Important notes and reminders
Quarter 2 of 2018 SIH returns
The SIH return at 30 June 2018 is due to be submitted by 15 August (note that the 45 days period remains in place).
- Funds with year end of June 2018 need to have submitted their 2nd levy return and payments by 25 July 2018; July 2018 year ends by 25 August 2018.
- Funds with year end of December 2017 need to have submitted their 1st levy return and payments by 25 July; December 2017 year ends by 25 July 2018.
- Funds with year end of December 2017 need to submit their final levy return and payment by 31 December 2018.
VAT registration and refunds – press releases
Inland Revenue issued two press releases on 3 July. The first release deals with registration for VAT purposes. Download it here...
The second release invites persons who are owed a VAT refund to contact Inland Revenue. Download it here...
In this newsletter we question whether Namibia is ready for the FIM Act; we contemplate whether we will depend on foreigner to fly our [FIM Act] aeroplane; we analyse standards RF.S.5.20, RF.S.5.22 and RF.S.5.23; we report on news from RFS and NAMFISA and in our investment commentary we show why a more conservative portfolio for now should let you sleep more peacefully.
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!
Tilman Friedrich's Industry Forum
Monthly Review of Portfolio Performance
to 30 June 2018
In June 2018 the average prudential balanced portfolio returned 2.45% (May 2018: -1.61%). Top performer is Allan Gray (3.92%); while EMH Prescient (1.13%) takes the bottom spot. For the 3 month period, Allan Gray takes top spot, outperforming the ‘average’ by roughly 1.92%. On the other end of the scale Investment Solutions underperformed the ‘average’ by 1.09%.
A more conservative portfolio for now should let you sleep more peacefully
The relevance of a normalised interest rate environment is that returns of all other asset classes should start normalizing in other words, returning to inflation beating returns of all asset classes but perhaps cash, up to inflation plus 6% to 8% on equities. Until we reach normality we will see lots of volatility particularly in the more volatile asset classes and we will see similar returns on the various asset classes. This is also what we showed in last month’s column where we looked at the period 1 July 2014 to 31 May 2018. In such scenario, a more conservative portfolio structure should offer more peace of mind as it will avoid the painful draw-downs of the more aggressive portfolios.
This is exactly what the trustees of the Benchmark Retirement Fund did with its Default Portfolio when they decided to pair the Prudential Inflation Plus portfolio with the Sanlam Inflation Linked portfolio on a 50: 50 basis to 50% of the portfolio in October last year. This appears to have worked out quite well for the portfolio since October 2017, given that it is a very short period. Over this 9 month period the Default Portfolio returned 6.2% compared to the return of the average manager’s 5.3%. Graphs 1.1 to 1.6 above cover this period and mirror the positive outcome of the reduction of risk affected in the Default Portfolio.
The US Repo rate is currently 2%, while US CPI was 2.9% at the end of June. This relationship should be the inverse of what it is meaning that based on current CPI, a US Repo rate of around 4% would indicate a normalised interest rate environment.
Read part 6 of the Monthly Review of Portfolio Performance to 30 June 2018 to find out what our investment views are. Download it here...
Is Namibia ready for the FIM Act?
The FIM Bill is due to be tabled in parliament for approval at the September session of parliament, after the first draft was presented by NAMFISA in May 2008. Although the industry was granted various opportunities to comment on the original draft and various subsequent drafts and on numerous draft standards and regulations to be issued under the new law over this 10 year period, there appears to be general consensus in the industry that many comments by the industry were not given due consideration. The question may be asked whether Namibia is ready for this new law?
We believe Namibia is not geared and we still have serious concerns about a number of matters, including more prominently, the following:
Will we depend on foreigners to fly this aeroplane?
- It is difficult to separate the standards and regulations from the FIM Bill. The Bill should and cannot be considered in isolation without reference to the standards and regulations where we have numerous concerns with these standards and regulations, that we have been highlighting in our monthly newsletters.
- The 30 day period granted for commenting was in many cases not sufficient to give properly considered feedback on the standards and regulations. Although NAMFISA did at times indicate that it is still open for comments, we suspect that stakeholders would often not have commented after having missed the official due date.
- We believe the consultation that took place in the process of formulating the FIM Bill in many instances did not give adequate consideration to the contribtuions by the industry.
- As a point in case, a new chapter 8 appeared for the first time in the 2017 draft of the Bill that was never subjected to comment, while the previous draft was circulated in 2013.
