Retirement
June 24, 2010
Fund managers are facing an ongoing balancing act
Lynn Carlisle
Business Day
Minimising the risk of loss to retirement fund portfolios from listed shares — without being conservative to the point of missing out on potential returns — is an ongoing balancing act for fund managers. Delphine Govender, a portfolio manager at Allan Gray, says that, ultimately, getting this trade-off right is the key to successful investing, since the risk of loss of capital outweighs that of missing out. “While we have no special ability to predict the future we have a relatively high conviction that opportunities to invest in equities will be better in future than they are right now.
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June 24, 2010
Greater use of instruments geared to combat inflation and credit risk
Lynn Carlisle
Business Day
Demand for inflation-linked instruments to meet long-term real liabilities above inflation has grown significantly in SA these past few years, as retirement funds and other institutional investors have responded to the increasing availability and diversity of suitable instruments. Bradley Shearer, head of Old Mutual corporate product development, says the rocky ride experienced by investors following more aggressive strategies has also highlighted the value of matching or mirroring, which means that the value of the changes in the liabilities are closely tracked by changes in the value of the assets.
June 24, 2010
Growth stocks generally fail to live up to their name
Lynn Carlisle
Business Day
One of the most appropriate strategies that a retirement fund should consider is to adopt a value stance when investing members’ assets, says Geoff Blount, CEO of Cannon Asset Managers. “While some companies’ shares carry the title ‘growth stocks’ the evidence shows that despite this name these firms do not grow their earnings faster than the market. Growth stocks refer to popular shares that investors bid up to high price:earnings multiples (PEs) in the expectation they will achieve earnings growth higher than the equity market (JSE) — often much higher.”
May 14, 2010
High on emotion
Evan Pickworth
Financial Mail
Peter Bernstein observes in his book Against The Gods that there are repeated patterns of irrationality, inconsistency and incompetence in the manner in which humans arrive at decisions and choices when faced with uncertainty. It appears these patterns will continue well into the future despite the harsh lessons of the US credit crisis, the Greek debt contagion and the Bernard Madoff Ponzi scheme. Herd behaviour may have had disastrous repercussions after the dot-com bubble and bust of 1995-2000, but lessons were not learnt then, and members of retirement funds should tread warily.
May 07, 2010
All in the mix
Stephen Cranston
Financial Mail
According to the famous Brinson and Beebower paper, asset allocation accounts for more than 90% of the difference in investment returns between funds. For pension fund trustees, setting the strategic asset allocation is a more critical task than choosing managers, though it is usually given less attention. Asset allocation was particularly important over the past 12 months, with the equity market up 44% and property 32% higher while bonds gave 9% and cash 8%.A smart stock picker who has been given a low strategic allocation to equities of, say, 40% would have been hard pressed to outperform a mediocre stock...
April 22, 2010
The Bottom Line
Nick Wilson
Business Day
It is disconcerting that when trustees of retirement funds do attend meetings they have not read the papers in advance. These are the findings of a study by PricewaterhouseCoopers on the South African retirement fund industry issued yesterday. The behaviour seems to be directly correlated to whether trustees are remunerated or not. Although employers recognise their employees’ trustees responsibilities, they usually do not assess the performance of that role.
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June 24, 2010
Funds apply new strategies
Lynn Carlisle
Business Day
A new generation of liability-driven investment is gaining traction in the larger defined contribution (DC) funds of SA, says Tobie van Heerden, head of the institutional business at Investec Asset Management. He says liability-driven investment (LDI) refers to investment strategies employed by pension funds to ensure that there are sufficient assets to meet all current and future liabilities. While more commonly used in defined benefit pension schemes, LDI is becoming more advanced in the South African market, where consideration is given not just to matching assets and liabilities but also to generating appropriate real returns.
May 24, 2010
Real problem is to know how much to put away for pension
Bryan Hirsch
Business Day
The Old Mutual Retirement Survey published recently revealed that retirees will have less than 26% of their final salary as a pension when they retire. I find this even more disturbing than the statistics that reveal that only 6% of the workforce in SA will be able to retire comfortably. The reason for my concern is that most people don’t realise that contribution to a retirement fund, or private pension plan, does not necessarily guarantee sufficient funds on which to retire, and those who have no pension to which they contribute know that all they can rely on is a state pension.
May 14, 2010
Pension fund trustees will need to tread more carefully — King
Sanchia Temkin
Business Day
Increasing complexity in corporate governance principles is placing greater responsibility on pension fund trustees. Mervyn King, chairman of the King committee on corporate governance in SA, said this week that, complex as the regulatory landscape might be, a new code on responsible investing was likely to be introduced during the course of the year, which would add to the obligations of pension fund trustees. King was speaking at the launch of the second edition of the Toolkit for the Retirement Fund Trustee, compiled by professional services firm KPMG.
May 06, 2010
PIC reined in after ‘unwise’ investment
Linda Ensor
Business Day
The investment discretion of the Public Investment Corporation (PIC) has been reined in by the R820bn Government Employees Pension Fund after it made a R6bn imprudent investment in a black empowerment consortium. The move clips the wings of SA’s largest fund manager amid concern — particularly among elements within the African National Congress — that it has in the past funded questionable empowerment deals. The Government Employees Pension Fund board believes the investment in construction company AfriSam was...
April 04, 2010
New pension funds adjudicator an old FAIS
Staffer
Business Times
Charles Pillai, the Financial Advisory Intermediary Services (FAIS) ombud, is the new pension funds adjudicator. The post has been vacant for the past six months since Mamodupi Mohlala left before the end of her tenure for the position of director general of the Department of Communications. Finance Minister Pravin Gordhan announced Pillai’s appointment on Wednesday, the day before he took up his new post. Pillai will be replaced by his deputy Noluntu Bam as FAIS ombud for the next three years.
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MORE ARTICLES:
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Leaking bucket
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Another look at the rules
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There is life after work — if you plan properly
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Hands off retirement funds, union tells Patel
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Retirement: stick to golden rule of a 5% withdrawal rate
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A forgotten battle
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Numerous advantages to retaining a retirement annuity
February 01, 2010
When your parents have left retirement saving too late
January 17, 2010
Invest pension surpluses in job creation projects — Metropolitan
November 25, 2009
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