, including
in South Africa, that manage a wide range of offshore-
focused, foreign currency denominated funds with varying
degrees of growth assets (equity and property) and income
assets (cash and bonds) for you to choose from.
9However, the absolutely critical consideration of investing
SA Equity and SA Cash
offshore is the exchange rate. Using the Rand/$ as an 1000
illustration below, exchange rates can be incredibly volatile in 900
Growth per R100 invested
the short term. You need to guard against taking your money 800
700
out of the country at say R16.1 (the level it was at January
600
2016), converting it back into Rand a year later at R13.5 and in 500
the process losing 15% of your initial investment to currency 400
movement. 300
200
100
Rand/$ 0
Nov-02 Nov-06 Nov-10 Nov-14
17 FTSE/JSE All Share SA Cash
16
As a South African tax payer you can, however, only move up
15 to R1 million out of South Africa per tax year without applying
for a tax clearance certificate. You do have the option to
14 move up to R10 million out of our borders, but you will have to
apply for tax clearance from South African Revenue Services
13
(SARS) for anything above your first R1 million per tax year.
12
Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Even though this money has left the country, as a South
African tax payer you are still liable for tax on income and
Source: IRESS dividends earned, as well as capital gains realised – just
according to a slightly different tax treatment, which we will
discuss later.
Once you have converted your Rands to a foreign currency,
the basic investment principles remain unchanged. Finding
the balance between time, risk (both your tolerance and
KEEPING IT LOCAL
appetite) and return remains vital to successful investing.
What many investors don’t realise is that it is possible to
In order to increase your expected growth rate, you need to
gain exposure to the likes of the booming US equity market,
be prepared to sit through some short term capital volatility
without your money physically leaving the country.
and loss and stay invested for longer in order to achieve your
expected growth rate. If you can’t afford, or bear, to lose any
For example, numerous companies listed on the Johannesburg
capital in the short-term, you will have to lower your growth
Stock Exchange (JSE) have very little exposure to our economy
expectations.
since they earn the bulk - or even all - of their revenue outside
of South Africa. These companies are commonly referred to
US dollar cash, just like SA cash, is the stable, but low growth
as ‘rand hedges’ and regarded as SA investments, despite
option suitable for US dollar capital protection needs. The
the drivers of their performance being globalised. Some of
offshore equity markets (as illustrated by the MSCI World
the larger, well-known names are Naspers and Woolworths
index below), just like the local market (as illustrated by the
that fall in the 40% - 60% offshore revenue bucket and
All Share index below), offer significantly higher growth over
British American Tobacco at close to 100% offshore revenue.
the long-term, but at much higher short-term volatility.
The South African, Rand-denominated unit trust industry
offers a few offshore exposure options for you to choose
Global Equity and US Cash
380 from, without needing to worry about breaching a maximum
340 rand value per tax year or getting tax clearance.
300 • Exposure to local ‘Rand hedges’ within the local equity
Growth per $100
260 and property building blocks
220 • Various single and multi-asset class funds that can invest
180 directly in offshore equity, property and fixed income
140 markets within the rand-denominated fund
100
• Global feeder funds that hold a single position in an
0
underlying fund that is domiciled outside of South Africa,
Nov-02 Nov-06 Nov-10 Nov-14
foreign currency denominated and completely offshore
MSCI World US Cash
focused.
10As mentioned above, if you invest directly offshore you will be Another important consideration is whether or not your
using your foreign allowance afforded to a natural person of investment is for retirement savings or discretionary
R1m. However if you invest into a rand denominated offshore savings. Offshore exposure within retirement savings must
unit trust that holds foreign assets, you will be using the be Regulation 28 compliant and are, amongst a few other
foreign allowance of the MANCO itself. investment restrictions, limited to 25% direct investment in
offshore markets and an additional 5% in African markets.
Just like offshore investing, it is important to consider the
impact of the exchange rate on these investments, especially
when investing in a global feeder fund. If the underlying fund UNDERSTANDING THE TAX IMPLICATIONS WHEN YOU
is USD-denominated the USDZAR exchange rate is added to INVEST OFFSHORE
the feeder fund price every day. Interest earned on offshore and local investments is taxable
at your marginal income tax rate and offshore and local
The ASISA fund classification system according to which dividends are taxed at 20%.