- The requirement that annual financial statements are to be submitted to NAMFISA within 90 days of fund year end was raised as a serious concern by funds, administrators and the audit profession. It is still contained in the latest draft.
- Amendments to the equivalent sections of section 37A, 37B, 37C and 37D present a substantially different situation for the industry and fund members that was not adequately considered in our opinion to the future detriment of members, beneficiaries and dependants.
- It would appear that sections in the Bill and the standards may be inconsistent with the Income Tax Act and question whether the Bill was subjected to review by the Tax Authorities.
- We believe that the industry is not prepared or resourced for the implementation of the Bill.
- We are concerned that no support structures for training and formal qualifications exist to prepare and equip the industry nor does it appear that government is taking any steps to initiate and coordinate efforts to put such structures into place.
- We are concerned that the FIM Bill is not affordable for the fund member who has to foot the total cost in the final analysis. We are not aware of any impact assessment studies that have been carried out by the regulator to determine the cost of regulation, the impact on levies once the Bill has been enacted, after the recent significant increase in levies, and the impact on members’ retirement capital.
- We believe that the cost of maintaining the FIM Bill, once enacted, will far exceed the economic benefits it may offer and therefore the cost of this law is likely to have a severe negative impact on the competitivenes of the Namibian economy.
- Although we are concerned that the regulator may not be ready to regulate and supervise the industry on the basis of the FIM Bill and might still have to build capacity at the cost of retirement fund members’ retirement benefits, the regulator believes that it is fully prepared already. The future will tell whether levies will be raised further or not.
- The fact the FIM Bill had to be drafted by foreign experts with only superficial insight into the Namibian environment indicates that neither the industry nor the regulator had the expertise and capacity to create this new law that is to be implemented, managed and operated by the very same industry and regulator.
- We are concerned that the judicial system is not resourced to provide a reasonable level of certainty within a reasonable time on conflicts and ambiguties contained in the Bill.
- We are concerned that the extremely wide powers that will vest in the regulator will put service providers in an unenviable position in the event of a dispute as there is no recourse to a low cost and efficient dispute resolution mechanism.
Namibians generally seem to be in the habit of failing to maintain and repair their capital assets and rather build a new replacement asset at a high capital outlay and great cost to the economy. I am sure this frequent phenomenon has caught the eyes and attention of many alert observers.
One argument in support of this of cause can be that it will increase the velocity of money flow, which is at the core of economic growth. This argument however will not be valid if much of the capital outlay leaves the country. Witness all the construction activities that have gone on over the past number of years, and are still going on in Namibia, largely undertaken by foreign contractors who leave very little of their earnings in Namibia. So where the taxman has a hand in every transaction where money is passed between two Namibian taxpayers, the moment the money leaves Namibia this chain breaks and no further taxes will be collected on that money. Furthermore, building new and discarding the old that could have still represented a productive asset, necessarily entails wastage of resources and a cost to our economy. Such wasted costs only contribute to the uncompetitiveness of the Namibian economy.
The FIM Bill is a point in case. Namibia has a Pension Funds Act since 1956 (and other financial services laws) and it has been built by our courts over the past 60 years. Possibly because it was seen as Apartheid era legislation, the Pension Funds Act never really received much attention since Independence, as the result of which it was not really maintained and underwent very few repairs. We rather preferred to build a new law to replace the Pension Funds Act and a number of other financial services laws. With this new law, unlike an asset, we will discard all the established expertise and experience that was built over 60 years. It is not possible to quantify the economic value that will be thrown out the window, but it will be many, many millions, no question being raised about this wastage of very scarce resources. Also, as for many of our infrastructure projects that were undertaken by foreigners, this new law was largely the product of foreign experts. Their remuneration too, will have left Namibia breaking the tax collection chain at that point.
If Namibians were not technically capable of building this ‘aeroplane’, will we depend on foreigners to ‘fly, maintain and repair this aeroplane’ now and perhaps forever?
New regulations and standards: comment on RF.S.5.20, 5.22 and 5.23
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:
- 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.
- 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.
In the Benchtest 2018-04 newsletter we addressed RF.S.5.12 and RF.S.5.13.
In the Benchtest 2018-05 newsletter we addressed RF.S.5.14 and RF.S.5.15.
In the Benchtest 2018-06 newsletter we addressed RF.S.5.20 and RF.S.5.21
Matters to be included in a code of conduct
The rules of every fund and its code of conduct must provide for (s 2) -
- Duty of attendance: A minimum requirement for attending meetings and sanction in case of non-compliance (ss a);
- Duty of active engagement that entails (ss b) -
- withholding one’s vote if not satisfied;
- being or becoming knowledgeable concerning the fund and its rules;
- being intimately familiar with the code of conduct.
