MoneyMarketing July 2018

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31 July 2018 | www.moneymarketing.co.za

First for the professional

WHAT’S INSIDE

YOUR JULY ISSUE

personal financial adviser

ANXIETY IN THE EQUITY MARKETS Peter Armitage, CEO of the Anchor Group, writes his first of many columns for MoneyMarketing Page 15

INTERMEDIARIES APPLAUD SA’S TOP BRANDS The FIA announces the 2018 FIA Awards winners

Page 24

ADVISERS CAN CONTRIBUTE TO IMPROVING SAVINGS CULTURE IN SA July is National Savings Month Page 25

Insurance and insurtech to merge in next decade The life insurance industry is presently encountering both innovation and disruption. MoneyMarketing speaks to Brad Toerien, CEO of FMI, about the wave of insurtech that has swept through the industry.

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raditional insurance and insurtech will merge in the next ten years, says Toerien.

“We’ll start seeing that because of technology, customers will be empowered to take control of some of their financial planning themselves.

This will change their relationships with advisers who are going to have to find ways to remain relevant and valuable, as their customers may in future have some of the information that is currently only available to advisers. Our hope is that we’ll be able to broaden the net and attract new people into the industry who are currently either unable to get cover or do not see the need for cover.”

But he doubts that the stage where clients develop their own insurance products unique to them is near as “the dream of customising all products is a difficult one to achieve.”

Toerien believes that one of insurtech’s mistakes is that it has styled itself as an alternative, disintermediate, direct model.

“We think the way to go is to get the two worlds to work together. We should be asking: How do we use technology to enable advisers to do what they do in a much simpler, more effective way and help them strengthen their relationships with customers?

“We should also be asking: How do we use technology to bring new customers into the insurance market?

If we can get that right, we can get both traditional insurance and insurtech to work together.”

Toerien believes that for the forseeable future, the majority of life insurance policies will still be sold through intermediaries. “I think as customers we still need someone to inform us why financial planning is crucial and take us through the process of buying the product.”

He adds that while South Africa has life insurance products that are probably the most innovative and sophisicated worldwide, regulatory

changes are making it increasingly difficult for advisers to offer advice in an economically viable way.

“Technology can change that,” he says.

Life insurance is sometimes not an easy product to market, due to clients having to think about death and illness, as well as paper work and medical exams.

“A lot of the process is complex because the products themselves are complex. The biggest challenge is trying to de-mystify that and we think we’ve made a lot of progress in this respect.

“We’re trying to change the way life insurance is bought and sold, by urging clients to stop thinking about the product in relation to death. We’re saying that clients should protect the life they have and the income they earn, rather than only thinking about what happens when they die.”

Toerien says FMI is trying to move the focus to people’s plans for the future and how these plans need to be protected from the impact of them not being able to earn an income.

“Whether that be due to death or illness, it’s fundamentally the same need we’re trying to fill by securing a future income stream. Our hope is that by

changing the product structure, we change the conversation.”

FMI has been able to make the planning and quote process simpler, “by changing the way life insurance products are designed to support our philosophy of protecting 100% of the income you earn.”

The medical underwriting process is where technology can make a huge difference to the customer experience.

“The more we can access data or information about you that’s readily available or provided by you, the better we’re able to form a picture of you and a view on your risk profile without having to send you for blood tests,” he adds.

Toerien says that FMI will soon be able to accept about a quarter of its cases without any medical tests. “In time, we plan to grow this to 100%. What we’re working on now is how to market income protection without medicals – and we feel we’re quite close to coming up with the answer.”

Brad Toerien, CEO, FMI

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NEWS & OPINION

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NEWS & OPINION

RICHARD RATTUE Managing Director, CompliServe SA

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31 July 2018

Conflicts of interest: Are you managing yours?

ven with the FSCA starting to move into implementation mode with the Retail Distribution Review (RDR), I am still sometimes surprised at the low levels of recognition of conflicts of interest. Of course, best practice is to avoid all conflicts of interest and not engage in business where a conflict may even potentially exist. In a more practical world, however, this is not always possible – it then comes down to recognising that a conflict exists, understanding the impact it will have in your dealings with associates and clients, and acting accordingly in compliance with the relevant legislation.

As we all should know, RDR seeks to ensure fair outcomes for consumers and eliminate conflicts of interest for customers, financial product providers and financial advisers. Of course, the RDR is not the first piece of legislation to focus on conflicts of interest.

The FAIS General Code of Conduct requires advisers to act with due care and skill and in their clients’ best interest. This comprises many statutory contact stage disclosures that include conflicts of interest. Treating Customers Fairly also looks to ensure that firms are fair in their dealings with clients and this naturally would include the disclosure of any conflicts.

But whereas these earlier injunctions emphasised avoiding conflicts of interest, the RDR is intent on eliminating them where it comes to costs, as has been made clear in the Phase 2 proposals. Specifically*: • All platforms will be required to offer only clean share classes (i.e. no more fund rebates and no more all-in priced fund propositions) • Investors will have to agree to all adviser fees in writing and these will be recovered by redeeming assets from an investor’s investment account • Product commissions from insurance-wrapped investment products or structured products will not be permitted

• ‘Hundred percent allocations’ to investors will no longer apply when there are upfront adviser fees payable on a lump sum investment • Adviser trailer fees will no longer be paid from the annual management fee of unit trust funds, both domestic funds as well as offshore domiciled funds • Stockbrokers and financial advisers will not be permitted to share brokerage or annual management fees.

Clearly where conflicts do exist they must be disclosed to the client, and this goes to the heart of the client making an ‘informed decision’. In effect, the client must be able to understand how the conflict of interest might affect the substance and efficacy of a recommendation that is being made to them. It is, however, not only the fact that we should disclose to clients when we have a material conflict but also the way such disclosures are made to ensure that it is effective, i.e. disclosures should not be lengthy attachments to reports full of non-specific dense legalese.

Disclosure not enough Disclosure alone is rarely sufficient to manage conflicts of interests and accompanying internal controls are generally needed. At the very least, a basic policy document should be drafted, laying out the company policy in respect of conflicts and identifying where they may occur, and steps that are in place to manage them. In an investment environment, policies in respect of insider and personal account trading are essential.

Compliance officers and key individuals should work to ensure that conflicts of interest are identified and disclosed in their disclosure documentation, which the client receives at a contact stage.

Providers that ignore conflicts of interest will find it difficult to get past the ‘fair treatment of client’ test that is vital in case of a client complaint. *Reference: https://bit.ly/2KpqNFi

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EDITOR’S NOTE

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ast month was a rather hectic one. There was a cyberattack on a South African company, a strike at Eskom, the release of the 2018 draft mining charter, as well as the release of the first quarter’s GDP data, and (bad) news on SA’s current account deficit.

Also in June, the National Health Insurance (NHI) Bill and the Medical Schemes Amendment Bill were both gazetted. I don’t think there are many who would dispute the noble idea of the NHI Bill – namely to ensure quality healthcare for all. What will be debated though, is just how South Africa will pay for it.

The country’s economy has fared badly since the government committed itself to NHI principles a few years ago.

And recently, the same government committed itself to spending more on higher education. Where the NHI money will come from is anyone’s guess.

One can only assume there will be cuts in spending in other areas.

At the time of going to print, most of the larger medical schemes were reluctant to comment in detail on the NHI and Medical Schemes Amendment Bills. MoneyMarketing hopes to bring you more in August. (And do keep an eye on our website).

One of the events I enjoyed enormously last month was the Editor’s Lunch, hosted by the Governor of the SA Reserve Bank, Lesetja Kganyago. The lunch was also attended by members of the Bank’s Monetary Policy Committee (MPC). As the event was held under Chatham House rules, all I can say is that we are fortunate to have Governor Kganyago at the helm of our central bank, together with the knowledgeable minds that make up the MPC. Janice janice.roberts@newmediapub.co.za @MMMagza www.moneymarketing.co.za ERRATUM In the June issue of MoneyMarketing, an image of Jurgen Hellweg was incorrectly labelled as being that of Ronald King. We apologise for any inconvenience caused to the parties.

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NEWS & OPINION

31 July 2018

PROFILE LUIGI MARINUS, PORTFOLIO MANAGER AT PPS INVESTMENTS

How did you get involved in financial services – was it something you always wanted to do?

A career guidance assessment in Standard 9 (or grade 11 nowadays) suggested that – based on my strengths – I should consider pursuing a degree in actuarial science. At that point I never even knew what actuarial science was, but after doing some research I applied for Actuarial Studies at UCT. While studying for the degree, I realised that this was not entirely for me, but completing it would open opportunities in the investment industry. My first real job was on an investments grad program. So yes, I always wanted to be in financial services. Working in investments specifically, though, evolved over time.

What makes a good investment in today’s economic environment?

For most people the important decision is simply to invest. This, in conjunction with having a disciplined investment approach, is half the battle won. That may sound like a cliched response, but the hustle and bustle of life often makes it hard to be diligent about investing, so having a plan is key.

There is a second consideration to bear in mind though, which is to invest with the appropriate level of risk. Most investors tend to invest too conservatively. While volatility may be hard to stomach at times, not beating inflation over time is often the bigger risk for most. The current economic environment should carry very little weight in most investors’ decision-making.

What was your first investment, and do you still have it?

I’m happy to say that my first discretionary investment was in an aggressive unit trust fund (true story).

My wife and I used it to pay the deposit on our house in 2014. My initial retirement savings are still untouched.

What have been your best – and worst – financial moments?

The first time I joined an asset management team was in 2007. For a while (as markets were going up in a straight line), I was convinced that asset management was the perfect career for me.

A few months later, the US housing bubble burst, sending ripple effects worldwide. This was a real eye-opener for the new guy in the investment team. I’m more balanced in my views and emotions now, and even though I have more grey hairs than I care to admit, I still think this is the perfect career for me.

What’s the best book on investing that you’ve ever read – and why would you recommend it to others?

The timing of the financial recession relative to my career (as explained above) has meant that The Black Swan by Nassim Nicholas Taleb is my favourite investment book. It’s not a book about ‘how to invest’, like The Intelligent Investor, but it does make one question models and assumptions in investment perspectives. The lesson I learned from the book is that you cannot simply accept that the modelled outcome will play out. The results may be far better – or worse – than you initially envisaged. And even though investment outcomes are not predictable, being mindful of this can broaden your investment perspective.

Do you own Bitcoin? If not, why not?

No, I do not. I can see the value in what Bitcoin attempts to achieve, but my view is that the hype around cryptocurrencies is making them trade like commodities at the moment, which at the best of times are hard to value. When or if Bitcoin functions like an actual currency and less like an avenue for speculative activity, I might reconsider it.

UPS & DOWNS President Donald Trump’s economic approval rating surged six points to 51%, according to last month’s CNBC All-America Economic Survey.

This is the first time Trump has received the approval of a majority of Americans in the CNBC poll. Disapproval decreased to just 36%, down six points from the March survey. The poll was published as Trump’s handling of illegal immigrant children – whose parents are held by border authorities – drew criticism. Despite the controversy, Trump’s overall job approval rose two points to 41%.

South Africa’s current account deficit widened to 4.8% of GDP in the first quarter of 2018, the highest level since 5% in the first quarter of 2016.

This comes as weak exports pushed the trade account into deficit. The financial account surplus widened to 4.5% of GDP from 4.2%. Nedbank economists say the current account deficit is likely to narrow in the remainder of this year as exports benefit from firm global demand and a weaker currency. The deficit for the year as a whole is likely to be just above 3% of GDP.

VERY BRIEFLY Prescient Investment Management has announced the appointment of Henk Kotze as portfolio manager in the interest-bearing team. He joins Prescient from Green Oak Capital, where he was employed for the past 10 years, most recently as one of three lead portfolio managers on fixed income funds. Prescient says that Kotze, a specialist in fixed income markets, has a unique skillset because of his background and experience in finance and law. “His strong track record and proven application of interest-bearing portfolio construction make him well suited to contribute to all areas of Prescient’s interest-bearing investment process, most notably fixed income and money-market structuring and risk management.”

Allianz Global Corporate & Speciality (AGCS) Africa has appointed Steffen Siljeur as Head of Marine. He will develop, grow and manage the Marine business in Africa reporting to Thusang Mahlangu, AGCS Africa CEO, and Simon Buxton, AGCS Head of Marine and Energy. Siljeur, who will be based in Cape Town, has 24 years’ experience in leadership and technical roles within the local and international marine industry. “I am pleased to have a person of Steffen’s calibre on board,” says Mahlangu. “I look forward to his insight and knowledge in expanding and growing our marine business in Africa.”