South African unit trusts are grouped determines how much
direct offshore exposure (excluding rand hedges) funds Capital gains tax, on the other hand, is the tricky one as the
within each category is allowed to hold. exchange rate plays a different role in the calculation when
• ‘South Africa’ fund classes must have a minimum of 70% you invest offshore vs. gaining offshore exposure through
invested in South Africa and a maximum 25% offshore local investment vehicles. When you disinvest, the difference
and maximum 5% in Africa between the proceeds and base cost* will be subject to
• ‘Global’ fund classes must have a minimum of 80% capital gains tax (CGT).
invested offshore and a maximum of 20% in South Africa • When you invest offshore the taxable capital gain is
(with less than 80% in any specific country/region) effected by the growth earned on your foreign currency
• ‘Regional’ fund classes are concentrated to a specific investment and the exchange rate on the day you realise
country or region with at least 80% invested in any one the gain.
specific country or region, with South African exposure • When you obtain offshore exposure through a local
limited to 20% investment vehicle, your taxable capital gain is effected by
• ‘Worldwide’ fund classes, on the other hand, have no the growth earned on your rand denominated investment
restrictions on South Africa vs offshore allocation and – which includes the exchange rate at the start and end
the regional allocation is completely up to the fund of your investment period.
manager’s discretion
Once you have chosen the level of direct offshore exposure Let’s look at an example of how currency movement can affect
that is suitable for you, each category offers various types your capital gains tax liability
of funds managed by various different fund managers to
choose from. It includes the full ‘risk-return-time horizon’ Sam decides to invest R1.6m and can invest either directly into
spectrum that can be summarised into four broad categories, a US dollar denominated foreign fund or a rand denominated
depending on the level of growth and income asset each fund feeder fund. At the time of investing the Rand was trading
mandate allows: at R16 to the dollar. This means that Sam invested $100k
directly into a foreign fund.
Money Market and Income Time horison: Less than 1 year
Rand amount invested Exchange rate Equivalent $ amount
Return expectation CPI + 0% - 1%
R 1 600 000 R16/$ $ 100 000
Cash-like exposure 100%
Growth assets 0%
A year later the US dollar fund has returned 20% and Sam
Low Risk Time horison Min 1 - 3 years
decides to fully disinvest his current market value of $120k
Return expectation CPI + 2% - 4% (assume no other purchases or withdrawals made prior to
Growth assets 10% to 40% sale of units). At the time of disinvestment, the Rand was
Medium Risk Time horison Min 3 - 5 years
trading at R14 to the dollar.
Return expectation CPI + 4% to 6%
$ Market value Exchange rate Equivalent R amount
Growth assets 40% to 75% one year later
High Risk Time horison Min 5 to 7 years $ 120 000 R14/$ R 1 680 000
Return expectation CPI + 6% to 7%
Growth assets 75% to 100%
* Nedgroup Investments uses the weighted average base cost (WAC) method in
determining the base cost.
11If Sam invested offshore, the $20k capital gain will be Let’s redo this example assuming that the Rand weakened to
converted at the current exchange rate of R14 which R20/$ over one year.
translates into a taxable capital gain of R280k. If Sam • The $20k capital gain in the US dollar fund translates to
invested in a rand denominated feeder fund, the strength a R400k capital taxable gain
of the currency would’ve largely offset the growth of the US • The equivalent rand amount in the rand denominated
dollar fund and one year later sits at a capital gain of only feeder fund is R2.4mil ($120k * 20) and translates to an
R80k. I.e. in periods of Rand strength, it is more tax efficient R800k taxable gain.
to realise capital gains from a rand denominated investment
vehicle than an offshore investment. So when the Rand weakens, it is more tax efficient to realise
capital gains from a foreign currency denominated, offshore
investment vehicle.
STICK TO THE BASICS • Choose investments that are appropriate to your risk
While there is definitely a good case for diversifying offshore, profile
it is important to stick to the basic principles of investing • Choose a credible investment partner
and remember to keep a long-term view and investment • Diversification is crucial
time horizon. Listed (and discussed in more detail by Trevor • Avoid making emotional decisions
Garvin in a previous newsletter**) are a few suggestions to • Remember that valuation drives long-term return
think about to ensure that you have “ticked the boxes” before • Don’t base your decision on currency alone
making any final investment decisions • Seek advice.
* Nedgroup Investments uses the weighted average base cost (WAC) method in
determining the base cost.
** http://www.nedgroupinvestments.co.za/Insights/InsightDetailsPage/Investing-
offshore-have-you-ticked-the-boxes
12ARE MONEY MARKET FUNDS
TOO GOOD TO BE TRUE?
We are often asked by prospective users of the Nedgroup
Investments money market fund range how it is possible for
us to achieve the yields of a fixed deposit with the access of a
call account.