- Duty of prudence that entails (ss c) -
- discharging duties with skill, diligence and prudence;
- carefully testing and challenging the advice of service providers.
- Duty to protect the fund that entails (ss d) –
- operating and maintaining the fund subject to adequate and appropriate measures to identify and control risks.
- Duty of avoidance and fair dealing that entails (ss e) –avoiding conflict on interests;
- avoiding acceptance of gifts and inducements;
- governance that is transparent and free of any questionable conduct;basing all transactions on sound governance principles.
- Duty of independence that entails (ss f) –
- exercising discipline through rigorous independence of thought and analysis;
- resisting tendency to uncritically accept views of other trustees and service providers.
- Duty of efficiency that entails (ss g)–
- incurring only reasonable expenses;
- protecting fund against excessive expenditures;
- ensuring that expense charges of service providers are reasonable and are subject to verification and audit.
- Duty to monitor performance that entails (ss h) -
- monitoring investment and administrative performance.
- Duty to hold service providers accountable that entails (ss i) -
- ensuring that work of and reporting by service providers are reasonable and to highest professional standard.
- Duty of compliance that entails (ss j) -
- fund meeting requirements of all applicable legislation;
- all parties involved in the maintenance and administrative or investment operations of fund comply with a code of conduct considered sufficient and appropriate by fund.
- An extremely prescriptive, compliance based standard that will constitute law, for interpretation by the courts in case of conflict or a dispute. It will lead to funds taking a ‘tick-box’ approach. NAMFISA should perhaps rather consider prescribing a standard code of conduct.
- References to clauses in the Bill need to be updated to refer to the relevant sections in the latest version of the Bill.
- Para 2 refers to section 253(3)(b). This seems to be an incorrect reference and no appropriate clause could be identified.
- The duties of trustees in whichever capacity has been well codified through extensive case law.
- Formulating duties of trustees in the rules and a code of conduct may create conflicts with established case law.
- The standard has been formulated like a guideline yet it will be law and should avoid offering any discretion as it does at the moment.
- The standard uses qualitative measures in many instances (e.g. ‘excessive’, ‘reasonable’, ‘intimately familiar’, ‘knowledgeable’, ‘adequate’, ‘appropriate’ etc.) that are bound to lead to different interpretations for conclusive interpretation by a competent court.
- It is not clear why the code of conduct should be included in the rules and be set up as a separate document. Anything included in the rules is much more inflexible as there are strict requirements for amending the rules. A separate document would be superfluous if the duties are also contained in the rules. Alternatively a separate document not contained in the rules would provide for a more flexible arrangement.
Transfer of any business from a fund to another fund or from any other person to a fund
No transfer of benefits and corresponding assets and liabilities may be made, if (S 2) –
- No transfer of benefits and corresponding assets and liabilities may be made, if (S 2) –
- either of the funds (ss a)
- is not in compliance with Act and this may prejudice transferring members (sss i);
- party to litigation and this may prejudice transferring members (sss ii);
- technically insolvent (sss iii);
- not expressly authorised by rules to make or receive a transfer (sss iv).
- funds have not concluded an agreement governing the transfer (ss b);
- NAMFISA has not approved the agreement (ss c);
- transferring employer is in default vs transferee/ transferor fund or NAMFISA (ss d).
- NAMFISA may notwithstanding S 2 approve a transfer if requirements of S 4 have been met and transfer is in interests of the members of both funds (s 3).
- NAMFISA will not approve a transfer unless it is satisfied that (S 4) –
- transfer agreement has been submitted jointly by both funds (ss a);
- members were given at least 3 months’ notice to voice concerns, prior to effective date and agreement adequately addresses legitimate concerns (ss b);
- provisions of Chapter 10 re transfers and amalgamations have been complied with (ss c);
- the transfer agreement (ss d) –
- protects transferring members’ accrued benefits and reasonable benefit expectations (sss i);
- provides analysis showing that remaining members of transferor fund and members of transferee fund are treated equitably and showing impact of transfer on financial position of both funds (sss ii);
- stipulates that accrued benefits of transferring members are fully vesting (sss iii);
- stipulates that transferring members’ period of service will be recognised by the rules of the transferee fund (sss iv);
- where assets, not cash is transferred, specifies and analyses (by independent advisor) the methodology for selecting assets (sss v);
- in the case of a fund that is not a defined contribution fund that has an actuarial surplus (sss vi) –
- describes members’ rights to allocation of surplus according to the rules;
- provisions made for allocation of surplus;
- valuator’s opinion provided that allocation is equitable to transferring and remaining members;
- in the case of a fund that is not a defined contribution fund (sss vii) –
- describes the effects on the rights to surplus that may reasonably be expected to result from transfer of accrued benefits;
- valuator’s opinion provided that the rights to surplus (of remaining members?) are not adversely effected by transfer;
- includes a certificate by both funds confirming (sss viii) -
- transfer is authorised by and in compliance with the rules;
- disclosing proportion of members that have formally objected to the transfer.