SA life insurer Sanlam has announced its partnership with Plug and Play, the world’s largest global innovation platform headquartered in Silicon Valley. This is the first South African partner in the Plug and Play Insurtech program. “Insurtech is fundamentally changing the way we present insurance solutions to our clients,” says Ahmed Banderker, Chief Executive of Sanlam Business Development. “Sanlam is a clientcentric company and joining hands with Plug and Play is a natural fit as we look for ways to enhance our business models and technology layers to improve our offering to our clients.”

Ashburton Investments has appointed Tony Wilshin to the role of Managing Director of its international business’ headquarters in Jersey. He will be responsible for the strategic management and further enhancement of Ashburton’s international offering and will drive the growth of the business with a core focus on enhancing customer experience and Ashburton’s position in the industry. He brings over 27 years of experience in the Jersey financial services industry to the role, specialising in operational efficiency and process streamlining.

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NEWS & OPINION

31 July 2018

FRANCOIS DU TOIT, CFP® Director, Francois du Toit Consulting and Technology

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Are you a financial planner to healthcare practitioners?

ecently, several financial planners have contacted me regarding planning for healthcare practitioners. Their questions included: • A doctor wants to explore options to reduce his tax liability. Can he register a private company? If so, would this be tax-efficient?

• A family member of the healthcare practitioner wants to invest in her practice and will own x% of the practice. What are the tax implications for the investor?

• A practitioner wants his share in the practice to go to his spouse (in the event of his death) so that she can continue to share in the profits of the practice after he has passed away.

• Is it a good idea for my client (who is a healthcare practitioner) to form an incorporated company? Can she be the only shareholder and director?

Can a healthcare practitioner run his or her practice through a private company?

As healthcare providers, healthcare practitioners retain direct liability for the treatment they provide. In other words, they can’t hide behind a ‘corporate veil’ should a patient want to sue them for malpractice.

An owner of a Pty (Ltd) can have an aggrieved client take legal action against the company he or she owns rather than against them in their individual capacity; healthcare practitioners are not afforded this alternative.

For this reason, healthcare practitioners have the following options when establishing a practice: • Run the business in their own name, as an individual – solo practitioner • Run the business with a partner or partners – partnership • Run the business in association with other healthcare providers – association • Run the business with other healthcare providers as shareholders – incorporated company • Run the business as a franchise (subject to compliance with the ethical rules).

IS IT A GOOD IDEA FOR MY CLIENT – WHO IS A HEALTHCARE PRACTITIONER – TO FORM AN INCORPORATED COMPANY?

Healthcare practitioners can outsource their administration to a third party or create a company for this purpose, provided the arrangement is not in violation of the ethical rules of the Health Professions Council of SA (HPCSA).

If any other business model is being considered, this model must first be submitted to the HPCSA for approval.

An incorporated company (personal liability company) is usually the best option where more than one healthcare practitioner is part of the practice, especially if the said partners are likely to change in the future (either through new practitioners joining, or existing practitioners leaving the practice). An incorporated company can have only one shareholder/director at any time.

Tax implications of an Incorporated Company Profits in the incorporated company will be taxed at 28%. The distribution of any profits after tax, in the form of dividends, will be subject to the 20% dividend withholding tax (DWT).

What, then, is the effective rate of tax being paid?

It is 42.4% (please refer to the end of the article for the calculations).

To reach a net effective tax rate of 42.4% in one’s personal capacity, one’s taxable income must be more than R6m per annum. On taxable income below R6m, the personal tax rates are more beneficial than those on an incorporated company.

Having financial statements of an incorporated company audited is optional, subject to the public interest

score of the company. This can add additional expenses for the practice.

Can any person own a share (invest) in the practice of a healthcare practitioner?

The HPCSA’s policy document on business practices, Section 2.2, pp. 4 to 5, determines that: A person (whether a natural person or a juristic person) who is not registered in terms of the Health Professions Act and in accordance with the ethical rules, does not qualify to directly or indirectly, in any manner whatsoever, share in the profits or income of such a professional practice and which, without limiting the generality of the foregoing, may take the form of: 1. transferring the income stream (or any part thereof) generated in respect of patients from the practice to such a person; or 2. giving (directly or indirectly) shares or an interest similar to a share in the professional practice to such a person; or 3. transferring income or profits of the professional practice to a service provider through payment of a fee which is not a marketrelated fee for the services rendered by the service provider; 4. paying or providing a service provider with some or other benefit which is intended or has the effect of allowing the service provider or persons holding an interest in such a service provider to share, directly or indirectly, in the profits or income of such a professional practice or to have an interest in such a professional practice.

Direct or indirect corporate ownership of a professional practice by a person other than a registered practitioner in terms of the Act is not permissible.

Therefore, a share or partnership in a professional practice cannot be bequeathed to a spouse (or any other person for that matter), unless the spouse is also a healthcare practitioner registered under the Act as required. A buy-and-sell agreement between the partners will add tremendous value to their financial planning and the financial wellbeing of their surviving spouses and other dependants.

For the same reason, third parties who are not healthcare practitioners cannot own or invest in a professional practice. The best they can do is extend a loan to the practice and charge interest. This entails numerous risks and one cannot assume that such a loan is advisable without assessing these risks.

Net effective tax rate calculations Let’s assume a profit of R100. Less 28% income tax (R28) leaves a net profit after tax of R72. If the full R72 is paid out as a dividend, the 20% DWT will be R14.40 (R72 x 20%), leaving a net dividend of R57.60.

The total tax paid on a profit of R100 is then R42.40 (R28 + R14.40). In other words, the effective tax rate paid in the incorporated company is 42.4%.

This effective rate is fixed, regardless of the amount of profit (assuming the full profit is distributed as a dividend).

INVESTING 9

31 July 2018

Why investors should think differently about ETF liquidity

Kingsley Williams (CIO), Rick Martin (CFO), Helena Conradie (CEO), Johann Hugo (Porfolio Manager) and Jenny Albrecht (COO)

SA’s first-to-launch ETF voted most popular

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he inaugural South African Listed Tracker Funds Awards (SALTA) were held at the Johannesburg Stock Exchange on 13 June and Satrix was proud to receive three awards on the night.

Satrix won awards in the following categories: • The People’s Choice for most popular ETF amongst the investment public – Satrix 40 ETF • Best Total Return Performance, one year – Satrix FINI ETF • Best Trading Efficiency, three years – Satrix RESI 10 ETF

SATRIX 40 is the favourite Being the first recipient of The People’s Choice award is a huge honour for Satrix. The public voted via online poll and overall Satrix ETFs received more than 80% of the votes. The Satrix 40 ETF received one-third of all votes cast, which officially makes it the most popular ETF among South African investors. In October last IT REMAINS year, Satrix made their flagship product even more attractive by capping the total expense THE LARGEST ratio of the Satrix 40 ETF to just 0.1%.

DOMESTIC Satrix as a business is no stranger to ‘firsts’. In EQUITY ETF BY A 2000, it launched the first ETF in South Africa, CONSIDERABLE the Satrix Top 40. This effectively introduced the South African investing public to ETFs. MARGIN In response to investor’s needs, the Satrix Investment Plan was launched in 2006 as the first platform, enabling investors to access ETFs for as little as R300 per month. And 2015 saw the introduction of SatrixNOW.co.za, an online platform giving access to investors at no minimum investment amount.

Nerina Visser, ETF strategist and director at etfSA, comments: “The brand recognition and loyalty to Satrix, and in particular the Satrix 40 ETF, is remarkable. It remains the largest domestic equity ETF by a considerable margin and is also the ETF with the broadest investor base. It is therefore no surprise that it was recognised by popular vote as the ‘People’s Choice’, supported with numerous stories of the impact it has had in changing ordinary people’s lives for the better.”

Satrix 40 ETF quick facts

Financial inclusion Says Satrix CEO, Helena Conradie: “Our ethos and focus at Satrix is to enable financial inclusion. For far too long the large majority of South Africans were denied access. We believe that, in order to grow and create wealth and build a better South Africa, everyone needs to be included in the financial system – and what better place to start than to ‘OWN THE MARKET’.”

Thompson Reuters, Profile Data and etfSA.co.za, three independent service providers to the South African Exchange Traded Funds industry, partnered to launch SALTA and recognise leaders in the ETF industry in various categories.

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iven the proliferation of exchange-traded funds (ETFs) across the globe, deciding which to invest in can be overwhelming. Within the selection process, we have found that many investors often misunderstand liquidity and how it’s measured in the realm of ETFs. We believe many investment decisions and much pre-trade analysis continue to be based on potentially misleading volume metrics. In particular, we believe it’s a mistake to apply traditional mutual fund screening processes to the selection of an ETF. Trading characteristics of an ETF ETFs share many of the same market structure characteristics of single stocks: both trade on an exchange, both have two-way (buy and sell) pricing, and both are centrally cleared. But the structure of the underlying investment in each is fundamentally different.

An ETF’s underlying value is derived from the price of the basket/ index constituents it tracks. Since the underlying basket can typically be exchanged in real-time for the ETF, the composite price of the underlying assets and the price of the ETF are typically very closely aligned.

In other words, the price of an ETF should be based on objective metrics. If the ETF price diverges from the pricing of the underlying assets, a process known as ‘arbitrage’ tends to work to align the two.

Let’s think of it as buying and selling the same thing at the same time at two different prices. Should the ETF trade below its composite fair market value, participants would buy the ETF and sell its underlying basket, and vice versa if the ETF were to trade above the composite value.

Different drivers of liquidity By contrast, the underlying liquidity of a single stock is a function of the finite number of shares outstanding.

Let’s imagine CompanyCo has five outstanding shares of stock, of which Investor X and Investor Y own two shares each.

Liquidity is one outstanding share Now imagine Investor Z wants a piece of the action and wishes to purchase three shares. Investors X and Y will need some incentive to sell shares to Investor Z. The price of CompanyCo shares therefore starts to rise.

Conversely, let’s say Investor X and Investor Y both want to sell their two shares because they fear CompanyCo sales will disappoint. Investor Z will need some incentive to buy them, so the price of the shares will drop.

Thus, the trading volume of the stock gives an indication of the liquidity.

An ETF, on the other hand, is an open-ended fund that can issue more shares based on demand – and can terminate shares based on redemptions. The underlying liquidity of an ETF is unrelated to volumes traded. ETF volumes tell you only what has traded, not what could be traded. To see what could be traded, an investor has to look through to the underlying stocks at the individual constituents.

For ETFs, size is academic Unlike a mutual fund, an ETF doesn’t need a minimum initial client investment to stay open or be liquid and it can exist regardless of any investor’s allocation. A newly launched ETF will typically have much lower average daily trading volumes than more established or older funds. In addition, newer ETFs tend to have far fewer shareholders – on the first day of trading it’s not uncommon for there to be just one.

Even so, a new ETF’s price will generally remain in line with the price of the underlying basket of securities. Being the first, second, third or last investor in the fund should have no impact when considering liquidity. An ETF with low trading volume should not (and often does not) prevent smooth trade execution.

So, if we think of an ETF as a window into a pool of securities, it should be clear that, in terms of liquidity, the size of an ETF is only academic.

INVESTING

JASON XAVIER Head of EMEA ETF Capital Markets, Franklin Templeton Investments

10

INVESTING

E XCH A NGE T R A DED PRODUCTS

31 July 2018

Sharp increase in smart beta use globally – SA to follow?

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ince 2014, FTSE Russell has run a smart beta survey canvassing around 1 000 of the world’s largest asset owners, representing $2tn in AUM. The survey is important as it sheds light on investment management trends and how practitioners are thinking about and incorporating the continuous innovation within the rules-based index investing world.

Smart beta is often referred to as the commoditisation of active management as it offers investors investment styles and strategies that were previously the reserve of traditional active management (such as Value or Quality). Smart beta does this while retaining the benefits of passive investing – increased transparency, diversification and lower costs.

The last decade has seen increased use of index investing, and particularly smart beta investing, across the world. This progression is documented in the FTSE Russell report, entitled 2018 Global Survey findings from asset owners. When the survey was first conducted, 32% of the surveyed asset owners had existing allocations to smart beta. Around 40% of those surveyed did not have smart beta allocations and neither were they currently evaluating this investment approach.

Five years later, in 2018, 48% of asset owners said they had smart beta allocations, with only 12% not currently making use of this investment approach or evaluating it.

“While South Africa’s passive industry only makes up 4% of the R2.4tn local collective investment scheme market, this relative market share doesn’t suitably represent the growth and innovation happening locally, or the increased number of smart beta strategies now available in SA,” says Gareth Stobie, Managing Director of CoreShares.

“In fact, like global markets, smart beta is growing quicker than vanilla passive, albeit off a small base. This is true both in the growth of AUM and number of funds.”

