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In this newsletter:
Benchtest 03.2018, trustee term of office, RF.S.5.12 and RF.S.5.13 analysed and more...

Important notes and reminders

Quarter 1 of 2018 SIH returns

The SIH return at 31 March 2018 is due to be submitted by 15 May (note that the 45 days period remains in place).

NAMFISA levies

Funds with year ends of March 2018 need to have submitted their 2nd levy returns and payments by 25 April; April 2018 year ends by 25 May 2018.

Funds with year ends of September 2017 need to have submitted their 1st levy returns and payments by 25 April; October 2017 year ends by 25 May 2018.


Newsletter


Dear reader

In this newsletter we comment on what a reasonable term of office of a trustee should be based on our experience, we provide an analysis of FIM Bill retirement fund standards 5.12 and 5.13; in ‘legal snippets’ we provide an analysis of an adjudicator ruling on another interesting death claim and in our Benchmark Monthly Performance Review of 31 March 2018, we comment on the question posed in an articles below – “Do investors care about governance when there is money to be made?”

The topical articles from various media should not be overlooked – they are carefully selected for the value they add to the management of pension funds and the financial well-being of individuals...

...and make a point of reading what our clients say about us in the ‘Compliments’ section. It should give you a good appreciation of who and what we are!


As always, your comment is welcome, so open a new mail and drop us a note!

Regards

Tilman Friedrich


Tilman Friedrich's Industry Forum

Monthly Review of Portfolio Performance
to 31 March 2018


In March 2018 the average prudential balanced portfolio returned minus -1.67% (February 2018: 0.79%). Top performer is Investment Solutions (-0.74%); while Prudential (-2.35%) takes the bottom spot. For the 3 month period, Investment Solutions again takes top spot, outperforming the ‘average’ by roughly 1.68%. On the other end of the scale EMH underperformed the ‘average’ by -1.70%.

Do investors care about governance when there is money to be made?

Doing business presents risks as being alive and the adage that taking greater risks will deliver greater returns will always remain true. Somewhere there is a tipping point where the risk was just too high and resulted in the demise of the venture. When is a risk a normal business risk and when does it become morally questionable – whose morals do we apply as the measure anyway? And where is the boundary between business and politics? I do not believe there is a boundary between these two. Politics is but another arrow in the quiver of business while war is the ultimate argument of politics on behalf of business. Take US politics. Without business involvement, a candidate would get nowhere. So business interests are eventually dictating to politics what its interests are. US global hegemony is absolutely essential for US business interests to achieve their goals and to dominate the global economy. We are all experiencing in our own lives how we have to dance to the tune of the US be it when you want to open a bank account, when you want to enter into a business relationship with a North Korean company, or you want to consider a request by the Chinese government to set up an earth satellite tracking station near Swakopmund or to construct a naval base in Walvis Bay. What is morally wrong with this? The problem is that should the Chinese get a foothold in Namibia they might be able to challenge the US military dominance and consequently the global dominance of US business interests.

One can only conclude that there is ultimately no such thing as moral values when it comes to human interaction. The United Nations was established through US initiative on the noble ticket of promoting peaceful coexistence of nations across the globe. Yet how many times has the US enlisted so-called coalitions of the willing to enforce its interests as dictated by business without UN mandate and did these interventions make the world any better? It’s not that the US would need Denmark or Britain or France or Australia to make its point but it is merely trying to give its brute endeavours a moral coating. The first things one hears in the media after the recent attack on Syria how the ‘west’ can now get its foot in the door with the reconstruction of Syria. The ‘west’ of course being the US first and foremost, with some spoils left to the ‘willing’.

It seems to me a bit of a farce and an exercise in futility of the weak, applying ESG principles when the ultimate argument is brutal force.

So what does this have to do with investors and their investments you may ask?

Read part 6 of the Monthly Review of Portfolio Performance to 31 March 2018 to find out what our investment views are. Download it here...


What should a trustee’s term of office be?