- includes statement of costs of transfer (sss ix).
If applicable, following reports must be appended to transfer agreement upon submission to NAMFISA (S 5) –
- any statements of opinions of fund advisor or valuator;
- report on what statement of opinion is based.
- Section 4 (d) (vii) appears to make reference to members remaining behind in the transferor fund. If this is the case, the clause should state this for the sake of clarity. If this is not the case, the clause should be rephrased as it not comprehensible as it stands.
- We note that section 4 (d) (viii) indicates that it will be sufficient for an unspecified proportion of fund members not having formally objected to the transfer, for NAMFISA to approve the transfer.
Fees that may be charged for copies of certain docs
Copies of documents to be provided free of charge (S 2) -
- Rules, fund policy statements and fund service levels; (ss a)
- governance documents (ss b);
- annual report (ss c);certificate of registration by NAMFISA (ss d);
- any notice to be given to members in terms of the Act (ss e);
- insofar as it directly relates to the member, any application to NAMFISA for approval (ss f)
- of any material change to or activity involving fund;
- NAMFISA decision regarding the afore going.
- any amendment to any document per ss (a) to ss (f)
Copies of documents to be provided for a reasonable fee (S 3) –
- copies of documents per ss (2) where (ss 1) –
- it is not required i.t.o. Act;
- member specifically requested it.
- reasonable fee can be charged for (ss 2)-
- document that was previously provided (sss a);
- most recent report of auditor, valuator, investment manager or advisor, administrator or other service provider if already provided previously (sss b);
- report received or commissioned by board insofar as the report relates directly to the member (sss c);
- minutes of meetings insofar as they relate directly to the member (sss d);
- court adjudication or legal opinion regarding a matter posing a material risk to the fund if this does not violate confidentiality (sss e).
- Member must be consulted whether an electronic copy suffices or whether a paper copy is required ( S 4(1)).
- A copy provided to the member in electronic format, at his request is to be free of charge (ss 2).
- A copy of any document per S 2 in paper format is to be provided at a reasonable charge (ss 3).
- Fund to provide a fee-exempt paper format excerpt of a document per S 2 that includes the conclusion or other material provisions, if (ss 4) -
- it was received by the fund in bound format, extends beyond 5 standard report-size pages;
- it includes a mix of standard report-size pages and non-standard large-sized pages;
- it is otherwise difficult to copy.
- Board of trustees must approve fees for paper copies of documents (S 5), but –
- cost may not exceed lowest cost of copying in the commercial market;
- approval of costs may be delegated to the principal officer.
- Summary of standard must be prepared and distributed free of charge to all members (S 6)
- Standard to be read in conjunction with RF.S.5.13 (communication strategy) and RFS5 14 (annual report).
Pension fund governance - a toolbox for trustees
- Another extremely prescriptive, compliance based standard that will constitute law, for interpretation by the courts in case of conflict or a dispute. It will lead to funds taking a ‘tick-box’ approach and it will be costly to comply with. NAMFISA should perhaps rather consider prescribing the costs and reviewing these once a year to remove all discretion and judgement and to ease the burden on the trustees.
- References to clauses in the Bill need to be updated to refer to the relevant sections in the latest version of the Bill.
- Para 3 (2)(b) insinuates that there is an obligation on the fund to provide the most recent report of the auditor and the valuator to members which there is not i.t.o. this standard. A member can only be required to pay a reasonable fee for a further copy of these documents while the first one should seemingly be provided free of charge even though there is no such obligation on the fund.
- Para 3 (2)(d) requires minutes of meetings to be provided to members ‘insofar as such minutes relate directly to the member’. Firstly, minutes are confidential per se and secondly, they also mostly do not only deal with a single matter. We believe this para should be removed altogether or at least must be qualified by setting very narrow constraints to when minutes can be requested.