Smart beta makes up 12% of the passive industry in SA (up from 8% 12 months ago). The other interesting trends to observe from the FTSE Russell survey is the ‘why and how’ – these have become increasingly varied (cost, risk management, return enhancing, management of style drift, etc) as the market has grown and the

number of ‘use cases’ have grown too.

There has been a distinct shift from ‘first generation’ smart beta indexes – which typically aimed to capture one particular style or factor – to smart beta funds, which incorporate numerous smart beta factors within one succinct strategy.

“This is important because, as with Active, some of the underlying ‘styles’, such as Value, can exhibit cyclicality

inaugural SA Listed Tracker Funds Awards (SALTA) were handed out at a function at the Johannesburg Stock Exchange.

Absa Capital (NewFunds) was the top winner, receiving four SALTA trophies. It won awards for: The Best Total Returns for a non-equity ETF (NewFunds GOVI ETF) over both one and three years; Best Total Returns for a SA equity ETF over three

Where smart money works.

and lumpy return profiles, while Multifactor should be far more consistent as it aims to capture different factors at different times during the return cycle by holding numerous of these factors,” Stobie adds.

According to FTSE Russell, 64% of those asset owners who currently use smart beta made use of a multi-factor combination in 2017 (mostly through single multi-factor solutions). This is up from 37% and 20% in 2016 and 2015 respectively.

“CoreShares expects the Multi-factor framework to suit a narrower market such as South Africa,” Stobie says.

“Smart Beta is particularly important within the SA context, given the more concentrated starting universe.”

As passive investing continues to grow in popularity in SA, it was fitting that last month the

years (NewFunds S&P GIVI RESI 15 ETF); and Tracking Efficiency over three years for a SA non-equity fund (NewFunds MAPPS Growth ETF), which combines equities, bond and cash in a balanced portfolio.

Satrix Managers won three SALTA awards in the following categories: one-year Best Return Performance (Satrix FINI ETF); Trading Efficiency, measured by the total volumes traded on the JSE as a percentage of shares in issue (Satrix RESI 10 ETF); and it also won the popular poll award conducted among the investment public with the Satrix 40 ETF. (The SALTA organisers established an online poll, where the public were asked to name their ‘favourite ETF’ based on various criteria, including investment returns, investment relevance, product features, etc. Many

hundreds of responses were received and Satrix ETF products dominated by receiving over 80% of the popular vote. The Satrix 40 ETF stood out as the ‘popular choice’, receiving about one-third of all votes cast).

Sygnia Itrix (RF) also received three SALTA awards. The Sygnia Itrix MSCI USA ETF was the top performing ETF over three years in the foreign and commodity ETFs category; and the Sygnia Itrix MSCI World ETF was the largest capital raiser for individual foreign and commodity funds over one year.

As an issuing house, Sygnia Itrix (RF) raised R4 534m in new capital from existing listings of ETFs and for the listing of five new ETFs over the period March 2017 to March 2018. This makes it the winner by a substantial margin as the most successful issuer of ETFs on the JSE over that period.

Sygnia Itrix only entered the South Africa ETF industry in June 2017 with its purchase of five ETFs from Deutsche Bank and it has made a significant impact on the South African market over a short time period.

Standard Bank South Africa won two SALTA awards. The first, for the best performance by a foreign or commodity ETF over a one-year period, Standard Bank Africa Rhodium ETF. This ETF, which invests only in physical rhodium, a by-product from platinum group metals, has been the best performing SA listed ETF for the past three, six, 12 and 24 months. The second award, Standard Bank Africa Gold ETF, won best tracking efficiency over the years for a foreign or commodity ETF. The following companies and products won a single SALTA trophy each: CoreShares Top 50 ETF raised the most capital for a SA equity ETF over the one-year period ended March 2018. There has been a regular need to list new ETF securities in this product on the JSE, which tracks the S&P South African Top 50 capped index. This limits exposure to Naspers and other large cap SA stocks to less than 10% of the total portfolio, which finds favour with certain investors.

Stanlib SWIX 40 ETF had the best tracking efficiency, i.e. total returns relative to the index tracked, for SA equity ETFs for the past three years.

South African Listed Tracker Funds Awards (”SALTA”)

THE PEOPLE’S CHOICE SATRIX TOP 40 ETF At Satrix, we know that all South Africans dream of a better financial future.

That’s why, in 2000, we created a product that allows everyone to access the power of the market. We’re honoured that you trust us with your future, and that you’ve voted Satrix Top 40 as your favourite ETF. We’re also proud to have won ‘Best Total Return Performance over 1 year’ for Satrix FINI ETF and ‘Best Trading Efficiency over 3 years’ for Satrix RESI 10 ETF.

Satrix Managers (RF) (Pty) Ltd is an authorised financial services provider and a registered and approved manager in terms of Collective Investment Schemes Control Act. A schedule of fees and charges and maximum commissions is available from the manager on request. The full details and the basis of the awards are available from the manager. The inaugural South African Listed Tracker Funds Awards (SALTA) were held at the Johannesburg Stock Exchange on 13 June 2018.

SALTA is a combined initiative from Thomson Reuters, etfSA and Profile Data.

12

INVESTING

31 July 2018

What about the quality of How to buy UK property on your offshore exposure? a mortgage

PIETER HUGO MD, Prudential Unit Trusts

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hile most South African investors these days tend to focus on the question of whether they have adequate exposure to offshore assets in terms of quantity, less is heard about the quality of those offshore holdings.

Quality can be defined in terms of attaining excellent risk diversification, as well as accessing the best possible investment opportunities. Both are key ingredients for building an appropriate investment portfolio.

From a statistical perspective, adding global investments to a portfolio has been widely shown to meaningfully reduce that portfolio’s risk characteristics without detracting from returns, helping to create an ‘optimal’ portfolio when considering risk versus return.

Given this unequivocal fact, it is somewhat surprising to note that, according to international research*, most equity investors around the world are very overweight in their own home markets. Those in many emerging markets like Turkey, Mexico, India and Russia have nearly 100% of their equity portfolios invested at home, while US and Japanese investors have about 75% in domestic equity. In only a handful of smaller and more open markets have investors kept less than 50% at home,

60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

like Singapore, Austria, the Netherlands and Portugal. In South Africa, the equivalent figure is approximately 80%.

Excessive domestic exposure can certainly pose problems for investors. This is because even large and well-diversified equity markets can experience long periods of poor performance. This is evidenced by the US between 2000 and 2013 – 13 years during which the S&P 500 Index was basically flat. In Japan, returns from the Nikkei 225 Index were close to zero for 31 years, between 1986 and 2017. And our own equity market has effectively traded sideways for well over three years now. Extended periods of low returns can have serious consequences for individuals’ longer-term retirement savings, especially for those nearing retirement or having just retired.

When examining the companies listed on the FTSE/JSE All Share Index (ALSI), we can observe far less diversification and a narrow set of opportunities compared to global equity markets (represented by the MSCI All Country World Index (ACWI)). Regarding geographic diversification, ALSI investors are very underexposed to both the Americas (comprising an estimated 6% of earnings versus 42% in the ACWI) and Asia-Pacific Opportunity set and risk diversification Sector exposure: JSE All Share vs. MSCI All Country World Index (20% versus 33%) – yet 51.80% these regions encompass the world’s biggest 21.00% 21.10% capital markets 13.60%15.30% 12.50% 11.40% and some of 9.70% 8.90% 8.20% 8.20% 5.30% 3.70%3.30% 3.20% 2.90% the world’s largest and 3 252 7 174 26 474 15 343 24 198 58 437 19 383 4 81 fastest-growing companies.

ALSI MSCI AWCI Source: Merril Lynch, AGF Investments And the ALSI’s

Basic Materials

Consumer Goods Consumer Services

Financials

Industrials

Telecommunications

Technology

Healthcare

higher exposure to South Africa and to African equity markets makes investor portfolios more susceptible to emerging market volatility.

Comparing sector exposure, South African investors certainly lack choice, as shown in the accompanying graph.

For example, in the rapidly expanding technology sector, the ALSI has three relatively small companies (Altron, EOH and ADvTECH, comprising 3.2% of the Index – Naspers is listed in Consumer Services), while the ACWI offers 252 tech companies boasting global giants like Alibaba, Apple, Facebook, Microsoft, etc. and comprising 9.7% of the Index. In the energy sector, the ALSI has Sasol (the only option), but the ACWI can offer the likes of Shell, Chevron and Repsol, renewable energy companies, etc. And let’s not forget popular consumer brands that aren’t listed locally, such as Coca-Cola (one of Warren Buffett’s long-term favourites), Heineken and Nestlé.

By contrast, ALSI investors are overexposed to the volatile Basic Materials sector, which makes up nearly 52% of the Index. This compares with the sector’s 21% weight in the ACWI. And although the ALSI does offer a broad selection of mining and commodity companies, it’s important to note that over the past 10 years to the end of 2017, the FTSE/JSE Africa Basic Materials Index has returned 0% (a zerototal return). When you contrast this with the 18.1% return recorded by the MSCI World Information Technology Index in rand over the same period, it’s easy to see that the ALSI does not offer the highest-quality opportunities for South African investors. *Source: IMF Coordinated Portfolio Investment Survey, Factset, data as of 8/11/2016

Contrary to common belief, South Africans who don’t have residency in the UK or a British passport can still buy property there and get a mortgage.

Sable International’s mortgage adviser, Ian Henning, says there are several lenders who offer credit to South Africans even if they have a complex income structure, where they are using family trusts or are self-employed and rely on putting expenses through the business to keep their taxable income quite low.

“There are challenges – such as the fact that they’re not living in the UK – which already means their choice of lenders becomes restricted. As a nonresident, you can’t look at using lenders based inside the UK, because UK lenders who are offering buy-to-let mortgages tend to want you to be a resident in the UK and have a UK taxable income.

“South African residents need to use lenders that are either based in the Isle of Man, Jersey or Guernsey, or at certain private banks who have a wider underwriter remit, which means they can look at clients on a global scale and they can take into account income that sits outside of the UK.” According to Henning, if you are South African but also hold a British passport, you have a larger choice of lenders.

He cautions buyers to consider the deposit they need to put down on a property: “Depending on where the property is based, its value, the potential rental yield, the lender and your financial standing, you may be able to obtain a 60 to 75% loan to value mortgage.”

Ian Henning, Mortage Adviser, Sable International

INVESTING 13

31 July 2018

INSIDER CHRONICLES

CHRIS FREUND Fund Manager, Discovery Moderate Balanced Fund

TIM HUGHES Director of Corporate Affairs, Warwick

Creating shared value in SA

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apitalism is the worst form of economy, except for all the others. This may have been how Sir Winston Churchill would have captured the myriad challenges facing most social market economies, including that of South Africa. The dilemma we face is that, while capitalism is being scrutinised, blamed and criticised more robustly than at any time since the global financial crisis, the alternative models – socialism, communism, full-blown nationalism or a purely libertarian economic system – all seem to work less well.

To make capitalism more beneficial for more people in our country, we may have to reconsider our conventional models and understanding of the roles and indeed rules of business generally and companies more specifically.

Corporate social responsibility under capitalism can be traced at least to the early 17th century with the Quakers’ refusal to accept slavery as a form of human capital. Since then, CSR has developed its own codes, its own practices, its own metrics and indeed its own politics! Yet the fundamental conceptual problem with CSR lies in the fact that it is not intrinsic to business, but rather is often an additional or external activity – not fundamentally linked to the business that funds it. This externalisation of CSR means that companies’ commitment to and relationship with CSR is contingent and often dependent on a host of factors, central to which is company profit. The convention of setting CSR spend at 1% of profit may seem at once generous or miserly, but whatever one’s viewpoint, CSR spend equates to the margin of company profit. This may read as axiomatic and obvious, but such thinking is old and arguably less effective than the new thinking captured in the concept of creating shared value (CSV).

CSV seeks to link economic progress with social development, and within its paradigm there is no trade-off between business competitiveness, growth and profits.

CSV is not about giving away money, or diverting profits, or giving to charitable causes, but is rather about becoming more aware of how to do business in a way that is sustainable and that ensures the pool of wealth is broadened and deepened. So how can CSV be achieved?

Three core pillars lie at the foundation of CSV. The first pillar requires a re-think of a company’s products and markets and to focus more on meeting social and societal needs. For example, in the food sector, while historically the marketing thrust of processed food has been on flavour, taste, size and visual appeal, this has led manufacturers into a ‘self-made’ cul-de-sac of blame for obesity, hypertension and other non-communicable diseases. A greater focus on, research into and marketing of tasty and nutritious products leading to healthier customers consuming good food for longer makes economic, business and social sense. Thereby shared value is created.

The second area requiring rethinking is that of value chains. This means not only investing in more energy-efficient and environmentally sound procurement practices, but importantly, investing in communities involved in the value chain, such as small-scale farmers, SMMEs and communities integral to the value chain.

The third pillar is linked to the second and that is for businesses to cluster their operations in such a way as to train, attract and retain skills and suppliers in their local economic environment. This clustering of the value chain within local economic communities can generate greater sustainability, local economic development, security, loyalty and enhance the overall quality of company and product, which, in turn, leads to sustainable company value.

It’s time we took a good look at creating more shared value in South Africa.

Discovery Moderate Balanced Fund sustains outperformance

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he Discovery Moderate Balanced Fund has delivered solid returns to investors, despite a volatile environment, outperforming the benchmark to the end of May 2018*: • Five years: 8.1% (benchmark: 6.6%) • Three years: 5.3% (benchmark: 3.9%) • One year: 5.7% (benchmark: 3.6%) The benchmark for this fund is the peer group average of the Association for Savings and Investment South Africa (ASISA) South African-Multi Asset-Medium Equity. The Discovery Balanced Fund range, which includes the Moderate Balanced Fund, has one of the highest inflows in the industry, as per ASISA. The Moderate Balanced Fund has been top quartile over all periods and was a close runner-up in the Best Moderate Allocation Fund in the Morningstar SA awards earlier this year.

Investment philosophy We believe that sustained outperformance over the medium to long term is derived from focused, multi-specialist investment teams working together within a clearly defined process. We apply this multispecialist approach in managing the Balanced Strategy by leveraging off the combined wisdom of strong in-house specialist skills, while simultaneously retaining complete focus and accountability with the dedicated portfolio managers.

The Discovery Moderate Balanced Fund investment philosophy can be summarised as follows: • On balance, risk assets deliver a return premium over time.

• At turning points in the economic cycle, changes in economic growth momentum have an impact on asset allocation, equity style and sector performance.

• On a ‘through-the-cycle-basis’, investing in companies where the expected future profits are being revised upwards and where the shares are reasonably valued will result in market-beating returns.

In order to achieve the desired real returns over time, the assets are skewed towards risk assets and listed equity in particular. In this respect, a mediumterm horizon is necessary to weather the inherent short-term volatility of equity markets and to capture both

the equity risk premium as well as the benefit of reduced volatility that comes from time diversification in the markets. At appropriate times, emphasis will shift from capital growth to capital preservation and cash holdings will be tactically increased.

Portfolio construction The equity component is currently limited to 60% of the portfolio including international equity.

The Moderate Balanced Fund has moderated equity exposure in order to reduce the risk of capital loss during unfavourable market conditions. The current asset allocation within this fund (as at 31 May 2018) includes a minimal allocation to SA listed property and commodities and is as follows: SA Equities

39.6%

Non-SA Equities

18.3%

Commodities

2.1%

SA Listed Property

2.7%

SA and Global Bonds

18.9%

SA and Global Cash

18.4%

Portfolio constraints are monitored as part of our risk and compliance process. Active management of asset class exposures is an important source of relative returns. The best riskadjusted returns over the medium term are generated by what we refer to as strategic asset allocation by buying attractively valued assets best suited to the cyclical environment.

As a consequence, the strategic asset allocation time horizon is typically three to seven years. Tactical asset allocation can improve returns by taking account of investor positioning and risk appetite and scaling strategic allocations accordingly. The typical time horizon for tactical decisions is up to six months.

Portfolio positioning In terms of our offshore allocation, we continue to be favourably disposed to corporates operating in Europe and Japan. These two are cyclical in nature and improving economic activity is leading to strong profit recoveries, valuations remain attractive and sentiment is healthy. *All performance figures sourced from ProfileData as at 31 May 2018

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INVESTING

31 July 2018

MEYER COETZEE Director, Prescient Investment Management

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he saying goes that friendships are for a reason, a season or a lifetime. The same saying can apply to finance by replacing ‘friendship’ with ‘investments’. The deliberate action to defer spending in lieu of instant gratification that comes from consumption implies saving, and saving leads to investing in some form or flavour. That is the natural path that connects a basic desire to preserve something of value for later, to an unnerving quagmire of complexity and confusion called investments. Saving, in its simplest form, is something that all people do from time to time.

While we all agree that a longterm savings discipline – a lifetime investment regime – is an essential component of sustainable financial independence, there are other reasons we save.

Enhance returns by avoiding tax

In this article, I focus on investing for a season, which is a small subset of all those who save. I focus on those that find themselves in the fortunate position of suddenly having a large sum of cash that needs safe storage until it can be sensibly deployed. This select group might be larger than we think. It includes all those who sold their house and want to avoid a large interest tax bill that comes with leaving the cash in the attorney’s trust account while buying their dream home; all those who sold their business or farm and need time to reflect; all those who received a bonus that is earmarked for home improvements; or those who inherited a handy lump sum that needs to be preserved while options are carefully considered. In other words, this select group includes those who

seek stability in their capital values while earning an attractive after-tax yield and thereby avoiding that nasty surprise come tax year-end.

For everyone finding themselves saving for a season, there might be a simple solution called the Prescient Optimised Income Fund (‘the Fund’).

The Fund is a registered unit trust fund regulated under the Collective Investment Schemes Control Act, so your money is safely housed in a standardised investment vehicle.

The returns compare favourably with normal money market unit trusts but are virtually tax-free in your hands.

Current money market unit trusts typically offer between 7% and 8% p.a.

After tax, at a marginal rate of 45%, the net return is between 3.9% and 4.4%.

The Prescient Optimised Income Fund currently offers after-tax returns around 6% p.a. To earn 6% after tax, a pre-tax return of around 11% is required from the bank, which is a stretch!

THE RETURNS COMPARE FAVOURABLY WITH NORMAL MONEY MARKET UNIT TRUSTS BUT ARE VIRTUALLY TAX-FREE IN YOUR HANDS

The best part is that you have daily access to your money and no lock-ins that come with fixed deposits. Finally, there is no capital volatility as the unit price remains at 100c.

If this sounds perfect for you, investing is as easy as speaking to your financial adviser, contacting Prescient at 0800 111 899 or clicking on www. prescient.co.za – easy and hassle free.

Prescient Investment Management Ltd is an authorised financial services provider (FSP 612).

Collective Investment Schemes in Securities (CIS) should be considered as medium- to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. CISs are traded at the ruling price and can engage in scrip lending and borrowing.

Performance has been calculated using net NAV to NAV numbers with income reinvested. There is no guarantee in respect of capital or returns in a portfolio. Prescient Management Company (RF) (Pty) Ltd is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). For any additional information such as fund prices, fees, brochures, minimum disclosure documents and application forms, please go to www.prescient.co.za

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INVESTING 15

31 July 2018

PETER ARMITAGE CEO, Anchor Group

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Anxiety in the equity markets

e might be able to do a mean spreadsheet, but that does not mean we are definitely going to make you money right now.

That’s because the market does not know about our spreadsheets and often the value that we calculate for a company is very different from where a share trades – at least in the short term.

This is one of the factors that often makes our jobs incredibly frustrating, but equally fascinating. There are many dynamics that influence a share price and varied skills that are required to “make the right call”. In order to invest on the stock market, at the very least, you should be smart, analytical, balanced, intuitive and, most importantly, patient. And a little bit of luck also helps at times!

As custodians of people’s wealth, our primary mission is to make money (with the appropriate risk etc.). We wake up in the morning thinking about shares and we spend most of our day digging through information and vigorously debating economics and companies. Nothing brings us greater joy than seeing a share price rise and nothing makes us more anxious than a plummeting counter or simply not delivering the returns that we would expect as a client.

There are times when it just seems easy and the runs flow, and then there are times when it’s just downright difficult. That’s the story of the market over the last few years. An equally weighted FTSE JSE Top-40 portfolio has now been flat for three years and the FTSE JSE All Share Index return over the same period has been a paltry 5% p.a. It’s not a disaster, but it’s just plain boring. However, this is exactly when we shift up a gear and our collective skills and experience become critically important.

So how do we respond?

First, with the understanding of context. In a 24year career, I have personally been through several periods of equity market fatigue. It was never right to lose faith in the market. Staying invested and being in the right shares always delivers a great return over time. I always get reminded of that when I look at older share portfolios and observe the value created by owning a growing company over time.

Over the last 15 years, JSE investors have, on average, made 17.5% p.a. (that’s a 1 000% return!) and many

great companies have delivered much more than that. I remember writing a report on Naspers at R16/ share and Capitec at R20/share. This is the place to make money. It sounds simplistic, but the longer the market goes sideways or down, the better the chance of a great future returns.

Second, we respond with passion. There are always ten shares that are going to give you an outsized return over the next year and it is our job to find them. Our analyst team hits the road and visits swathes of companies, digests the analysis and finds future gems. Opportunities are created by the performance of a company or the mispricing of a share. When the market has been moving strongly upwards it is often harder to find the latter. Equity investment is the world we choose to live in and we love what we do.

Third, we respond with patience and sticking to the plan. As we indicated earlier, shares don’t always move logically and often returns come when you least expect them – nobody has the ability to predict exactly when returns will materialise. Our philosophy is to invest in companies that are growing and that can reinvest capital at a high return, generated in cash. If we can find these companies and identify appropriate entry prices, the underlying value of your investment will go up every year. Share prices sometimes run ahead of this underlying value and sometimes they lag but, over time, share prices follow earnings.

Fourth, we respond with a level head.

We don’t panic, and we always bear fundamentals in mind. Knee-jerk reactions are usually wrong. We also seek opportunities where sentiment and emotion depress prices.

It’s also worth putting into context the performance of the market over the last year or so.

There are two important drivers of the SA market – Naspers (given its weighting in the overall index) and the currency, especially since around 50% of SA earnings are generated in currencies other than the rand. Running into the end of 2017, local economic prospects looked

dire and SA Inc. shares were battling – the biggest positive drivers of the market were Naspers and the weaker rand. With a reversal of the Zuma economic drag as a result of Cyril Ramaphosa’s victory at the ANC elective conference in December 2017, the currency has strengthened remarkably – from over R14.50/$1 to levels well below R12/$1. This resulted in a reversal of 2017 conditions. SA Inc. shares have performed very well, but this has been more than offset by the negative moves in Naspers and rand-hedge shares. A perfect storm, in a sense, with the negatives outweighing the positives in both instances, with a muted aggregate outcome.

However, nothing lasts forever, and we know the currency will weaken over time and that prospects for SA companies have improved markedly, with the risk being the time it takes for this to materialise.

So, we will carry on doing our spreadsheets and keeping a keen eye on fundamentals, which enables us to invest with conviction. And we will apply an overlay of the other skills we have learnt over time.

A healthy dose of anxiety is also not a bad thing. But most of all, we will be patient and the returns will come. Our SA equity fund has now compounded at around 15% p.a. since its inception just over five years ago, but recent returns have been more muted. We are working hard to try and repeat that performance over the next five years.

I HAVE PERSONALLY BEEN THROUGH SEVERAL PERIODS OF EQUITY MARKET FATIGUE

16

INVESTING

31 July 2018

KIM HUBNER Head of Business Development and Marketing, Laurium Capital

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s the needs of independent financial advisers (IFAs) in South Africa evolve, asset managers, linked investment service providers (LISPs) and other service providers need to evolve too in order to make it easier to do business. The latest financial planning and fintech trends make this possible – and worthwhile. Fintech makes it easier and more convenient to transact and engage, and allows for personalisation that puts customers at the centre of all interactions. The timely delivery of quality and in-depth communication is paramount and IFAs can boost process efficiency and deliver better outcomes for clients using the latest technology. These are our top four financial planning and fintech trends.

1. Tech-savvy investors have high expectations The use of the internet and smartphones to consume information and access a broad range of products and services has

Make these financial planning trends your friends

become a way of life for most people.

Increasingly, investors expect asset managers and wealth management firms to evolve and provide the same user experience and convenience for their investments as they do with other consumer products. Partnering with a digital platform provider should be a consideration for asset managers and advisory firms alike.

This allows advisers to offer the latest technology that meets client’s expectations, without incurring time and development costs.

2. Increasing use of fintech In 2015, one in seven global consumers used fintech products regularly. By 2017, the number had grown to one in three (33%), according to an EY study. South Africans’ use of fintech is slightly higher than the global average at 35%. Fintech is here to stay and change the way we do things, and more and more people are using it.

The advances in fintech can improve

Adopt a global mindset for long-term investment success

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outh African investors are fixated on the rand exchange rate, so much so that our currency movements act as a barometer of our nation’s mood: when the rand is strong, happiness pervades, but if the rand depreciates, emotions head south at the same pace – or even faster.

The appetite for offshore investing seems linked to the same barometer but sits on the other end of the see-saw. As the mood turns sombre locally, so the appetite for offshore seems to increase exponentially.

Novice and savvy investors alike ask the same question time and again: when is the best time to invest offshore? There are so many factors that need to be in place for there to be perfect alignment; it makes much more sense to get started when your circumstances allow and adopt a long-term, consistent strategy. Also, timing the rand may not be as important as you think. Consider the example below: Three investors were keen to invest offshore and enjoy the diversification benefits of different countries, industries and companies not available locally. They all had different approaches.

Investor 1 made the decision to invest regularly, putting away R1 000 a month for 22 years.

Investor 2 wanted to invest once a year at the most favourable exchange rate, but sadly always got his timing wrong, thus investing an amount of R12 000 at the worst exchange rate every year for 22 years. Investor 3 took the same approach as investor 2, but got it right, investing at the strongest exchange rate every year, for 22 years.

As the graph shows, the results for our three investors were quite predictable – investing at the best exchange rate got investor 3 the best results.

However, while the graph shows that investor 3 won the race, the range of outcomes was narrower than most investors would have expected.

This provides an interesting lesson for South Africans who are fixated on timing

the efficiency of advisers’ businesses, enabling them to focus on building relationships and helping investors reach their financial goals. By offering the types of digital tools and services that people have grown to expect in other areas of their lives, fintech can help improve access to advice and the investors’ investment experience.

Advisers will always have a role to play, but this role is evolving. Client acquisition and reducing ongoing servicing costs may be better achieved using consumer-facing digital advice technology. Advisory firms will need to combine the best of people with this technology to better serve their clients.

3. Fee structures under the spotlight Lower-cost investment options such as exchange traded funds (ETFs) and robo-investing have put considerable pressure on traditional financial advisers. Instead of continually lowering fees to compete, managers will expand their offerings and

highlight their value-add to differentiate, including varying fee structures for specific services.

4. Social media Social media has changed adviserclient relationships, helping advisers attract and retain clients, but leading to fewer face-to-face meetings and phone conversations. Most advisers use LinkedIn as the network of choice, while Facebook and Twitter are used to a lesser extent. Social media needs to be more than selfpromotion – there must be value for the reader. Better access to information about investments for potential clients is an opportunity to grow and retain assets.

When advisers use the latest trends and developments to add value to their business and their clients’ experience, opportunities open for better relationships with clients, more convenient service offerings and more contact.

TAMRYN LAMB Head of Retail Distribution and Orbis Client Servicing, Allan Gray and EARL VAN ZYL Head of Product Development, Allan Gray

the rand: perhaps we should consider giving up the business of predictions in lieu of things within our control. At Allan Gray, we don’t believe we have any edge in this either and prediction could be summed up by Niels Bohr, a physicist who once said, “Prediction is very difficult, especially about the future”.

It is impossible to accurately and consistently forecast the movements of the rand: there are just too many factors at play that we can’t control – from the mood and actions of local politicians, foreign investor sentiment, and the daily noise in global markets. Coupled with this is that global markets themselves are unpredictable, so even if we could pinpoint what our currency was going to do next, there is no telling if the right opportunities would be available offshore at that exact point in time. Our current circumstances are a case in point: the rand has recovered since its weak point last year, but assets in major developed markets such as the US are generally looking expensive.

A better strategy is to figure out how much of your investment portfolio you want to place offshore and what you are trying to achieve and then formulate a plan to invest as regularly as possible in carefully selected assets. Arguably, it is more important spending your time identifying which global assets you want to invest in for the long term than determining the exact perfect entry point.

Reasons to go global Everyone has their own goals and objectives when it comes to investing offshore.

Perhaps you want to protect your purchasing power, or take advantage of opportunities that simply aren’t available locally – or it is a combination of both reasons.

By investing in offshore funds, like those managed by Orbis, Allan Gray’s offshore partner, you are able to gain exposure to a wider universe of attractively priced companies that don’t feature in our local market, thereby benefiting from trends that are shaping markets globally.

And of course diversification is not just about different shares or currencies, but taking advantage of different asset classes. If your portfolio is well diversified you are not reliant on a single asset class to deliver your returns; instead you have the opportunity to get returns from various sources, so when one is doing poorly, another is likely to make up for it. In addition, our portfolio managers locally and globally are continuously scrutinising this opportunity set to determine how to invest your money between these various asset classes.

HEDGE FUNDS & ALTERNATIVE INVESTMENTS FEATURE

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HEDGE FUNDS & ALTERNATIVE INVESTMENTS FEATURE

Should investors remain positive about local hedge funds?

Local hedge funds’ performances have been muted for the last couple of years.

MoneyMarketing asked RisCura’s Head of Investment Analytics, George Tsinonis, why.

Last year wasn’t a good one for SA hedge funds. ASISA tells us that the industry ended 2017 with assets under management (AUM) of R62.4bn, a decline of R5bn from the R67.4bn managed at the end of 2016. Given this statistic, should investors still be positive about local hedge funds?

Last year’s decline of the AUM in the hedge fund industry can be attributed to a variety of factors. Perhaps the most pertinent factor was the high level of political instability in the country, causing many investors to reallocate funds to perceived safer investments. However, it is especially during market downturns that hedge funds should be utilised, as they are vehicles with the ability to hedge away market risk.

Investors should therefore remain positive in their allocation to hedge funds, as there is always a need to have natural diversifiers in portfolios.

The opportunity presented by genuine market-neutral hedge funds with consistent long-term records should not be overlooked. The South African hedge fund industry is still in relative infancy. The regulatory changes should have a positive impact on the growth of local hedge funds, by increasing their risk oversight and invest-ability.

Why do you think local hedge funds’ performances have been muted for the last 24 months plus?

The years 2016 and especially 2017 were characterised by significant macroeconomic and stock-specific events in South Africa, which had strong influences on the asset management industry. The heightened political instability during 2017 overshadowed returns across the market, which saw a reverse in sentiment towards the end of the year.

While the All Share Index returned 3.8% and 1.6% for the years 2016 and 2017, respectively, Equity Long/Short Hedge Funds returned 5.8% and -0.3% over the same period. Much of the 2017 losses can be attributed to the stock-specific impact of Steinhoff in November 2017, which reduced most of the gains made during the year. However, Market Neutral Hedge Funds returned 6.1% and 3.5% over the same period, and Multi Strategy Hedge Funds 8.7% and 7.9%. This highlights the ability of certain hedge funds to provide uncorrelated returns to the equity market, which greatly reduces the risk of a portfolio.

SA was the first country to put in place comprehensive regulation for hedge fund products. What impact has this had on the industry in terms of, for example, the consolidation of product offerings?

The South African regulator is one of the global leaders of hedge fund regulation, following a similar path to the European Union, with the main piece of legislation being administered through Board Notice No.52 of 2015. This specifies, among other items, the risk parameters that must be considered when measuring and managing hedge fund risk.

Since its implementation, hedge fund providers have consolidated their offerings, due to the increased cost associated with greater risk management, transparency and reporting requirements. While this has hampered the short-term growth of the hedge fund industry, these rules ultimately protect the investor. Hedge funds now have stringent guidelines that are monitored on a daily and monthly basis. The increased regulatory oversight has also sharpened hedge fund offerings; there is now more George Tsinonis, clarity on investment processes and Head of portfolio construction, which ultimately Investment benefits the end investor.

Analytics, RisCura

31 July 2018

Ashburton spins off Dynamic Equity Hedge Funds into empowerment business

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shburton Investments, the asset management arm of the FirstRand group, has spun off the Ashburton Dynamic Equity Hedge Funds business.

There are two hedge funds in the business: the Ashburton Dynamic Equity Qualified Hedge Fund and the Ashburton Dynamic Equity Retail Investor Hedge Fund.

As of 1 May 2018, the team managing the funds has operated under its newly established standalone business called Black Mountain Investment Management.

Rudigor Kleyn, co-head of private markets at Ashburton Investments, says: “It gives us great pleasure to see the team operate on their own after a four-and-a-half-year incubation period at Ashburton.”

Joint founder of Black Mountain Investment Management, Mohamed Dhorat, says that with a team of 30 years of experience in total, Black Mountain Investment Management aspires to be the leading, empowered asset management and investment holding company in southern Africa.

“The team, which also includes Ashay Deochand and Craig Lyall,

offers a niche, activist style of investing that aims to bridge a widening gap in the alternative investment space between regulated hedge funds and private equity funds.

“We are very excited about continuing on our own and offering a stand-apart fund that has historically been uncorrelated with the market and many of its peers.”

Ashburton Dynamic Equity Hedge Funds employs multiple equitybased strategies and invests primarily in the South African listed equity and derivatives markets.

The fund focuses on building a fundamental core portfolio and applying several satellite strategies around the core.

The Ashburton Dynamic Equity Qualified Hedge Fund received the Hedge News Africa award for the best performing long/short equity hedge fund in South Africa for 2016.

The Ashburton Dynamic Equity Hedge Funds will remain with the Ashburton Management Company (RF) Proprietary Limited for a period before moving to a new management company and rebranding under the new company.

AFIG Funds CEO receives Private Equity Africa Award

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rivate Equity Africa (PEA) awarded Papa Ndiaye, CEO of AFIG Funds – the private equity fund management company founded in 2005 in Mauritius – the 2018 Outstanding Leadership Award at a ceremony held in London last month.

PEA is a the London-based publication dealing with private equity on the African continent.

“I have had the privilege of seeing the African private equity industry blossom from its very humble beginnings in the 1990s, and I firmly believe that the best years are ahead of us,” says Ndiaye.

“This award is a strong testament to the commitment and hard work of my colleagues at AFIG Funds, who have accepted the challenge of promoting private equity in both established and frontier markets on the continent,” he adds.

“Thanks to their hard work and excellence, we have invested across 12 countries to date and impacted the development of African blue-chip companies in several sectors, while providing healthy returns,” he says.

Papa Ndiaye (left) receives the 2018 Private Equity Africa’s Outstanding Leadership Award.

HEDGE FUNDS & ALTERNATIVE INVESTMENTS FEATURE

31 July 2018

ALWYN VAN DER MERWE Director of Investments, Sanlam Private Wealth

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anlam Private Wealth offers hedge funds in its multi-asset solution, to ensure its clients’ portfolios are well diversified and positioned to generate returns in both normal and extreme market conditions.

When selecting a diversifying asset as part of a more sophisticated approach, one should naturally consider its ability to add value in both normal and extreme market conditions. In doing so, it is of utmost importance to consider the cost – noting that this doesn’t only mean the sum of fees paid, but also the return sacrificed under normal conditions to cater for the extreme. In other words, cost is the difference between the diversifying asset’s after-fee return and the return of the asset against which protection is typically sought.

Graph 1 considers the longer term, annualised risk and return characteristics of equity, bonds and a hedge fund solution* over the past 15 years. The farther left the asset finds itself on the graph, the lower its

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The value of hedge funds in a multi-asset portfolio

volatility, and the higher up it is, the better its return.

GRAPH 2: CUMULATIVE RETURNS 31 MAR 2003 TO 31 MAR 2018

GRAPH 3: ANNUALISED RETURNS OVER JSE UP AND DOWN MONTHS RESPECTIVELY 31 MAR 2003 TO 31 MAR 2018

GRAPH 1: ANNUALISED RISK & RETURN 31 MAR 2003 TO 31 MAR 2018

The significantly lower volatility of the hedge fund solution and bonds in comparison to equity indicates that their inclusion in a portfolio reduces risk. Also, at a lower volatility than bonds, the hedge fund solution generated an annualised return of 13.73% (after all fees), while bonds returned 9.48%. This effectively means that in terms of returns sacrificed, the hedge fund solution was a considerably less costly diversifying asset. The cumulative effect over the 15 years is shown in Graph 2.

1804_1807_SPW_INTERMEDIARY_PRINT_AD_MONEY_MARKET_220mmWx155mmH_FA.indd 1

To consider the diversification during extreme periods, bonds and the hedge fund solution returns are viewed over all equity upmarket months separately from all the months in which the JSE incurred a loss. Graph 3 shows that the hedge fund solution’s outperformance of bonds was due to more effective participation in upmarket months (returning 21.47% per year), while exhibiting fairly similar positive returns when equities were down (1.76% per year).

The hedge fund solution should not simply be seen as a substitute for bonds, however. In a similar analysis – this time separating bond up-months and downmonths – Graph 4 shows the hedge fund

GRAPH 4: ANNUALISED RETURNS OVER ALBI UP AND DOWN MONTHS RESPECTIVELY 31 MAR 2003 TO 31 MAR 2018

solution’s returns as largely uncorrelated to bond returns over extreme periods.

An annualised return of 8.37% was generated by hedge funds over all All Bond Index (ALBI) down-months. * The performance used for the hedge fund solution in this analysis is after all fees and represents the actual fund of hedge fund track record of the portfolio manager at THINK.CAPITAL.

2018/04/18 5:46 PM

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HEDGE FUNDS & ALTERNATIVE INVESTMENTS FEATURE

ANDREW LUDWIG Director, BLACK ONYX

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31 July 2018

When do you start considering the alternatives?

ost people accept that we’re at the top of a bull market, but what’s fascinating is how quickly you and I have forgotten what happened 10 years ago. I’m not a bear, but right now I’m anxiously bullish and would like to share some thoughts around the establishment of a sophisticated investment portfolio specifically for this cycle of uncertainty, which considers the general equity & balanced funds, passive ETFs, but most importantly the regulated alternatives like hedge funds, which are CIS, Regulation 28 compliant.

Right now, there are two investor camps: those that believe the drawdown in February (2018) was the much-anticipated financial correction, and those who believe the worst is yet to come.

My leaning is into the latter, who have braced themselves for the next couple of years. But we all hate FOMO, so how do you navigate this period of market uncertainty and how much upside is there really left, and how much risk are we prepared to take in pursuit of the apparent low-hanging fruit?

Brexit and then Trump should have been the catalyst to a market correction akin to 2008 but gave rise to a ridiculous upsurge on the S&P and JSE – perhaps the tail-end of quantitative easing (QE) or a result of all the (US) baby boomers pension money sloshing around in the new order of ETFs (an entirely new asset class born out of the underperformance of active managers, and one yet to be tested in a cataclysmic market correction).

The signs of change may well be in our face when you consider global debt has once again been dispersed across the economy, much like sub-prime mortgage lending before the global financial crisis.

There is the ever-looming threat of the Federal Reserve raising interest rates and that strong US earnings cannot last. China, the second largest economy, may also self-implode under its opaque guise of failing enterprises and bad debts. Let’s face it, we’re all impacted if the US and China sneeze.

Closer to home, December 2018’s political get-together was anyone’s guess. Ramaphoria will taper and, consistent with South Africanism, we will enter yet another period of uncertainty (2019 elections); but what are we as investors, advisers, custodians of other persons’ wealth etc. supposed to do? Do we go to cash, do we send even more money offshore, do we do nothing, or do we think about the alternatives and portfolio diversification that ensures uncorrelated returns while minimising the risk?

The last 30 years have seen a declining interest rate environment, critical to the seemingly ‘bulletproof ’ multi-asset portfolios (60 equity/40 bonds), and we are actually paying the institutions to borrow our money. More recently, the inverse relationship of bonds and equities has shifted and may actually become the new norm. There are excess leverage and liquidity concerns, and it’s all looking very familiar to some.

The rising market has been beta driven, with euphoric consumer sentiment great for passive

strategies, especially during an abnormally low volatility cycle. Sadly, the past decade’s high-double-digit equity returns propped up by cheap-money policies like QE, are likely a thing of the past. The search for alpha becomes increasingly difficult, with an increasing emphasis on fundamentals. If you are at all anxious, now is certainly the time for active management, especially that which demonstrates diversification, reduced correlation and especially low volatility.

2017 was a bumper year for the ALSI, and all thanks to three miners and a luxury goods producer, not forgetting that Naspers accounted for over 25% of the JSE and was up 75% for the year. Remove those five stocks and the index would have been flat, as well as unit trusts, ETFs and most pension funds. Across the pond, four tech stocks and the men of Omaha dominated the S&P 500, but with their exclusion, the US index would have also been flat. That’s awfully concentrated and why so many hedge funds could never keep up because, by design, they are not lemmings, hence we pay them to be contrarian, to actively identify fundamental value, to be the ‘hedge’ of our more mainstream, seeming less risky (pension) investments.

So why would you ever consider an alternative strategy like a hedge fund, and what do you know about this seemingly expensive, nefarious, risky beast? Did you ever consider that they are employed alongside your existing traditional strategies to bring down your portfolio’s risk?

The benefits of the alternatives are: • Better returns and less risk than the JSE over time • Better returns and less risk than most unit trusts over time • Portfolio diversification that ensures uncorrelated returns • Active fund management that minimises downside risk • Investor protection via FSCA-regulated CIS structures.

And while 2016 and 2017 were shockers for equity long-short hedge funds, other hedge strategies fared well (fixed income especially), but still delivered very low volatility that is key to wealth preservation. The most likely reason for such underperformance was that many hedge fund managers took defensive positions, anticipating a market correction (after eight years), and missed the rally after Trump. As such, many alternative managers were not overly exposed to the aforementioned top performing stocks with the conviction that we were likely at the top of the market and the risk/reward no longer made sense.

What about a real benchmark then, back in the days before we ever knew ETFs existed? The year 2008 speaks volumes.

This is not flash-in-the-pan stuff, with hedge funds having been in SA for as long as 18 years.

Many hedge fund managers were once the decisionmakers at the largest asset managers and likely played an integral role in your current retirement strategy. They left to establish their own mandate (CIS / Regulation 28), affording them an opportunity to chase true alpha, diversification, low volatility and ensure the least correlation to your existing nest egg. There are over 300 regulated CIS hedge funds available in SA, many of which are Regulation 28.

To conclude, hedge funds will likely underperform general equity funds and balanced funds in today’s rising market (typically designed to capture 80% of the upside) and then hopefully earn their keep in the bearish, volatile cycles by minimising the downside risks. A collaboration to establish a sophisticated Regulation 28 investment portfolio, which considers ETFs, general equity funds and balanced funds, including the alternatives to establish better risk-adjusted returns, makes complete sense in creating a sophisticated Regulation 28 investment portfolio – all other things remaining constant.

A sophisticated portfolio should include 10-30% in the alternatives, a prudent allocation when 53% of US university endowment allocations are into alternative strategies.

The author is an alternative investment consultant at BLACK ONYX, invested in all the aforementioned strategies.

HEDGE FUNDS & ALTERNATIVE INVESTMENTS FEATURE

31 July 2018

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Generating strong absolute returns while maintaining capital stability Peregrine Capital Peregrine Capital is the oldest and one of the largest hedge funds in South Africa. Since inception in July 1998, Peregrine Capital has consistently delivered exceptional results across its suite of funds. The funds managed

by Peregrine Capital are underpinned by a common investment philosophy and style. The portfolio managers are significant co-investors in the funds.

We believe in partnering with our clients for the long term.

Investment team The investment team is made up of investment professionals with complementary knowledge and market skills, but similar investment DNA. The team includes four highly qualified, experienced hedge fund

portfolio managers, as well as four equity analysts. Active information sharing and cross-pollination of ideas, combined with a hands-on approach, results in a strong, well-balanced and stable team.

THE TEAM INCLUDES FOUR HIGHLY QUALIFIED, EXPERIENCED HEDGE FUND PORTFOLIO MANAGERS, AS WELL AS FOUR EQUITY ANALYSTS Investment strategy The objective of Peregrine Capital is to generate strong absolute returns while maintaining capital stability in the funds.

Dedicated to only managing hedge funds, the heart of our equity investment process is sound bottomup fundamental company research,

performed by experienced investment professionals. This is augmented by our long-term corporate relationships.

We aim to generate outperformance from an array of opportunities rather than a handful of big successes, leading to consistent results over time.

We do, however, make significant investments in thoroughly-researched, high-conviction positions.

In the complex landscape of investing, whether in bull or bear markets, the Peregrine Capital funds have provided investors with the means to reduce portfolio risk, increase returns and diversify their investments.

Dudley Lamont Smith, Business Development, Peregrine Capital

HEDGE FUNDS & ALTERNATIVE INVESTMENTS FEATURE

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31 July 2018

SA private equity outperforms ALSI TRI and SWIX TRI

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he latest fourth quarter 2017 RisCura-Southern African Venture Capital and Private Equity Association (SAVCA) report shows that private equity has outperformed the FTSE/JSE All Share Total Return Index (ALSI TRI) and the FTSE/ JSE Shareholder Weighted Total Return Index (SWIX TRI) over the three-year and five-year reporting periods analysed.

The quarterly report, which tracks the performance of a representative sample of South Africa’s private equity funds, also reveals that the public market equivalent (PME) recorded is greater than one against all three listed benchmarks for the threeyear period; reflecting positively for the asset class.

“The private equity sector, like many others, experienced a slowdown associated with the political uncertainty and populist narrative of most of the last quarter of 2017. The decrease in pooled IRR figures also reflects the cyclical nature of the asset class,” says Tanya van Lill, SAVCA CEO. “We anticipate potential for an upward swing to be recorded in Q1, against the backdrop of renewed, positive political sentiment, a rise in investor confidence and the ability of SA fund managers to weather macroeconomic storms though effective decision-making and value extraction.

This is coupled with government’s continued focus on positioning South Africa as an attractive and viable investment destination.”

USD Internal Rate of Return (IRR)* declined over the 10-year period, CAGR

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POOLED IRR BY TIME PERIOD Pooled IRR 13.1%

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reaching 6.7%. The five-year and three-year IRR increased to 3.9% and 7.7%, respectively, up from 2.5% and 7.1% at September 2017.

Historic data collected has shown some noteworthy trends.

Smaller funds, particularly those with committed capital under R500m, have outperformed larger funds in South Africa, says Kelsey Tanner, Senior Private Equity Analyst, Unlisted Investment Services, RisCura.

This, she adds, is in line with international markets, where private equity performance data also shows that returns can vary across fund sizes.

“While one cannot conclude that small funds will always outperform in all cases, they have been able to show good returns for their investors.”

The size of a fund impacts the size of the companies that the fund typically targets, Tanner points out.

“Thus, the outperformance may indicate that smaller companies in niche markets are showing better results than large firms, which are typically more dependent on the general economic conditions.”

Larger funds are also able to invest in more capital-intensive industries, which require larger investments. In the South African context, this may have proven to be a disadvantage, as capital-intensive industries have been exposed to greater economic headwinds.

Historic industry data also shows that older vintage funds, in the pre-2000 and 2000-2004 brackets, have performed better than the newer vintage funds.

11.6% 10.9%

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PRIVATE EQUITY HAS COME A LONG WAY IN THE LAST 20 TO 30 YEARS

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“Over the last few quarters, however, we have observed an upward trend in 2013-2015 vintage fund returns. Pooled IRR for these funds has grown from 6.9% at Q2 2017 to 7.1% at Q3 and 9.0% at Q4,” says Tanner.

“The majority of the value in these funds is still unrealised. Returns are therefore driven by significant movements in fair values. Higher IRRs from increases in fair values are the result of improvement in performance and positive sentiment.

This is typical of the J-curve effect in the private equity industry, where limited value is accumulated at the beginning of the investment period, followed by rapid accumulation prior to investments being exited.”

She adds that the 2013-2015 vintage fund returns have been depressed to date, but value is accumulating rapidly as would be expected in the current stage in the life of these funds.

“Private equity has come a long way in the last 20 to 30 years; the asset class has become more widely known and appreciated by investors,” says van Lill.

“Impact investment – addressing socio-economic issues while making a solid return – has also gained traction within the sector, as well as the industry’s continued role in contributing to environmental, social and governance (ESG) measures.” * The most widely accepted method for calculating returns of private equity funds is the annualised internal rate of return (IRR) achieved over a period.

Tanya van Lill, CEO, SAVCA

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0

10 year

5 year

3 year

Kelsey Tanner, Senior Private Equity Analyst, Unlisted Investment Services, RisCura

FIA AWARDS

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FIA AWARDS 2018

31 July 2018

SA’s top brands toasted at FIA Awards

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n a celebration held at the Sandton Convention Centre last month, the Financial Intermediaries Association of Southern Africa (FIA) announced the winners of the 2018 FIA Awards. The awards celebrate the financial services brands that provide the best product, relationship and service to SA’s financial advisers and insurance brokers.

The FIA Awards are hotly contested and the winners are not only recognised as companies that ‘go the extra mile’ but those that truly have consumers’ interests at heart.

The Winners

EMPLOYEE BENEFITS: Sanlam Employee Benefits MEDICAL SCHEMES: Discovery Health INVESTMENT PRODUCT LUMP SUM: Allan Gray LONG-TERM RISK: Old Mutual Life INVESTMENT PRODUCT SAVINGS: Allan Gray SHORT-TERM COMMERCIAL: Renasa SHORT-TERM CORPORATE: Hollard SHORT-TERM PERSONAL LINES: Renasa SHORT-TERM UNDERWRITING: ITOO Special Risks

CLOCKWISE FROM TOP LEFT: Lizelle van der Merwe (FIA), Nash Omar (Hollard), Peter Olyott (FIA); Discovery Health's Jonathan Broomberg; ITOO Special Risks team receives the award for short-term underwriting; the Renasa team with their two awards; Lizelle van der Merwe and Ray Mhere (Allan Gray).

Sanlam wins FIA’s Employee Benefits Product Supplier Award

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anlam has been named the 2018 Financial Intermediaries Association of Southern Africa’s (FIA) Employee Benefits Product Supplier of the Year. These awards take place to celebrate the role of advice and acknowledge the product providers who, in the opinion of the members of the FIA, have excelled over the past year in supplying exceptional products and service delivery.

The FIA awards provide financial intermediaries the opportunity to recognise product suppliers that consistently deliver exceptional value to clients.

Dawie de Villiers, Chief Executive Officer of Sanlam Employee Benefits, says that the company’s culture and business model is focussed on addressing changing client needs in partnership with intermediaries.

“The way our clients want to interact is changing rapidly with technological and generational shifts driving this change,” he adds. “For this reason, we’ve

embedded innovation into our DNA and made a wide range of investments in technology to bring an always-improving offering to our clients and to enable intermediaries to provide informed advice.

From the announcement of offering free retirement benefit counselling services to qualifying administration clients, to our class-leading Retire-Mate platform, to the Sanlam My Retirement App, we are able to share real-time information and data between the sponsor, fund, employer, intermediary and member.”

De Villiers says the strategy has been to leverage synergies across Sanlam to develop what has been widely recognised as the market-leading offering.

“Intermediaries have played a crucial role in executing this strategy as their input informs how we engage with members.

This accolade, I believe, is a reflection of our partnership with intermediaries to help improve financial outcomes for

the members of Sanlam funds.”

De Villiers notes: “We’ve won this award previously and are delighted that the 2018 win represents an affirmation from intermediaries that Sanlam is on the right track in empowering them to add even greater value to our shared clients through our engagement model, service proposition and technological suite.”

The role of the intermediary has never been more important than in today’s very tough economic conditions, he points out, adding that “advice across various dimensions is critical to help employers, funds and members achieve better financial outcomes – and advice is what intermediaries do best.”

Dawie de Villiers, Chief Executive Officer of Sanlam Employee Benefits

31 July 2018

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dvances in technology have resulted in an expansion of options available to clients, such as digital financial planning and guidance tools, or robo-advisers as they are commonly known.

Despite this, the financial adviser’s role remains increasingly important, especially if we aim to significantly improve the poor savings culture in our country.

South Africans are among the worst savers in the world. Despite several ongoing interventions implemented by various organisations, including government and the private sector, the dial does not seem to be moving.

The advent and adoption rates of these digital financial planning tools in developed markets are fairly high. However, in developing markets like South Africa, where financial literacy remains relatively low, such adoption rates have not materialised.

While these digital financial planning tools are by their very

Advisers can contribute to improving savings culture in SA

nature intended to bring simplicity to creating and executing financial plans, clients may still need or prefer the assistance of a financial adviser.

These tools are fundamentally based on complex financial terms, calculations and conclusions – including the tax implications that may create an added layer of complexity, and that an average client may not fully comprehend.

As a result, a financial adviser will need to be knowledgeable about the various tools available in the market, including their unique selling points,

capabilities and service offerings.

Armed with this information, a financial adviser will be better equipped to answer any queries their clients may have about these tools.

Furthermore, a client should not use these tools in isolation of their financial plan. It would therefore be in the client’s best interest to first create a comprehensive financial plan in consultation with an adviser before engaging in activities that may lead to any sort of financial contracts.

Moreover, these digital financial planning tools are designed predominantly for use by the younger generation. Therefore, financial advisers need to ensure that there is a special focus on this market as it naturally requires a fair amount of financial guidance due to lack of experience and knowledge in managing their personal finances.

Historically, unnecessary personal debt is most probably one of the biggest thieves of financial security within this market, largely due to instant gratification.

In this regard, the role of financial advisers remains key to ensure that the younger generation is geared towards long-term intergenerational wealth. Through appropriate interventions at this level, a financial adviser can contribute to improving the poor savings culture in South Africa.

Ultimately, the journey to financial freedom starts with a comprehensive financial plan created with the assistance of an accredited financial adviser.

And while the digital financial guidance tools can help to improve accessibility to financial solutions, they should not be used independently to a financial plan.

The information, opinions and any communication from PPS Investments, whether written, oral or implied, are expressed in good faith and not intended as investment or financial advice, neither does it constitute an offer or solicitation in any manner.

Furthermore, all information provided is of a general nature with no regard to the specific investment objectives, financial situation or particular needs of any person.

SASI calls for employers to assist with saving

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he month of July is Savings Month in South Africa, a campaign led by the South African Savings Institute (SASI) and supported by Absa and the IDC, with a focus on driving awareness around savings issues that contribute to the financial wellbeing of the South African consumer.

In the quest to find alternative financial solutions for South Africa’s dire savings rate, this year the spotlight falls on how employers can play a vital role in assisting cash-strapped employees to save.

The 2018 SASI July Savings Month Community Campaign will be taken to grassroot communities, stokvels and tertiary institutions.

“As South Africans struggle under SAVING increasing financial pressure, a savings MONEY IS buffer becomes even ESSENTIALLY A more important, yet BEHAVIOURAL there is less focus on savings and people CHANGE are increasingly using credit to fund their basic needs, getting caught in a vicious spiral of debt from a young age,” says SASI CEO Gerald Mwandiambira. “For those that can save, it is important that they use all the

instruments available to improve their long-term financial sustainability.”

Mwandiambira says saving money is essentially a behavioural change, and this is behaviour that employers and HR professionals can help guide. “HR professionals should be educating employees to start building a savings buffer and recommending tweaks such as regularly reviewing and adjusting their pension fund contributions.

Employers can more actively facilitate or automate the savings process for those with an income, such as garnish savings options where money goes into tax-free savings accounts and structuring 13th cheques as a savings tool.”

Collaboration with partners across all industries, even beyond financial services, is necessary to address savings in South Africa, says Mwandiambira. “The lack of a savings culture in South Africa is a systemic developmental issue, and no single organisation holds the resources – financial, intellectual or skills – to address a problem of this magnitude on its own.

Collaborative efforts from active corporate citizen companies such as Absa have the potential to deliver results on a bigger scale,” he adds.

According to Thami Cele, head of Savings and Investments at Absa Retail and Business Banking,

research shows that there are clear benefits for employers as financially stable employees tend to be happier and more productive. “We know that savers with a savings buffer of up to three months income enjoy improved emotional wellbeing, greater resilience to external market shocks and, importantly, an increase in productivity at work.”

Research commissioned by Absa to uncover the interplay between savings and happiness will be launched to the market next month.

Mwandiambira believes we need to move away from negativity around South Africa’s savings rate to develop innovative savings alternatives and reinforce positive savings behaviour. “Savings Month has been designed to remind consumers to strive towards financial freedom or remain continuously vulnerable. Cultivating a culture of savings and promoting alternative savings solutions in all spheres remains the focus of SASI and our dedicated partners.”

SASI CEO Gerald Mwandiambira

25

SAVINGS MONTH FEATURE

TANDISIZWE MAHLUTSHANA Executive of Marketing, PPS Investments

SAVINGS MONTH FEATURE

26

SAVINGS MONTH // RISK

MARILIZE LANSDELL CEO, PSG Wealth

E

very July (national savings month) we are reminded how important saving is, but by September most of our good intentions have fallen by the wayside. How can we prevent that from happening this year and commit to financial resolutions that stick? The first step is letting go of some common savings myths, says Marilize Lansdell, CEO at PSG Wealth.

“Successful savers do not fall prey to these common myths that lead many of us to delay – or give up on – saving,” she says.

31 July 2018

Five savings myths to let go of Myth 1: Saving is about what you earn While we all like to believe the ability to save is linked to earning more, we all know some high-earning individuals who live pay cheque to pay cheque. The reality is that saving is not so much a factor of what you earn, but a factor of the difference between what you earn and what you spend.

Anyone can save, and the first step is to take a long, hard look at your expenses and see where they can be curbed.

Myth 2: Saving is for retirement Realise that you will not only need savings one day, when you retire. You could need it tomorrow (when you need to cover medical expenses out-ofpocket), next month (when the wheels on your car need to be replaced), next year (when you want to take that holiday) or three years from now (when you get retrenched). Without a safety cushion to fall back on, or a nest egg for your big-ticket items, you are far more likely to overspend and incur expensive debt.

RISK

Myth 3: The bank is your best friend Your money should always work for you.

Unless you are outpacing inflation, you are effectively losing money. In the short term, this effect is less pronounced, but in the long term it can be devastating.

Be sure to invest in a savings vehicle that matches your investment horizon. In the short term, stock markets are volatile and you could lose money. In the long term, shares and listed property are the only asset classes that beat inflation.

Myth 4: You can catch up later Much has been written about compound interest, and it has even been called the eighth wonder of the world.

Unfortunately, compound interest really needs time to work its magic. By putting off saving until you ‘can afford it’, you are losing out on one of the most powerful forces in the investment universe.

Myth 5: Saving can wait when ‘life happens’ Saving should be a mindset, rather than something you do when the time is right. There will always be ‘good reasons’ to postpone saving and we are often side-tracked along the way. Most of us blame misfortune (losing a job, not getting that raise) or market corrections for our failure to arrive at the financial position we’d hoped for. But while most of us fail – South Africa’s savings rate and provision for retirement is worryingly low – there are some that succeed.The difference is that they make saving part of their everyday life. When you achieve a savings mindset, you will find a way to save no matter what curve balls life throws your way.

Limiting the ransomware threat

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ybercrime resulting in the loss of funds is at an all-time high. While the latest company to be in the spotlight as a result of being hacked is insurer Liberty Holdings, there is a growing list of businesses that have been breached.

Simon Campbell-Young, CEO of MyCybercare, points out that not only is company data constantly at risk, but big corporate breaches are increasingly putting individuals at risk. “Every time a business is hacked, all of its customers’ details are available to the cyber criminals to use or to sell. This opens the doors to identity theft as well as straightforward theft of money from a person’s bank account, in addition to many other types of fraud,” he says.

“We are seeing a massive spike in online criminal activity. Hacks and phishing attacks are becoming more targeted and more mainstream, as can be seen in the recent Liberty event. Since 2016, there has been a massive increase in the number of ransomware attacks, the amount of ransom demanded, and the number of ransoms paid. Ransomware will continue to plague organisations as hackers constantly look for data to on-sell or re-use.”

He adds that viruses, botnets and malware are becoming more and more creative and increasingly more difficult to detect. For example, there’s a new and rising trend in ransomware called SamSam ransomware. Once

limited to the healthcare sector, this more destructive form of ransomware has expanded to include other industries.

With SamSam, attackers prey on missing security patches to access a network. This type of attack does more than just encrypt files – it also attacks critical software and network backups, making them inoperable. “We’ve seen more than 10 SamSam attacks so far this year and that number is expected to grow. Around 28% of all cyber claims are ransomware attacks, and there has been a 34% increase in the frequency of reported ransomware attacks. This is only the tip of the iceberg and will certainly increase as cyber criminals demand – and get – higher amounts of money,” Campbell-Young says.

While there are very few details about the ransom amounts paid by companies locally, the amounts being demanded by hackers have more than tripled internationally. The highest paid ransom in the US in 2016 was $18 000; to date in 2018, the highest amount paid was over $60 000.

“Online profiling, with an intent to commit cybercrime, is driving most of the large-scale cyber hacks. These criminals are getting smarter about how they target companies and people, and as these attacks become commonplace, consumers and businesses need to increase their efforts to protect and secure their systems, as well as limit any damage in the event of an attack.

With cybercrime rising exponentially, everyone needs to be protected – at home and in business,” Campbell-Young says.

He adds that while businesses and individuals are investing in security measures to protect themselves and their data, over and above prevention, mitigation and response is key.

“Consider having a personal cyber insurance policy in place. This will protect a business or an individual from all sorts of threats and frauds, and will guarantee they don’t lose money in these events. These policies specifically cover ransomware and will offer professional assistance on how to respond to an attack of this nature, and will even see that the ransom is paid, should this action be approved.”

Simon CampbellYoung, CEO, MyCybercare

RISK 27

31 July 2018

Discussing critical illness cover with your clients “Y ou have cancer.”

Whether you’ve received this diagnosis from your doctor, or whether a loved one, friend, family member or colleague has shared this news, every year one in four South Africans hear these words.

Critical illness or dread disease cover is not something anyone wants to talk about, but when seeing the statistics, it’s a necessity to discuss it with your clients in your capacity as their trusted financial adviser.

At FMI, we provide cover against all serious illnesses or conditions, such as heart attacks, cancer and strokes. Our critical illness cover complements our disability cover by giving your clients all the financial, practical and emotional support they need.

South Africa’s most common killers • Cancers: According to the Cancer Association of South Africa, 100 000 South Africans are diagnosed with cancer each year. The most common cancers among men are prostate, skin, colorectal, brain and lung cancer. In women, breast, colorectal, skin, lung and ovarian cancers are more prevalent.

• Cardiovascular diseases: More South Africans die of a cardiovascular disease than all cancers combined.

Every hour in South Africa, five people have a heart attack and ten people have a stroke. Cardiac and cardiovascular conditions contribute to the secondhighest insurance claims in South Africa.

• Lifestyle factors: Lifestyle factors like diet, smoking and lack of exercise contribute to heart disease and cancer. As a nation, South Africans are not active enough, we eat too much salt, smoke and do not eat healthily, in general. As much as 80% of heart diseases and strokes can be prevented by following a healthy lifestyle.

• Critical illness doesn’t care how old you are: Many South Africans think cancer and heart disease only affect older people. The truth is that critical illnesses can affect anyone – any age, gender or career choice.

Statistics show that not only older people are claiming for critical illnesses – 13% of young parents claimed in 2017, while 22% of emptynesters claimed their benefits in the same year. The age gap isn’t as large as you may imagine; young people get ill too.

In 2017, 13% of the claims against critical illness benefits were from business people, while 3% were from housewives. This can be attributed to underinsurance – executives may have some group cover, whereas a housewife may not have any cover and would be less likely to claim.

There is some good news though. With medical development and technologies, treatment for heart attacks, cancer and strokes is widely available in South Africa. It does, however, work better when detected earlier rather than later, so your clients should schedule regular check-ups with their GPs.

More about FMI Critical Illness cover At FMI, our critical illness cover was developed by listening to real people’s stories. It addresses all the financial, emotional and practical needs of being diagnosed and living with a critical illness. We offer a combination of lump sum and income benefits, plus practical household and logistical assistance, and an expert second medical opinion.

With these eye-opening stats at hand, it’s more important than ever that you discuss critical illness cover with your clients, so they can be sure they and their families will be looked after financially should the unthinkable happen. Our goal at FMI is to make sure your clients need only focus on getting better; we’ll look after the rest.

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RISK // HEALTH

31 July 2018

Agriculture: A key growth sector for the canny insurer – and broker

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HEALTH

he agricultural sector is a core element of the South African economy. It will also be central to rebuilding and growing our struggling economy – and it is therefore a key sector for the insurance industry.

Recognising this, Hollard recently made its debut at NAMPO Harvest Day, one of the largest agricultural shows on Earth. Living out its localis-lekker philosophy of being where its customers are, the insurer engaged thousands of show visitors around its agri, trucking and life insurance offerings. “'Local is lekker' is no more pertinent than when working with the agricultural sector,” says Andries Wiese, the head of Hollard Insure’s Agri Centre of Excellence.

“The circumstances of farmers differ widely, largely due to their geographical placement. A Karoo sheep farmer’s needs and risks are very different to those of a Swartland wheat farmer, even though they’re not that far from each other. And a Mpumalanga avocado grower’s situation is worlds apart from theirs.

“For that reason alone, it’s important to have insurance practitioners – including insurers and brokers – in the very communities they serve. They get to know local conditions and local customers

intimately and understand their specific insurance requirements well. In the highly competitive world of insurance, the differentiator isn’t necessarily price; it’s great advice and appropriate cover.”

Agriculture is currently prominent in the public discourse for various reasons –from issues around farming practices and nutrition to land reform and expropriation without compensation. As the economy’s best-performing economic sector, it is also fundamental to rebuilding and growing the economy.

“In that sense, agriculture is a key segment for insurers such as Hollard. As South Africa’s secondlargest independent insurer, we believe we have a responsibility to make a meaningful contribution to the sector – in so doing, helping it to remain sustainable, create jobs and ensure food security,” he says.

“This also satisfies Hollard’s Better Futures marketing campaign, which promotes the concept that doing good and creating a better future for everyone is at the heart of doing good business.”

Central to Hollard’s support for agriculture is specialist brokers, who are essential in a sector that is characterised by advanced technology, large capital inputs and a host of risks – from climatic issues to disease and natural disasters.

“If anything, the multi-million-rand equipment and livestock on display at NAMPO brought this point home to us. Farmers must negotiate huge financial and operational risks, and this is where the expert advice and support of their broker can mean the difference between success and disastrous failure.

“Hollard’s support for brokers is unequivocal.

Our business model is founded on intermediated insurance, and we will do everything in our power to ensure brokers are well informed, empowered, sustainable and profitable.

“It’s not for nothing that we recently launched #LongLiveTheBroker, a two-year campaign that underlines our relationship with the broking community. What’s good for brokers is good for Hollard – and, in this context, for the agricultural sector and the whole country. It’s a win-win-win situation,” says Wiese.

Andries Wiese, Head of Hollard Insure’s Agri Centre of Excellence

Heart attack is not the same as cardiac arrest

T

he UK’s Daily Mail recently carried a story concerning a father of three who was refused £65 000 by health insurer Aviva because he had a cardiac arrest and not a heart attack. This is despite him paying £22 a month for 16 years.

“Vicky and Steven Huddleston took out critical illness insurance to cover their mortgage if one of them became ill. So, when Steven, 40, nearly died in January after his heart stopped for 20 minutes, they were grateful they’d had the foresight to prepare themselves.Yet Aviva refused to pay their claim.

“Britain’s biggest insurer says that because Steven suffered a cardiac arrest, not a heart attack, he is not covered and ineligible for the £66 500 pay-out.

The insurer’s decision left the couple from Lancaster struggling financially.”

MoneyMarketing asked Momentum to comment on the Daily Mail story. Jenny Ingram, Head of Fully Underwritten Products at Momentum, says it’s important to first point out the main differences between a heart attack and a cardiac arrest.

Heart attack She explains that there are different types of heart attacks, but the most common ones are where

blood supply to the heart muscle is interrupted due to a blocked artery.

If this is not reversed very quickly, the parts of the heart where the oxygen supply was cut off will die. Once heart muscle dies, it cannot be reversed. If this happens, the heart muscle will never quite have the same strength as before.

Unless it is a very severe heart attack, a person will still be able to talk and be aware of their surroundings, but they might experience extreme pain. The heart doesn’t stop beating during a heart attack. In short, a heart attack is a circulatory problem resulting from one of the coronary arteries becoming blocked. The heart muscle is robbed of its vital blood supply and, if left untreated, will begin to die because it is not getting enough oxygen. If you are having a heart attack, you will be conscious.

Cardiac arrest Ingram says a cardiac arrest is a sudden stop in effective blood circulation due to the failure of the heart to contract effectively or at all, due to an electrical malfunction that disturbs the heart’s rhythm.

When this happens, a person can collapse instantly and those around them have very little time to act because this condition could result in death if the heart doesn’t start

beating and circulating blood again.

A defibrillator is the most effective tool to get the heart back into rhythm again and save the person’s life.

Most cardiac arrest events are fully reversible, if recognised and treated instantly. Also, most people who experience a cardiac arrest will not experience long-term effects with regards to their quality of life. A cardiac arrest event could lead to the diagnosis of a pre-existing congenital heart defect.

So, in summary, a cardiac arrest is an electrical problem which causes a person’s heart to stop pumping blood around their body and they stop breathing normally. If you are in cardiac arrest, you will most likely be unconscious and need to receive CPR/defibrillation immediately.

“If we look at the critical illness events covered by Momentum, experiencing a cardiac arrest alone doesn’t trigger a critical illness claim since most of these are short events which are reversible,” Ingram says.

However, if problems with the heart/brain manifest after this event, there are a couple of ways that a client can claim, as per the examples listed below (in the order of severity from low to high): • Cardioversion/defibrillation – if a person experiences irregular heartbeats, severe enough to require

electrical cardioversion therapy • Irregular heartbeats that requires a pacemaker to be inserted • If the blood supply to the brain was interrupted for an extended period and as a result caused brain damage; then a critical illness pay-out might be made.

“One must keep in mind that critical illness benefits have evolved faster in South Africa than anywhere else in the world,” Ingram says.

“As a result, companies are regularly updating their critical illness benefit definitions. Unfortunately, neither clients nor financial advisers are always able to make accurate assessments of which benefits are most up to date and most comprehensive.”

Therefore, although cardiac arrests are not explicitly covered in most critical illness products in the market, Ingram adds that products offering comprehensive critical illness cover will have claim events for those instances where the cardiac arrest is quite severe and has long-term implications.

Jenny Ingram, Head of Fully Underwritten Products, Momentum

Madiba

WAS MORE THAN A PRESIDENT, he gave me the courage to fight for freedom.

- Sophie De Bruyn

www.nelsonmandela.org

BOOKS ETCETERA

30

BOOKS ETCETERA

BORN IN CHAINS: THE DIARY OF AN ANGRY ‘BORN FREE’ CLINTON CHAUKE

WHO WILL RULE IN 2019?

JAN-JAN JOUBERT The ANC received a bloody nose in the 2016 local elections, when it lost three major metros to the opposition. Will the fractured ruling party be able to reunite under Cyril Ramaphosa and gain a majority at the polls in 2019? Or could the DA and the EFF overcome their vast ideological divide to oust the ANC? The South African political landscape has changed dramatically since Jacob Zuma stepped down as president.

Veteran political journalist Jan-Jan Joubert looks at all the possible scenarios, taking us behind the scenes into a world of political horse trading to analyse the options available to all the parties in the run-up to the next election. Will the oldest liberation movement in Africa have to form a coalition to stay in power? And what is the likelihood of the ANC turning to the EFF to bolster its support?

One thing is certain: deals will be done. By examining the results of the local elections, Joubert argues that the 2019 national elections may well be the first in 25 years in which no party wins an outright majority.

In exclusive interviews, political leaders also share their views on the major issues dividing – or perhaps uniting – South Africa today, and point the way to a new political future.

Clinton Chauke knows what it’s like to be born dirt-poor in South Africa – having been raised alongside his two sisters in a remote village bordering the Kruger National Park and in a squatter camp outside Pretoria.

The author is a young village boy when awareness dawns of how poor his family really is: there’s no theft in the village because there’s absolutely nothing to steal. Then fire destroys the family hut, and they decide to move to the city. There he is forced to confront the rough-and-tumble of urban life.

He is Venda, whereas most of his classmates speak Zulu or Tswana, and he has to face their ridicule while trying to pick up two or more languages as fast as possible.

With great self-awareness, Chauke negotiates the pitfalls and lifelines of a young life: crime and drugs, football, religion, friendship, school, and ultimately, becoming a man. Throughout it all, he displays determination as well as a self-deprecating humour. His story shows that even in a sea of poverty there are those that refuse to give up and, ultimately, succeed.

ASISA Foundation turns fledgling microenterprises into employment generators

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ural township entrepreneurs from some of the country’s poorest areas gathered in Sandton, Johannesburg, last month to celebrate the successful incubation of their 28 businesses. Most of them were little more than good ideas or fledgling micro-enterprises less than a year ago. Now these businesses support 83 jobs, 42 of which are new. These jobs in turn positively affect the lives of at least 200 dependants.

The 28 entrepreneurs all have one thing in common: They participated in RIGHT: Thuto Legwale created the Segaetsho Cultural Village in the Sun City Leisure Resorts Precinct. He is pictured receiving the FLAME Impact Award with Ruth BenjaminSwales, CEO of the ASISA Foundation, and Leon Campher, CEO of ASISA. FAR RIGHT: Zanele Ntuli,a smallholder farmer who received the FLAME Trailblazer Award, is pictured with Leon Campher, CEO of ASISA, and Ruth Benjamin-Swales, CEO of the ASISA Foundation.

31 July 2018

EDITOR’S BOOKSHELF

the Saver Waya Waya Financial Literacy and Micro Enterprise (FLAME) pilot programme introduced in 2016 by the Foundation of the Association for Savings and Investment South Africa (ASISA) in Hammanskraal, Soshanguve, Ga-Rankuwa and Rustenburg.

The ASISA Foundation is a non-profit initiative supported by the members of ASISA with the aim of delivering effective and objective financial literacy and microenterprise development programmes to SA’s most vulnerable groups.

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