To answer this question, one needs to differentiate between a person with previous experience as a trustee and a novice. Members are required to be represented on a board of trustees in terms of the Income Tax Act and a standard requirement of NAMFISA. Member trustees are elected by the members of the fund. Often these trustees do not have any background to the management of an institution or to financial matters which is largely what pension fund business is all about. Being a financial institution established to promote government’s socio-economic goals and objectives it enjoys unique tax incentives but is at the same time also subject to very stringent legal and regulatory requirements. A significant part of the business of a pension fund is therefore about compliance, i.e. meeting the requirements of the law and this places onerous demands on a trustee.

If a novice joins a board of trustees, in our experience, it takes at least a year before the person starts to participate in the discussions at trustee meetings and this presupposes that the person would have gained some confidence through a proper induction and formal trustee training. As the person starts to participate in the discussions her/she starts to apply his/her mind to the issues at hand and starts to understand the business of a pension fund ever more and better. It would normally then only be after 2 to 3 years of serving on a board that a person starts to add value to the proceedings at board meetings.

Effectively a novice will require a learning period of around 3 years. Any term of office of less than 5 years would make the process of training up a novice as a trustee very costly and inefficient. We would therefore propagate that rules should set the term of office of a trustee at 5 years.


New regulations and standards: comment on RF.S.5.12 and 5.13


In the second half of last year NAMFISA issued a number of new regulations and standards for comment. Although some comments were submitted these mostly did not address the substance of these but rather their form. Having considered these comments NAMFISA made some changes that we would consider superficial and not addressing the real concerns. Trustees are urged to pro-actively consider the possible implications of these regulations and standards and how to deal with these.  Funds are encouraged to liaise with RFS where these may impact the administration of the fund.

The following regulations and standards were issued and covered in the process:

Regulations:

  • RF.R.5.3  Terms & conditions on which a board may distribute some or all of an actuarial surplus
  • RF.R.5.7   The rate of interest payable on the value of a benefit or a right to a benefit  not transferred before the expiration of the applicable period pursuant to section 262(9)(c
  • RF.R.5.8   The protection of unpaid contributions of an employer and the rate of interest payable on contributions not transmitted or received pursuant to section 262 (9)(a) and (b).

The above regulations were covered in the Benchtest 2018-02 newsletter issued in February.

Standards:

  • RF.S.5.11  Alternative forms for the  payment of pensions for the purposes of defined contributions funds
  • RF.S.5.12  The conditions pursuant to which a fund may be exempted from Chapter 5 or from any provisions of Chapter 5
  • RF.S.5.13  Requirements for a communication strategy
  • RF.S.5.14  Requirements for the annual report of the fund to its members
  • RF.S.5.15  Requirements for the annual report of a fund to NAMFISA
  • RF.S.5.17  Categories of persons having an interest in the compliance of a retirement fund with the provisions of section 262  and the requirements for reports that must be submitted to such persons
  • RF.S.5.18 Matters to be included in investment policy statement
  • RF.S.5.19  Matters to be communicated to members and contributing employers and minimum standards for such communication
  • RF.S.5.20 Matters to be included in a code of conduct
  • RF.S.5.22 Transfer of any business from a fund to another fund or from any other person to a fund
  • RF.S.5.23 Fees that may be charged for copies of certain docs

In the Benchtest 2018-03 newsletter we addressed RF.S.5.11.

RF.S.5.12 

The conditions pursuant to which a fund may be exempted from Chapter 5 or from any provisions of Chapter 5

A fund may, subject to certain conditions, apply to NAMFISA for exemption from certain sections of Chapter 5 (Retirement Funds) of the FIM Act. Note that the section references below reflect the sections in the Final version of the FIM Bill issued in 2017 while the standard itself still contains references to the 2o13 version of the Bill.