- The standard has been formulated like a guideline yet it will be law and should avoid offering any discretion or judgement as it does at the moment.
- The standard uses qualitative measures in many instances (e.g. ‘previously, ‘reasonable’, ‘material’, ‘relates directly’, ‘difficult’, ‘lowest’ etc.) that are bound to lead to different interpretations for conclusive interpretation by a competent court.
- The default format of documents to be provided is the paper format. In this age of conservation of natural resources and mobile communication means, we believe the default should rather be electronic format.
The following documents can be further adapted with the assistance of RFS.
- 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 Friedrich is a qualified chartered accountant and a Namibian Certified Financial Planner ® practitioner, specialising in the pensions field. Tilman is co-founder, shareholder and Chairman of the RFS Board, and retired chairperson, and now trustee, of the Benchmark Retirement Fund.
|Compliment from an happy client
“Baie dankie Mevrou Nel, waardeur die hulp. Wens daar was meer soos u, regtig.. ten alle tye was u behulpsaam en beskikbaar. Die Here seen u in u werk, by u huis, in die veld en in die stad. Ek sal u en u company promote met elke geleentheid.”
Read more comments from our clients, here...
News from RFS
Former managing director hands over the baton
Here are a few photos from our internal handover function:
Tilman Friedrich handing over a ceremonial axe, symbol of authority to Marthinuz Fabianus, the company's new MD.
The RFS family assembled for a goodbye and welcome back picture. (Tilman Friedrich remains Chairman of the Board.)
The new Board of Directors of RFS (fltr): Louis Theron, Marthinuz Fabianus, Rauha Hangalo, Günter Pfeifer, Sharika Skoppelitus, Tilman Friedrich, Kai Friedrich, Festus Hangula.
We are pleased to announce that Valerie Mudisie has joined our permanent staff establishment as from 1 August 2018. Valerie joined us in February 2018 from Alexander Forbes Financial Services where she last held the position of team leader. Valerie is a born Namibian from Okahandja. She is married and the mother of three kids (1 girl and 2 boys). She matriculated at Jan Möhr Secondary school in 2003. She started her career in 2004 with FNB as an admin clerk. After 5 years in the banking industry she joined Alexander Forbes as a Senior Fund Administrator. She was promoted to the position of team leader in 2014. Valerie gained valuable experience in our industry during the 8 years she worked for Alexander Forbes. She is a member of the Benchmark team serving a portfolio of participating employers as a Fund Administrator. Her 8 years’ fund administration experience no doubt stands her in good stead to promote our slogan ‘rock solid fund administration that lets you sleep in peace’ amongst her clients! We extend a hearty welcome to Valerie and look forward to her being a key ‘player’ for many years to come!
RFS and the Benchmark Retirement Fund welcome Namib Lead and Zinc
We are excited to advise that Namib Lead and Zinc just informed us it will be joining the Benchmark Retirement Fund as a participating employer. We sincerely appreciate this gesture of confidence and trust in RFS, as fund administrator, and the Benchmark Retirement Fund and extend a hearty welcome to the company and its employees to the fold of the Benchmark Retirement Fund. Our business model is not to dominate the market through a low-cost proposition. We focus on transparency, exceptional reporting and superior service. This should support and promote sound industrial relations and the employer’s employment philosophy and policy of attracting and retaining the best staff. If these are objectives important to your company and close to your heart, we should be your ideal partner in the provision of retirement benefits to your staff.
This appointment takes editor down memory lane to the 1970’s when he used to audit the books of Namib Lead and Zinc's predecessor mine!
News from NAMFISA
NAMFISA launches whistleblowing hotline
As reported in The Sun The Namibia Financial Institutions Supervisory Authority (Namfisa) board chairperson Gerson Katjimune has officially launched the Namfisa whistleblowing hotline.
RFS and the Benchmark Retirement Fund support this initiative whole-heartedly and encourage any stakeholder of the industry in general, but of RFS and the Benchmark Retirement Fund specifically, to make use of this new hotline to report any fraud, bribery, corruption and suspicious transaction without delay.
NAMFISA investments exposed
The Namibia Financial Institutions Supervisory Authority has investments of N$527.9 million outside the country, according to its 2017 fourth quarter statistics bulletin. The report released last week shows that this is as decrease from N$552.6 million recorded during the third quarter of 2017. However, the amount was lower than the N$928.1 million invested within the country. Meanwhile, the company’s total investments during the period under review stood at N$1.46 billion in the third quarter of 2017. According to the bulletin, cash outside Namibia stood at N$41.5 million, compared to equities and shares outside Namibia standing at N$155.2 million. – The Namibian.