We are often asked by prospective users of the Nedgroup
Investments money market fund range how it is possible for
us to achieve the yields of a fixed deposit with the access of
a call account. “It sounds too good to be true. Where is the
catch?”
When it comes to surplus cash, any financial manager or
treasurer is obliged to explore any opportunity to improve
yields, liquidity, convenience and diversification - and to
thoroughly research and understand any investment vehicle
they are considering prior to making use of it. And, while
many treasurers and financial managers do this wherever
possible, there is understandably a certain amount of
SEAN SEGAR scepticism when a product appears to comfortably promise
CO-HEAD OF CASH SOLUTIONS to tick all the boxes.
To aide prospective users of money market funds, these
versatile and useful investment vehicles, we want to take this
opportunity to explain how money market funds achieve
higher yields and can still offer liquidity. Knowing that the
proposition is sound will hopefully enable financial managers
and treasurers to confidently make use of money market
funds to enhance interest and liquidity, and manage risk in a
convenient and highly regulated environment.
MONEY MARKET FUNDS OVERVIEW
Money market funds started in the 1960’s in the USA and
spread to Europe in the 1970’s. The American and European
industries are now massive and well entrenched. Most
countries that have unit trust legislation have a money
market fund industry. The first money market funds were
launched in South Africa in the 1980’s and since then, the
industry has grown to exceed R300b. In 2017 the South
African money market fund industry will pay investors in
excess of R3b extra interest – that is over and above the best
call rates available in the market, but without “locking up”
the funds - which fixed deposits would require to achieve the
extra interest.
13HOW DO MONEY MARKET FUNDS ACHIEVE ALL THIS? offset by investors depositing into the fund. Gross flows into
Money market funds make use of unit trust legislation to the Nedgroup Investments cash stable average between R1
pool investor monies into a single unitised vehicle (a trust), so billion and R2 billion per day, but are often netted off resulting
that this can be professionally managed for the benefit of all in much lower net flows.
unit holders. The trust is ring-fenced with an independent
trustee. For the Nedgroup Investments Money Market Fund • NO MINIMUM BALANCES
this trustee is Standard Bank. The money market unit trust There are no minimum balances as users are expected to
funds are operated by Nedgroup Investments using Taquanta take all their funds when these are needed. The money
Asset Managers as the Best of Breed™ specialist cash market funds are simply a parking place where cash can
manager. Global Ratings are the independent rating agency work harder until it is required.
who have assigned AA+ ratings to both the Nedgroup
Investments money market funds. The funds are regulated in • NO TRANSACTION FEES
terms of the Collective Investments Schemes Control Act, There are no fees to transact. Fees are taken out of the yield.
audited, and subject to the strict internal compliance regime These are nominal and depend on investment size. Investors
typical of a large banking group. will therefore take a haircut on their yield equivalent to their
fee, but only pay for the days they are using the fund.
The scale achieved by pooling thousands of investors’ funds Furthermore, the incremental interest typically covers the
enables specialist money market fund management team to fees many times over.
negotiate better yields with the issuers of fixed income
instruments, predominantly big four SA banks, used by the • VALUE-ADDED SERVICES
fund. This additional yield is passed on to investors in the There are additional potential savings that users of money
fund. The scale also enables the fund to spread assets market funds can benefit from in the form of the convenience
between issuers to create a more diversified, and hence of having a “one stop shop” and many investors use the
lower risk, portfolio of high quality assets. money market funds as a type of outsourced treasury
function with all the savings and convenience that comes
But the main reason money market funds are able to offer with it.
higher yields than call accounts, but still provide full liquidity is
their ability to invest along the yield curve – It’s win, win.
THE OTHER OPTIONS
The fund itself, which comprises all the collective deposits of The alternative to using money market funds is for treasurers
thousands of users, is able to invest along the yield curve as to invest themselves. However the disadvantages of this
far as instruments maturing in 13 months. These longer- approach are:
dated instruments naturally provide higher yields than funds • Lower yields as less buying power
on call. The fund holds an array of instruments of varying • Less diversification as not enough scale to spread assets
lengths - including short durations like one month, two between issuing banks. For a single entity to deal with
months and six months etc. On average, the fund cannot multiple banks also requires much effort.