  • A fund has no members, the fund shall be exempt from Chapter 5, except from -
    • Section 250: prohibition to carry on business unless registered.
    • Section 251: prohibition to use designation of ‘retirement fund’ or ‘beneficiary fund’ unless registered.
    • Section 269: prohibition to carry on business other than business of a fund.
    • Section 278: provision for voluntary dissolution of a fund.
    • Part II: provisions concerning registration of a fund
  • Fund has less than 5 members, the fund shall be exempt from Chapter 5, except from -
    • Section 250: prohibition to carry on business unless registered.
    • Section 251: prohibition to use designation of ‘retirement fund’ or ‘beneficiary fund’ unless registered.
    • Section 260: provisions concerning principle officer and principle officer.
    • Section 269: prohibition to carry on business other than business of a fund.
    • Section 278: provision for voluntary dissolution of a fund.
    • Part II: provisions concerning registration of a fund.
    • Part V: provisions concerning the rules of the fund.
  • A fund is closed to new active members and no new benefits accrue to the members, the fund shall be exempt from -
    • Section 267: provisions concerning appointment of valuator.
    • Section 268: provisions concerning investigations by valuator.
  • A fund has been terminated and is in the process of winding up, the fund shall be exempt from Chapter 5, except from –
    • Section 250: prohibition to carry on business unless registered.
    • Section 251: prohibition to use designation of ‘retirement fund’ or ‘beneficiary fund’ unless registered.
    • Section 269: prohibition to carry on business other than business of a fund.
    • Section 273: binding force of rules on employer, sponsor, board, fund officers members and any person claiming a benefit. (Note this is superfluous as Part V, sections 271 to 273 remain applicable.)
    • Section 278: provision for voluntary dissolution of a fund.               
    • Section 280: in a voluntary dissolution or winding up, members of fund to be treated as preferred creditors to be settled before ordinary creditors.
    • Part II: provisions concerning registration of a fund.
    • Part V: provisions concerning the rules of the fund.

Our comment:

  1. It is odd that a fund with less than 5 members is not subject to the provisions relating to benefits (deduction from or execution of benefits, distribution of death benefits).
  2. It is odd that a fund closed to new active members and where no new benefits accrue should not be subject to actuarial requirements, unless this were to only refer to defined contribution funds, which the standard does not.
  3. It is odd that a fund in the process of winding up should not be subject to the provisions concerning death benefits, particularly if it is a defined benefit fund.
  4. References in the standard must be updated as they still refer to the 2013 version of the Bill.

RF.S.5.13

Requirements for a communication strategy

This statement applies to –

  • all retirement funds;
  • financial institutions other than retirement funds, holding retirement capital of former members of retirement funds;
  • financial institutions holding retirement capital from which retirement income is paid;
  • trustees and
  • service providers, preservation product providers and pension/ annuity providers to the extent that their responsibilities involve communication with
    • trustees, principle officers or other service providers to retirement funds;
    • preservation product providers and pension/ annuity providers and
    • active members, ‘unpaid benefits’ (‘inactive members’), pensioners and living annuitants.

The strategy must be in clear, simple, non-technical language and must

  • Be developed and become the property of the parties to whom this statement applies.
  • Define the objectives the strategy is designed to achieve.
  • Define the process and service standards for managing various communication types –
    • recurring information regarding benefits, contributions and the retirement fund account (benefit statements);
    • notices on any other developments;
    • responding to complaints and enquiries;
    • NAMFISA, government authorities, media and others;
    • internal communication with trustees and service providers.
  • Information must be classified by retirement income providers and preservation product providers either according to ‘some other reasonable classification system’, else as
    • Confidential;
    • Protected but available to specified persons;
    • Available on an unrestricted basis;
  • Provide for regular communication between members, administrator and employer concerning the contributions, delays in contribution payments and arrears contributions.
  • Identify measures to trace beneficiaries and minimise unclaimed benefits.
  • Provide for electronic access by members and beneficiaries;

A communication strategy must provide –

  • to employers, members, deferred pensioners and pensioners –
    • fund performance
    • activities of interest materially affecting them;
    • statutory, regulatory and supervisory practices to the extent they affect defined contribution funds.
  • to employers, members, deferred pensioners and pensioners, a written explanation –
    • of the communication processes, roles and responsibilities of parties to the fund, emphasising the need to stay in touch with the fund;
    • how deferred members, retired members, and unpaid beneficiaries can obtain information and go about resolving unresolved complaints.

A communication strategy must offer access by members, unpaid beneficiaries, deferred pensioners and pensions to the latest auditors and valuator’s report

Requirements for preservation product providers and retirement income providers:

  • The communication strategy of these for retired members and unpaid beneficiaries must –
    • to the extent applicable comply with the requirements of the communication strategy of the fund;
    • provide factual, clear and not misleading Marketing material;
    • advise unpaid beneficiaries factually, clearly and comprehensively of the contractual terms for on-going management of their retirement capital or its transfer to another preservation product or retirement income provider and of charges, penalties and discounts that may apply to the product or a transfer to another provider.
    • advise retired members factually, clearly and comprehensively of the contractual terms for the conversion of retirement capital into retirement income or its transfer to another retirement income provider and of charges, penalties and discounts that may apply to the product or a transfer to another provider;
    • clearly disclose to unpaid beneficiaries and retired members their exposure to risk or loss in the event of the insolvency of the product provider prior to entering into a contract with the provider.

Our comment:

  1. To understand this regulation and many others is exceedingly difficult and time consuming. Perhaps NAMFISA should make an effort to ensure that these regulations and standards are formulated “in clear, simple, non-technical language”.
  2. The definition of “inactive member” is unclear. It seems to refer to a former member who has not been paid his full withdrawal benefit yet but where the intention is that this will be paid in due course. It does not seem to refer to a person who intends to consciously preserve his benefit. With this understanding, the references to “inactive member” in the standard appear to be inappropriate insinuating that the member will become a retired member at some time in future.
  3. The definition of “qualified financial institution” makes reference to an institution that complied with the requirements of RF.S.5.8. This standard deals with the early withdrawal from a retirement fund. The reference thus appears to be incorrect and makes it difficult to understand the standard.
  4. The definition of “qualified retirement income provider” insinuates that this can be a registered financial institution other than a registered insurer or a retirement fund although RF.S.5.11 only provides for latter two types of institutions to provide a retirement income.
  5. It appears that definitions used in different standards are consistent with each other. The definition of “retirement fund account” in RF.S.5.11 reads differently from the definition in this statement. The definition of “retirement income” also differs between these two statements. This is likely to lead to confusion in the industry and as these standards are part of the law, such conflicts will either have to be interpreted by a court or NAMFISA will have to issue replacements which our courts will find very difficult to keep track of as they will not follow the normal legislative process. Replacing a standard however will not resolve existing conflicts as they cannot normally be back dated.
  6. The strategy is to set out how the fund must communicate with NAMFISA. It is not understood why this is necessary as NAMFISA always directs in no uncertain terms what must be communicated, how and by when.
  7. The standard leaves quite a bit of room for applying discretion. The purpose of issuing this document effectively as an integral part of the law may be questioned. This document should rather be a guideline than a standard as it will be virtually impossible to ‘supervise’ objectively.
  8. This statement in essence applies to any party to a fund “...to the extent that their responsibilities involve communication...” with any other party to the fund. This is much too widely formulated. In effect it means that everybody doing business with a fund has to have a communication strategy as doing business always involves communicating with the client or customer.
  9. References in the standard must be updated as they still refer to the 2013 version of the Bill.
Pension fund governance - a toolbox for trustees

The following documents can be further adapted with the assistance of RFS.
  • Download the privacy policy here...
  • Download a draft rule dealing with the appointment of the board of trustees here...
  • Download the code of ethics policy here...
  • Download the generic communication policy here...
  • Download the generic risk management policy here...
  • Download the generic service provider self-assessment here...
  • Download the generic conflict-of-interest policy here...
  • Download the generic trustee performance appraisal form here…
  • Download the generic investment policy here...
  • Download the generic trustee code of conduct here...
  • Download the unclaimed benefits policy here...
  • Download the list of fund service providers duly registered by NAMFISA here...
Tilman FriedrichTilman Friedrich is a qualified chartered accountant and a Namibian Certified Financial Planner ® practitioner, specialising in the pensions field. Tilman is co-founder, shareholder and managing director of RFS, retired chairperson, now trustee, of the Benchmark Retirement Fund.
 
Compliment from a principal officer

“RFS always goes the extra mile for its clients, all these efforts are noted and highly appreciated. This is what makes RFS the leading administration company in Namibia.”

...and another compliment from a principal officer

“Thanks for your intervention on behalf of our Fund. I appreciate the level of service delivery we get from RFS.”

Read more comments from our clients, here...
 
News from RFS

Lilia Cabatana
Lilia Cabatana, Senior Manager: Systems, Training and Development, initially joined us in 2003, fulfilling duty outside RFS for a period of about 2 years but returning again after the two brief service interruptions. Lilia started her career with auditors KPMG in 1995 in the bookkeeping department. She then moved into auditing completing her articles and gathering 6 years’ experience, amongst other audits, also in pension fund audits, where she developed her interest in the pensions industry. Lilia is our core resource on the MIP project overseeing the development of MIP for RFS requirements, testing, implementation, conversion from Com_Pen, procedures and staff training.

News from Namfisa

Stakeholder engagement session – directors and trustees

NAMFISA hosted a stakeholder engagement session for boards of trustees and directors of fund sponsors and financial institutions, providing an overview of:
  • Its purpose
  • Its regulatory scope
  • Industry statistics
  • Its key staff
  • Overview of recent restructuring
  • Its organisational structure
  • Status of various bills in the pipeline
  • Status of standards and regulations
  • Governance requirements of board of financial institutions
  • NAMFISA approach to supervision
  • Industry overview of NAMFISA supervisory ladder of intervention ex inspections
  • Key findings from inspections
  • Purpose of ‘joint inspections’.
Download the presentation here...

Legal snippets

Trustees ordered to obtain information from executors and another fund and to then review allocation of death benefit (case ref PFA/GP/00025441/2016/MD)

In the case of AWL Kew and another as complainants vs Allan Gray RAF and it administrator as the respondents, an amount of R 5.7 million was available for distribution by the trustees of respondent from the deceased’s retirement annuity fund with Allan Gray. In a preliminary allocation communicated to all parties concerned, the respondents proposed to allocate a significantly smaller portion to the life partner and minor son of deceased. To this proposed allocation the life partner objected in response to which respondents requested and obtained additional information from the major son and the complainants. As the result of the additional information, the respondents resolved to significantly increase the allocation to around one-third each to the deceased’s life partner and his minor son, to essentially retain the allocation to his major son, while the allocation to deceased’s mother and his sister (the complainants) was reduced significantly.

Respondents argued that they had applied a calculator to arrive at the allocation. The calculator uses a real discount rate of 3%, a standard SA mortality table and it assumes that the deceased member’s income would have dropped after retirement to 66.7% of his pre-retirement income. With these assumptions a gross need was calculated and the net need, after deducting the amount of other cash benefits received as the result of the member’s death.

Respondents provided a very detailed calculation of the respective net needs of the beneficiaries showing the term of dependency of each one, the cash benefits each one received as the result of the death of the member. Respondents acknowledged that the deceased’s estate appears to have assets of around R 20 million and were informed that the winding up of the estate was far from complete due to on-going litigation/ mediation. Respondents acknowledged that in the final allocation they had not taken into account the value of any inheritance as this would have reduced the life partner’s needs to zero

Respondents’ arguments submitted to the adjudicator were that they took into account the age of the dependants, their relationship with the deceased, the extent of their dependency and the wishes of the deceased, pointing out that the deceased had not nominated the complainants as beneficiaries. They argued that the trustees had considered only relevant factors and ignored irrelevant factors, that their decision was justified, was not taken in an arbitrary manner and that they did not fetter their discretion. They pointed out to the adjudicator that the adjudicator’s role is not to decide what the fairest and most generous distribution is but rather, the test in law is, to determine whether the trustees acted rationally and arrived at a proper and lawful decision.

Between the complainants and the life partner various arguments were raised against their respective claim that they were in fact dependants, the life partner making reference to the complainants owning significant assets, and the complainants making reference to the deceased having ended his relationship with the life partner 4 years prior to his demise, removed her as a beneficiary in his life policies and ceased paying for her car instalments, not being married, and having kept separate bank accounts. The fact of the matter was though that both continued to live under the same roof and shared their household, they have a minor son, had joint businesses and the life partner remained a beneficiary of his estate. The complainants further averred that the trustees failed to consider that other dependants may be allocated a death benefit amount to R 1.8 million from another fund.

The adjudicator accepted that the all parties were factual dependants of the deceased. With regard to the status of the life partner it was pointed out that “the test of dependency was... whether the parties lived in a relationship of mutual dependence and ran and shared a common household. A relationship of mutual dependency involves, amongst other things, an emotional and intimate bond.” It did not express a view on whether the life partner was a legal dependant.

The adjudicator found fault with the fact that the respondents had not taken into account an amount of R 4 million the life partner was due to receive from deceased’s estate nor had they taken into account the benefits arising from another fund. The respondents were thus ordered to obtain information from the other fund of which deceased was a member and from the executors of deceased’s estate to determine who was paid how much from those sources for the purpose of reviewing the allocation of the death benefit from the respondent fund.

Our comment: The adjudicator instruction to respondents, to obtain information from the other fund before distributing the benefit from the fund in case creates quite a dilemma for trustees. It presents a ‘chicken and egg’ situation. The other fund should thus also wait for the distribution of the fund in case before it distributes the benefit – who is to be first and who last?


Media snippets
(for stakeholders of the retirement funds industry)

It’s a crime for employers not to pay your pension fund

“If your employer fails to pay your retirement fund contributions into your fund, it is a common law crime and you have a right to know and to expect the fund's trustees to do all they can to recover the money.

But, while this theft is common, there are no reported cases of company directors, members of closed corporations or those in charge at companies being held personally liable for the failure to pay contributions.

The issue of outstanding contributions is bigger than the one of unclaimed retirement benefits, Muvhango Lukhaimane, the Pension Funds Adjudicator, said...”

In South Africa the Pension Funds Act was amended in 2014, adding provisions that make controlling shareholders, members of close corporations, company managing directors, trustees and partners personally liable for an employer's failure to pay contributions. They can be fined up to R10-million or imprisoned for up to 10 years. In Namibia, section 270 (10) of the FIM Bill contains similar sanctions holding personally liable every director and the person regularly involved in the overall management of the financial affairs of a corporate body, or where the employer is not a corporate body, every trustee or partner who directs or instructs the governing body of the employer. Any unpaid contributions will constitute a first charge against the estate of the employer. In Namibia the fine for failing to pay over the contributions will be up to N$ 2.5 million or 5 years imprisonment or both.

Read the full article by Laura du Preez in Sowetan of 8 March, here...


Once invincible Tencent joins ranks of internet mortals

“Tencent Holdings may not be a superhero after all. Revenue at the Chinese social media company missed estimates by the largest margin in more than three years, user growth slowed and margins are under pressure. It’s about to get worse...By stripping out the entire “other gains” category — which I think should be reported under non-operating items anyway — I found that rather than climbing, operating margin slid from 29.4% a year ago to 26.8% in the most recent period. When revenue jumps 51% but operating margin slides, you start to realise that economies of scale aren’t quite what you imagined. Investors should be concerned.”

Tencent of course has been the driving force behind Naspers and Naspers has been the driving force of the JSE making up around 20% of its market capitalisation. Some asset managers have benefited greatly by this stellar performance of Naspers. For interest sake, here are the holdings in Naspers of some of the main asset managers’ prudential managed portfolios:

Allan Gray– 5.1%
Investec – 5.2%
NAM Cor Bal Plus – 3.9%
Old Mutual Prof Pinnacle – 9.7%
Prudential – 5.3%

Read the full article by Tim Culpan in Moneyweb of 12 April 2017, here...


Media snippets
(for investors and business)

Do investors care about governance when there is money to be made?

“While investors tend to pay lip-service to environmental, social and governance (ESG) factors at the firms they invest in as long as returns are favourable, recent corporate scandals at Steinhoff and Tiger Brands have highlighted how serious the damage can be when safeguards fail.

Research conducted by Bank of America Merrill Lynch shows that companies that are well-run from an ESG perspective, typically have much lower drawdowns than companies that are not.

Alex Tedder, head of global equities at UK-based asset manager Schroders, says it seems obvious that a well-run business would pay attention to ESG factors, but it is not the way a lot of companies or investors think yet.

“I think they will do, but it is [at a] very early stage. In the United States for example ESG is not really a factor right now. A lot of the investors don’t really look at it... Tedder says ESG considerations can’t protect investors against corporate failures such as Steinhoff as these events are very difficult to predict.

“If a manager is lying, it is very difficult to assess that and you’ll always have situations that you get wrong – every investor has that, but our view is simply that you have got to be systematic about it... It [ESG considerations] has to be integrated into your process and there has to be a trade-off between risk and return...”

Read the full article by Ingé Lamprecht in Moneyweb of 18 April 2018, here...


There is more to diversification than not having all eggs in one basket

“The old cliché is don’t have all your eggs in one basket, but you also need to understand that you can’t only have eggs, Philip Bradford, head of investments at Sasfin Wealth, says. What Bradford is referring to is the importance of understanding the interplay between various asset classes in a multi-asset portfolio. Although investors ideally want to ensure that all the building blocks in their portfolio do well in the long run, they don’t want to be in a position where all assets are struggling at the same time... In the local market, if you can currently get inflation plus 4% or 5% out of bonds – which are actually going to protect you when the equity market falls – what it does allow you to do is to dynamically move between those asset classes when equities underperform.

Bonds are essentially like an insurance policy that instead pays you a premium... When you are looking at equities I think you do need to look at things with very much a global mind set and be aware that the vagaries and movements of currency markets will impact those returns, but over time I do believe there are opportunities out there that you can’t get on your doorstep in South Africa... The argument for going offshore and investing in cash or bonds for me is a very weak one, particularly at these sorts of levels and the kind of yields that are available... However, other local asset classes like fixed income and local property offer very high yields compared to the global market. Local property offers a very high rental yield because the escalations in leases are linked to inflation and are much higher than in developed markets. ”

Read the full article in Moneyweb of 17 April 2018, here...


These 7 disruptive technologies could be worth trillions of Dollars

“Scientists, technologists, engineers, and visionaries are building the future. Amazing things are in the pipeline. It’s a big deal. But you already knew all that. Such speculation is common. What’s less common? Scale. How big is big?...”

Here are these 7 technologies:
  1. Deep learning  - Deep learning is a subcategory of machine learning which is itself a subcategory of artificial intelligence.
  2. Autonomous taxis – this is the biggest change that the automotive industry has ever faced.
  3. 3D printing – goes big with finished products at scale.
  4. Genetic therapy - CRISPR is the technique leading the genome editing revolution, dramatically cutting time and cost while maintaining editing efficiency.
  5. Mobile transactions – by 2020 75% of the world will own a smart phone.
  6. Robotics and automation – Amazon’s robot workforce in warehouses has grown from 1,000 to nearly 50,000 since 2014.
  7. Blockchain and crypto assets – there are now some 700 crypto assets of various shapes and hues.
Read the full article of 16 June 2017 by Jason Dorrier on ‘SingularityHub' here...

Interesting statistics


From Capricorn Asset Management Daily Brief of 18 April 2018.


And finally...

Blackboard wisdom at a filling station

A  filling station has become quite a landmark in Gauteng, South Africa, with its daily #PetrolPumpWisdom, which are uplifting quotes written on a chalkboard. Some motorists say they deliberately travel this road just to read the quote which brightens their day. Here's one:



 
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