(for stakeholders of the retirement funds industry)
Inside the mind of a balanced fund manager
“For quite a few years, analysts and market commentators have warned that investors should expect returns to be lower going forward. But the lack of investment returns over the past three years has been worse than many have anticipated and has caused alarm among local investors. Over the past three years the median return of a local multi-asset high equity fund – the typical unit trust investors use to save for retirement – was a mere 4.8%. Many of these funds have not kept up with inflation. During the period, the local equity market has largely moved sideways and after the rand weakened significantly at the end of 2015, the local currency has strengthened again. This meant that many funds could not fully benefit from the international stock rally...”
What is the general expectation of balanced fund managers of equities, as typically the largest asset class holding in a balanced portfolio, going forward?
Download this cross-section of investment manager views by Ingé Lamprecht in Moneyweb of 24 July 2018, here...
Safeguarding the elderly from financial abuse
“Dissect some of South Africa’s most controversial investment schemes and you will come across groups of pensioners who invested after they were lured with empty promises of great returns. In light of the country’s poor savings culture and socio-economic challenges, only about one in ten people are in a position to maintain their standard of living in retirement. Desperate to supplement a meager savings pot, it is not difficult to see why many retirees become victims of too-good-to-be-true money-making schemes. But financial abuse is not limited to having your money pilfered. It can also involve fraud or pressure to part with money or other assets, or having these misused by a loved one or acquaintance…”
As pensioners grow older, health is likely to fail and often they will no longer be in a position of evaluating the financial advice they receive from a financial adviser and to take a rational decision. So how do you protect the pensioners’ life savings?
Read the article by Ingé Lamprecht in the Moneyweb Investor of 24 July 2018, here...
Foreign equity transactions on the JSE
As equity investor one is competing with other equity investors for the best buys available. Often the buys everyone is piling into becomes expensive, being chased by high demand, with concomitant poor future growth prospects. Foreign investors represent a pool of investors on the JSE and their investment calls may assist you in deciding where to buy and where to sell.
SBG Securities produced an interesting analysis of what equities foreigners bought and sold on the JSE during June 2018. Download it here...
(for investors and business)
A huge storm may be looming for investors
Window-dressing - Why the market rallies at quarter end
“We are officially halfway through 2018 and it’s a good time to reflect and look at what’s happened so far this year. We compared the performance of the 100 largest shares on the JSE over different time periods and summarised the worst and best performers in the two tables below. Immediately we can note the 3.5% jump the Top40 Index experienced on 29 June, which accounted for all of the month’s 3.6% return. It was also the last trading day of the second quarter and the rampant one-day rally improved the picture substantially for those three months, returning 6.2% instead of 2.7%. The improvement was felt across the board with most shares posting a strong final day of the quarter. It may seem like an odd coincidence that the last day of the quarter sees this anomaly, but those in the asset management industry are well aware of this occurrence near quarter end. The phenomenon is called ’Window Dressing’ where fund managers change their positions and ’dress’ their funds to look more attractive at the end of a quarter (usually the period for reporting to clients). They may also try to increase the value of their funds in order to gain the maximum possible management fee (in cases where monthly or quarterly values are used to calculate the fee). The result is substantial buying support in the market which pushes up share prices…”
Read the full article by Joani van Wyk in Sharenet of 3 July 2018, here...
Where to invest - Comparing US and SA market valuations
If you are contemplating to invest in shares, should you invest in SA rather than the US or vise-versa? Analysing these markets on the basis of the CAPE (Cyclically Adjusted Price Earnings) Ratio tells an interesting story that may give you pointers where to look for opportunities. The next article (‘Mobius says there’s a 30% correction coming for US stocks’) dwells on the same topic and should also be referred to.
Download the full article by Ruan Koch of Laurium Capital in Moneymarketing of June 2018, here...
Mobius says there’s a 30% correction coming for US stocks
Mark Mobius, the 81-year-old investment guru, believes the U.S. stock market is set for a 30% correction that would essentially wipe out the gains of the last two years. The renowned fund manager…said “all the indicators” point to a large fall in the S&P 500… The market looks to me to be waiting for a trigger that will cause it to tumble. You can’t predict what that event might be — perhaps a natural disaster or war with North Korea…”
Read the full article in Marketwatch of 21 April 2018, here...
From Capricorn Asset Management Daily Brief of 25 July 2018.
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: