31 May 2021 | www.moneymarketing.co.za
WHAT’S INSIDE YOUR MAY ISSUE QUO VADIS, CLEANTECH INVESTORS? It is easy for investors seeking outsized returns to get caught up in the hype Page 11
NOT ALL DFMs ARE THE SAME DFMs are now also differentiated in the way they design investment solutions for clients Pages 16 - 17
UNIT TRUSTS – HOW DIVERSIFICATION HELPS TO REDUCE RISK Diversification involves allocating funds across various unrelated asset classes, or across various unrelated assets within asset classes Page 21
SHORT-TERM INSURANCE IN A TIME OF COVID-19 Inside the insurance sector, 11% of brokers indicated that they had to downsize their teams Page 30
@MMMagza
@MoneyMarketingSA
First for the professional personal financial adviser
The growing appetite for alternative investments Alternative investments are no longer exclusive to the ultra-wealthy. That’s the word from Westbrooke Alternative Asset Management’s Dino Zuccollo, who tells MoneyMarketing why Westbrooke is planning to become the premium provider of alternative investments to South African retail investors, family offices, and wealth managers’ clients.
BY JANICE ROBERTS Editor: MoneyMarketing
“
We’re on a mission, as a business, to provide South Africans with an easily accessible way to invest in the global world of alternatives that, historically have only ever been available to the super-rich and institutional investors of the country,” says Dino Zuccollo, Global Head of Product Development and Distribution, at Westbrooke Alternative Asset Management. “We believe that local investors are tired of vanilla investments – and they’re tired of returns in their traditional portfolios that often don’t meet their expectations,” he adds. Westbrooke is probably best known for its Section 12J investment offering that allows investors a 100% tax incentive from their tax liability. “It’s a misconception that this is all that we do,” Zuccollo says. “In fact, it’s less than half of our aggregate business to this day.” Regrettably, the Section 12J incentive, which became a R10bn industry, was canned by government when finance minister Tito Mboweni tabled his 2021 national Budget speech in parliament. The incentive will not be extended post the June 2021 sunset clause. Although Section 12J is now coming to
an end, the significant interest shown in the incentive has highlighted the desire on the part of South Africans to invest in something different. And the demise of Section 12J only serves to create an even larger gap to fill with new investment opportunities. “The rest of the products that we offer are on the same trajectory as the Section 12J incentive, and in time will be opened just as wide,” Zuccollo says. Simply put, alternative investments are seen as those that do not fall into one of the traditional asset classes such as shares, bonds and cash. The list of alternative investments includes private debt, direct real estate, hedge funds, venture capital, private equity, art, cryptocurrencies and even fine wine and whisky. “It’s very much in the conservative space of the world of alternatives that Westbrooke plays its part, where capital preservation is a focus for our clients. We like to play in that space because this type of investment
fits well within traditional client portfolios, but the returns generated are uncorrelated to the traditional markets, thereby reducing risk and volatility,” Zuccollo explains. Another advantage – although some might consider it to be a disadvantage – is that alternatives are generally ‘locked in’. “They are illiquid and they require you to be invested for a period of time. If you look at what happens when traditional markets start to move downwards – investors panic and they sell and, more often than not, they sell when things are cheaper, and they buy when things are expensive. My point is that the ability to create liquidity on a daily basis doesn’t always generate the right behaviours. Holding alternative investments means you don’t necessarily have the ability to be rash with your decision making.” The vast majority of South Africans have never really had exposure to these types of investments because, frankly, Zuccollo says, there haven’t been enough access points for them to gain exposure to alternatives.
Continued on page 3 Dino Zuccollo, Global Head: Product Development and Distribution, Westbrooke Alternative Asset Management