have a weighted term to final maturity longer than four • Enormous investment in time and systems to manage
months - which means for every long-dated instrument, and report on a portfolio of deposits, shop around for
there will be short-dated instruments including a significant rates, and renew or redeem these as needed
amount of call deposits in order to retain the average at four • Cost of time and employing fixed income and credit
months. The longer-dated instruments provide the fund with expertise
yield while the call monies provide the fund with liquidity. • Less liquidity as fixed deposits, which are what generates
excess yield, cannot be accessed until they mature
SO WHAT DOES THIS MEAN FOR INVESTORS? So if you had wondered if money market funds are too good
• LIQUIDITY AND YIELD to be true the above should assure you that they offer a
Investors can come and go same day, and they will be funded proven opportunity to put your cash to work in a highly rated,
by the call monies held within the fund, so they do not need highly regulated funds without sacrificing the liquidity of a
to lock up their cash. However, while they are invested, they call account, and without having to compromise on credit
benefit from the higher yield that the fund is generating from quality or liquidity in order to achieve higher yields.
its spread of assets across all durations. While investors are
in the fund, they are effectively exposed to longer dated
instruments, but with the flexibility to come and go. The units WHY NEDGROUP INVESTMENTS?
each investor holds provides them with effective exposure to Nedgroup Investments Cash Solutions is the market leader in
their share of the spread of instruments in the fund. In many providing money market fund solutions to the corporate
circumstances investors withdrawing from the fund are sector and manages over R85b of cash for a large client base
14including blue chip corporates, banks, insurers, medical We are happy to take you through the way that we work and schemes, asset managers, parastatals and multi-nationals. how we make sure that your cash investment is optimised By investing in a Nedgroup Investments Cash Solutions Fund, while you focus on your day-to-day business. At Nedgroup your investment is spread across a range of banks and other Investments Cash Solutions we believe money must work. credible issuers which means your risk is reduced even further, without compromising on yield or liquidity. And, when an Contact the Nedgroup Investments Cash Solutions team to opportunity arises to put that cash to good use, it is available discuss how we can help you optimise your balance sheet on the same day. Our dedicated Corporate Cash team will be today. on hand to assist you. 15
RATTLING THE CAGE –
CHANGING THE VIEW
ON SUSTAINABILITY IN
INVESTMENTS
Financial services as a world industry has been slow to accept
the implications of responsible behaviour.
The corporate and financial world has been operating under
a misguided timeline of short-term versus long-term that
cannot be sustainable.
Look at the current state ‘state of the world’, with global
warming and the recent unanticipated magnitude of its
effects, widening wealth inequality that is likely to ultimately
lead to populous uprising and resource overshoot. We
can no longer ignore these problems – or the fact that we
have essentially created them all. Financial services as a
world industry has been slow to accept the implications of
responsible behaviour but simply by raising the question, this
workshop is ahead of the curve in the industry.
PETER WILLIS
SENIOR ASSOCIATE AND FORMER The global financial services industry has three major blind
spots that become more of a liability each year and prevent
REGIONAL DIRECTOR OF THE
objective views.
UNIVERSITY OF CAMBRIDGE INSTITUTE
FOR SUSTAINABILITY LEADERSHIP
1. WHAT DEPENDS ON WHAT?
The concept and existence of economy has not been around
long in terms of the timeline of human history. The ratio of
human years without economy to years with economy is 29:1.
And nature has been around much longer than human life.
There is a natural order that needs to exist to support
survival. Nature needed to exist before homo-sapiens could
exist. In the same way, a complex order of society has to be in
place before business and the economy could be put in place.
However, the business press gives the impression that the
economy is the priority in terms of things that need to be
taken care of. Then, once we have taken care of the economy
and if there is surplus capacity, we can turn our attention to
the weak and disenfranchised - and only after those people
have been taken care of can we assess and take care of
nature.
16This is a fundamental thinking disorder that the financial 3. PRIVATE WEALTH
sector needs to recognise. The concept of Private Wealth is another blind spot held by the
global financial services industry. People invest with wealth
managers so that it can grow – their goal is to accumulate
2. GROWTH and protect their own private wealth. This raises a question
In nature growth has a natural cycle. Growth in all natural about common wealth. All around the world, common
things starts, accelerates, sustains, stabilises - and then wealth seems to be in dire need. This is painfully visible with
it dies. This is an irrefutable and unavoidable end state of the effects of the recent spate of natural disasters around
growth in nature. the world that have found the collective wanting in terms of
understanding their risks.
But the language of corporates worldwide does not support
this. In fact, the dialogue of corporates suggests that eternal This raises the question that when the common wealth is in
growth is not only possible – but aspired to. such dire need – how does the financial industry balance it
with a mandate to serve private wealth?
There are limits to growth on Earth. The Earth itself doesn’t
grow and this is something that human beings and the These issues are complex and jarring – and bringing them
financial industry in particular seem to be ignorant about. up in this way is supposed to rattle the cage of a potentially
I call this “the Limited-Earth problem”. In fact, a study complacent financial services industry worldwide. Opening
compiled by the global footprint network calculated that if one’s eyes to these blind spots is the first step to having
humans continue to grow, produce and use resources as we meaningful conversations about the future of responsible
are now, we will need another full earth by 2030. and sustainable investment practices.
It is not hard to see, when we look at the problem like this, that Peter Willis presented at the Responsible Investing Worksop
current methods and practices are simply not sustainable. hosted by Nedgroup Investments in Cape Town in late 2017.
17END OF AN ERA
There is no doubt that the eventual replacement of Zuma
by Cyril Ramaphosa as president will be a big change for the
better.
The title of this piece is an apt summary. It is certainly the
beginning of the end of a long nightmare. There is no doubt
that the eventual replacement of Zuma by Cyril Ramaphosa
as president will be a big change for the better. The country
has taken a step forward, and there is a better captain at the
helm as we muddle through the challenges we face.
THE RESULTS FOR THE TOP 6
One can summarise the result of the Top 6 in two parts:
1. There is something for everybody.
2. It was a closely run affair.
JP LANDMAN
POLITICAL ANALYST 1. THERE IS SOMETHING FOR EVERYBODY
Three of the Top 6 come from the Ramaphosa slate, and three
from the Dlamini-Zuma slate (although she has disappeared
from the Top 6 altogether). Two are from the ‘premier league’
provinces and rural South Africa, and four are from Gauteng
(of whom at least three are from modern and urban South
Africa).
The slate is not the first prize for either the Ramaphosa
camp or the Dlamini-Zuma camp – it is a compromise. In
fact, the Top 6 is so finely balanced that some people are
even suspicious that the results were rigged. If ‘rigged’ means
that the votes were counted and then adjusted to achieve
the announced outcome, I do not think so. There were too
many checks and balances in both the voting and counting
process. What is more likely to have happened is that trade-
offs and negotiations took place beforehand, leading people
to switching their votes between different candidates.
These negotiations and trade-offs are the result of a party
trying to unite before the 2019 elections. Ramaphosa is
obviously the better person to lead the ANC into the election,
but he had to accept David Mabuza as deputy president
and Ace Magashule as secretary general. One could also call
these negotiations and trade-offs ‘a pact with the devil’, as
some disappointed supporters are indeed doing. This is how
elections are won – politics is the art of the possible.
18We will only know how power will be finely balanced in the • launch various initiatives that can promote cohesion (do
ANC once the NEC (National Executive Committee) has you remember any that Zuma has launched?).
been elected. We should know this by the end of the week.
Ramaphosa may be restrained, but he is certainly not a lame
duck. Once you have your hands on the levers of power you
2. IT WAS A CLOSELY RUN AFFAIR can do a lot with them (as Zuma has shown in a negative
The biggest difference in votes was for Mabuza (8%) and way).
Mashatile (7.2%), while only 24 votes (a mere slither of 4
701 voting delegates) separated Magashule and runner-up His biggest test will come when he has to clean up corruption
Mchunu. and go after the looters. Here his hand is strengthened
substantially by the fact that the courts have already
The division of votes and majorities (numbers do not add up mandated him to appoint a commission of inquiry into
to 100% due to abstentions and spoilt papers): state capture (he now controls the terms of reference) and
1 President a new director of national prosecutions. Between those two
51% for Ramaphosa against 47.3% for Dlamini-Zuma actions he can lay the foundation for visible action against
(179 votes) corruption, despite some of his colleagues in the Top 6.
2 Deputy president
53% for Mabuza against 45% for Sisulu (379 votes) This of course can become a new political platform,
3 Chairman strengthening his position further with the broad electorate.
50.6% for Mantashe against 47.5% for Mthethwa (149
votes) There is no doubt that Ramaphosa will have to use every
4 Secretary general one of his famed negotiation skills to deal with the country’s
49.4% for Magashule against 48.8% for Mchunu (24 problems and his colleagues. But he is not alone. Gwede
votes) Mantashe will be a strong chair and manager of processes,
5 Deputy secretary general and Paul Mashatile will certainly help.
51.8% for Duarte against 46.3% for Losi (261)
6 Treasurer general I am less convinced that the party can get cleaned up with
52.7% for Mashatile against 45.6% for Nkoana- the current Top 6. This remains to be seen.
Mashabane (339)
If there was no ‘pact with the devil’, Ramaphosa and WILL ZUMA BE RECALLED?
Mantashe may not have made it. The closeness of the results makes a Zuma recall in the short
run unlikely, but the basic forces remain active. Under the lid
the cauldron is bubbling:
IS THE ‘WIN’ A WIN? 1 Zuma is thoroughly unpopular with the South African
Given the closeness of the results and that there is something electorate and there is an election in 18 months. The ANC
for everybody, can Ramaphosa govern effectively? Here one will not want to go into that election with the Zuma
must distinguish between the country and the ANC (as a albatross around its neck. They will want to put some
party). distance between themselves and him. This is likely to
have happened even if his ex-wife had won.
What the country needs most is some certainty and 2 Zuma could still face criminal charges, which could spark
coherence after the Zuma years. As a colleague once put a recall.
it, ‘Mandela gave us freedom, Mbeki gave us discipline, and 3 Thirdly, if he does things that embarrass the party (like
Zuma gave us chaos.’ Ramaphosa can provide some order announcing unfunded free higher education), it may
and lead us out of the chaos by creating policy certainty, result in a recall.
coordinating better implementation, promoting stability,
and effecting some administrative efficiency. This is both
within his ability and his power. SOME OBSERVATIONS
It is useful to cast our minds back and reflect on the journey
Once he has taken the reins, he will have the power to: to today:
• appoint cabinet ministers and hold them accountable • At the beginning of this year no pundits or party insiders
(Zuma never did that); gave Ramaphosa a chance to become ANC president.
• appoint qualified senior civil servants (Zuma did his best Dlamini-Zuma was the favourite and the flavour of the
to disrupt efficiency with mediocrity); succession. Ramaphosa was dismissed as not having a
• remove the bully pulpit (Zuma got to it late in his tenure constituency, carrying the albatross of Marikana, being a
as he discovered ‘radical economic transformation’); and capitalist, not having a power base, and so on. Indeed,
19when he re-entered politics five years ago it was on mood that led to this result. The ANC simply could not
Zuma’s slate. But the results showed that he managed to step too far away from the dominant mood. Dlamini-
build his own power base and won against the very same Zuma lost as much because she was seen as a
Zuma machine that brought him to power. No wonder continuation of the Zuma administration, as for her own
Zuma looked so unhappy when the result was announced weaknesses. Open society dynamics helped Ramaphosa
– just watch the video of his stony face and motionless and tripped Dlamini-Zuma. South Africa is not a closed,
hands when the Ramaphosa result was announced and arrested or stagnant society.
people around him burst into applause.
• Equally, many pundits predicted that the conference
would not happen, would descend into chaos, would SO WHAT?
simply collapse, that Zuma the master tactician would • There is no question that Ramaphosa’s victory is a change
pull a rabbit from the hat in the last minute to ensure for the better for the country. After the chaos of the
Dlamini-Zuma’s victory, or that a state of emergency will Zuma years it is a huge step forward. We hope that the
be called by Zuma if his candidate lost. The conference quote above that I referenced can evolve to ‘Mandela
happened, a successful election was held, Zuma’s freedom, Mbeki discipline, Zuma chaos, Ramaphosa
candidate was not elected, and the process and outcome order’.
was accepted, if not welcomed. Perhaps South Africa’s • It will take some time before he has his hands on the
body politic is more mature than people allow for. levers of power, so Zuma remains president for now. The
• I would submit that open society dynamics played a basic dynamics suggest a handover could very well
significant role over the last year in shaping the public happen before the 2019 election.
Nedgroup Collective Investments (RF) Proprietary Limited is the company particular instrument held. In most cases the return will merely have the Nedgroup Investments MultiFunds Plc / Nedgroup Investments Funds
that is authorised in terms of the Collective Investment Schemes Control effect of increasing or decreasing the daily yield, but in an extreme case PLC (the Fund) is authorised and regulated in Ireland by the Central Bank
Act to administer the Nedgroup Investments unit trust Portfolios. Unit it can have the effect of a capital loss. The Nedgroup Investments Money of Ireland. The Fund is authorised as a UCITS pursuant to the European
trusts are generally medium to long term investments. The value of your Market Fund aims to maintain a constant price of 100 cents per unit. The Communities (Undertakings for Collective Investment in Transferable
investment may go down as well as up. Past performance is not necessarily yield is calculated using an annualised seven day rolling average as at the Securities) Regulations 2011 (S.I. No. 352 of 2011) as amended from time-
a guide to future performance. Nedgroup Investments does not guarantee relevant dates provided for in the fund fact sheet. Excessive withdrawals to-time. This document is not intended for distribution to any person or
the performance of your investment and even if forecasts about the from the fund may place the fund under liquidity pressures and that in entity who is a citizen or resident of any country or other jurisdiction where
expected future performance are included you will carry the investment such circumstances a process of ring-fencing of withdrawal instructions such distribution, publication or use would be contrary to law or regulation.
and market risk, which includes the possibility of losing capital. Unit trusts and managed pay-outs over time may be followed. A schedule of fees and Nedgroup Investment (IOM) Limited (reg no 57917C), the Investment
are traded at ruling prices and can engage in borrowing and scrip lending. charges and maximum commissions is available on request from Nedgroup Manager and Distributor of the Fund, is licensed by the Isle of Man Financial
Certain unit trust funds may be subject to currency fluctuations due to Investments. Services Authority. The Prospectus of the Fund, the Supplement of its Sub-
its international exposure. Nedgroup Investments has the right to close Funds and the KIIDS are available from the Investment Manager and the
unit trust funds to new investors in order to manage it more efficiently. This document is of a general nature and intended for information Distributor or from its website www.nedgroupinvestments.com
For further information on the unit trust funds, including awards, fees and purposes only. Whilst we have taken all reasonable steps to ensure that
charges, please visit our website www.nedgroupinvestments.com the information in this document is accurate and current on an ongoing
basis, Nedgroup Investments shall accept no responsibility or liability for
A money market fund is not a bank deposit. The total return to the any inaccuracies, errors or omissions relating to the information and topics
investor is made up of interest received and any gain or loss made on any covered in this document.
20NEDGROUP INVESTMENTS UNIT TRUST PORTFOLIOS
MINIMUM
UNIT TRUST PORTFOLIO INVESTMENT MANAGER RISK BENCHMARK RECOMMENDED
TERM
Income unit trust portfolios: aim to provide investors with high levels of income (at low levels of capital volatility), by investing primarily in fixed income asset classes. These
portfolios are often appropriate for investors with shorter investment horizons.
Nedgroup Investments Money Market Fund Taquanta Asset Managers 1 STeFI Call Rate None
Nedgroup Investments Core Income Fund* Taquanta Asset Managers 1 STeFI Composite 6 months
Nedgroup Investments Flexible Income Fund Abax Investments 1 110% STeFI Call Rate 6 months
Nedgroup Investments Core Bond Fund Taquanta Asset Managers 2 Beassa All Bond Index (ALBI) 2 years
Nedgroup Investments Property Fund Bridge Fund Managers 4 South African Real Estate General Unit Trust Mean 5 years
Asset allocation unit trust portfolios: aim to provide investors with moderate levels of income and capital growth (at moderate levels of capital volatility), by investing in a range of
different asset classes. These portfolios are often appropriate for clients with medium to longer investment horizons.
Nedgroup Investments Balanced Fund Truffle Asset Management 3 ASISA Category Average 3 - 5 years
Nedgroup Investments Stable Fund* Foord Asset Management 2 Inflation +4% pa over rolling 3-year periods 3 years
Nedgroup Investments Opportunity Fund* Abax Investments 3 Inflation +5% pa over rolling 3-year periods 3 - 5 years
Nedgroup Investments Managed Fund* Truffle Asset Management 3 South African Multi Asset High Equity Unit Trust Mean 3 - 5 years
Nedgroup Investments Bravata Worldwide Flexible Fund Aylett & Co Asset Management 3 Inflation +5% pa over rolling 3-year periods 3 - 5 years
Equity unit trust portfolios: aim to provide investors with high levels of capital growth (at high levels of capital volatility) by investing in listed equities. These portfolios are often
appropriate for investors with longer investment horizons.
Nedgroup Investments Rainmaker Fund Abax Investments 4 South African Equity General Unit Trust Mean 5 - 7 years
Nedgroup Investments Value Fund Foord Asset Management 4 South African Equity General Unit Trust Mean 5 - 7 years
Nedgroup Investments Growth Fund Electus 4 South African Equity General Unit Trust Mean 5 - 7 years
Nedgroup Investments Private Wealth Equity Fund Nedgroup Investment Advisors 4 FTSE/JSE SWIX40 5 - 7 years
Specialist equity unit trust portfolios: are equity portfolios that are invested according to a specific sector or theme. They tend to display higher levels of price volatility.
Nedgroup Investments Entrepreneur Fund Abax Investments 5 South African Equity Mid and Small Cap Unit Trust Mean 5 - 7 years
Nedgroup Investments Mining & Resource Fund Prudential Portfolio Managers 5 South African Equity Resources Unit Trust Mean 5 - 7 years
Nedgroup Investments Financials Fund Denker Capital (a division of Sanlam Investment Mngt.) 5 South African Equity Financial Unit Trust Mean 5 - 7 years
International unit trust portfolios: if you wish to have exposure to offshore investment opportunities, you may consider the following range of rand-denominated unit trust portfolios that provide this
exposure for lower minimum investments and without the hassle of having to apply for foreign exchange control approval.
Nedgroup Investments Global Cautious Feeder Fund Chartwell Investment Partners 3 USD Libor 1 month (rand equivalent) 3 - 5 years
Nedgroup Investments Global Flexible Feeder Fund First Pacific Advisors 3 Global Multi Asset Flexible Unit Trust Mean 3 - 5 years
Nedgroup Investments Global Property Feeder Fund Resolution Capital 4 Global Real Estate General Unit Trust Mean 5 - 7 years
Nedgroup Investments Global Equity Feeder Fund Veritas Asset Management 4 Global Equity General Unit Trust Mean 5 - 7 years
Core unit trust portfolios: aim to provide low-cost exposure to a range of local and global asset classes. You may use these as a low-cost core holding or use them to implement your entire strategy.
Nedgroup Investments Core Guarded Fund* Taquanta Asset Managers 2 Inflation +3% pa over rolling 3-year periods 3 years
Nedgroup Investments Core Diversified Fund* Taquanta Asset Managers 3 Inflation +5% pa over rolling 5-year periods 3 - 5 years
Nedgroup Investments Core Global Feeder Fund BlackRock Investment Management 4 Global Multi Asset High Equity Trust Mean 3 - 5 years
Nedgroup Investments Core Accelerated Fund* Taquanta Asset Managers 4 Inflation + 6% pa over rolling 7-year periods 5 - 7 years
1 = Low, 2 = Low to medium, 3 = Medium, 4 = Medium to high, 5 = High *Comply with Regulation 28 of the Pension Funds Act
Unit Trusts are generally medium to long term investments. The value of your investment may go down as well as up. Past performance is not necessarily a guide to future performance. Nedgroup Investments does not guarantee the performance of your investment
and you will carry the investment and market risk, which includes the possibility of losing capital. Unit Trusts are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and charges and maximum commissions is available on request
from Nedgroup Investments. Certain Nedgroup Investments unit trust funds apply a performance fee. For the Nedgroup Investments Flexible Income Fund and Nedgroup Investments Stable Fund, it is calculated daily as a percentage (the sharing rate) of total
positive performance, with the high watermark principle applying. For the Nedgroup Investments Bravata World Wide Flexible Fund it is calculated monthly as a percentage (the sharing rate) of outperformance relative to the fund’s benchmark, with the high
watermark principle applying. All performance fees are capped per fund over a rolling 12-month period. The Nedgroup Investments Money Market Fund aims to maintain a constant price of 100 cents per unit. A money market fund is not a bank deposit. The total
return to the investor is made up of interest received and any gain or loss made on any particular instrument held. In most cases the return will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of a capital
loss. Excessive withdrawals from the fund may place the fund under liquidity pressures and that in such circumstances a process of ring-fencing of withdrawal instructions and managed pay-outs over time may be followed. The yield is calculated using an annualised
seven day rolling average as at the relevant dates provided for in the fund fact sheet. For the Nedgroup Investment income unit funds please refer to the relevant fund fact sheet for further details of the yield. A fund of funds may only invest in other unit trust
funds, that levy their own charges, which could result in a higher fee structure. A feeder fund may only invest in another single unit trust fund that levy their own charges, which could result in a higher fee structure. Nedgroup Collective Investments (RF) Proprietary
Limited is a member of the Association for Savings & Investment SA (ASISA).
Nedgroup Investments Proprietary Limited (Company registration number 1996/017075/07) Nedbank Clocktower Clocktower Precinct V&A Waterfront Cape Town 8001
Incorporating Nedgroup Collective Investments (RF) Proprietary Limited (Company registration number 1997/001569/07) PO Box 1510 Cape Town 8000 South Africa
Nedgroup Investment Advisors Proprietary Limited (Company registration number 1998/017581/07) an authorised Financial Services Provider (FSP number 1652) www.nedgroupinvestments.co.za
Sponsor of the Nedgroup Investments Retirement Funds Directors: I Ruggiero, NA Andrew, CE Sevenoaks
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