From listed property to buyto-let investing, property is still offering handsome returns. We look at the trends driving the industry right now.
Pg 10-15
HEDGE FUNDS
The South African hedge fund industry is currently experiencing record-breaking asset growth and double-digit net inflows for the first time. MoneyMarketing speaks to Peregrine Capital about its success in this field.
Pg 16-17
OFFSHORE INVESTING
Are there still opportunities in the offshore investing space beyond the usual suspects? Absolutely, if you know where to look.
Pg 18-23
FIDUCIARY DUTY
The relationship between financial planner and client calls for fiduciary duty. If you’re unsure as to exactly what this entails, read what the experts have to say.
Pg 24-25
Opportunity abounds in an uncertain world
Donald Trump’s return to the White House has ratcheted up tensions around the world, including among South African investors, who have been jealously eyeing impressive market performance in the US for so long. The experts are feeling the weight of uncertainty too, yet it is hard to find one who suggests that investors dramatically change their view on holding a portion of their portfolio offshore. Significant international conflicts in Ukraine and the Middle East, aggressive policy shifts, threats of tariff wars, and generally unpredictable decisionmaking during Trump’s first weeks in power added to investors’ anxieties about the markets, already under pressure from geopolitical tensions.
but also on a market level. Trying to make forecasts based on politics, geopolitical tension and ‘unknowns’ is a losing investment strategy. We prefer to keep our eyes on the fundamentals and valuations, and ensure portfolios are constructed so that no single event in markets can provide a ‘knockout punch’.”
The key to successful offshore investing, much like domestic investing, lies in careful planning, discipline and patience. While core investment principles remain the same, offshore investing comes with additional considerations, including currency fluctuations, varying market regulations, and political and economic risks unique to each region.
There is a lot to be nervous about. But there is always something to be nervous about, even if it is inflated gains, bubbles that threaten to burst, or overexuberance among investors. Investing comes with risk. Those who invest only in ‘risk-free’ assets face the risk of earning returns that are insufficient to offset inflation and meet their future liabilities.
Same old, same old challenges
Reacting emotionally to market fluctuations, even when they are driven by game-changing global events, usually leads to costly mistakes. Panic selling locks in losses, and investment decisions driven by fear (or greed) often lead to regret. In good times and in bad, a well-structured investment strategy should focus on the evergreen fundamental principles, including basing your strategy on well-defined goals, maintaining a diversified portfolio, and leveraging compound growth.
Keep those emotions in check
In the words of Rone Swanepoel, Head of Sales at Morningstar Investment Management South Africa, “No different than any other year, we face many uncertainties and challenges ahead. There is (as always) a multitude of factors at play on a macro level,
Often, an adviser’s toughest job is to help clients resist the urge to react emotionally to events. As Linda Eedes, Investment Professional at Foord Asset Management, puts it, “Many advisers will tell you this is the most important part of their jobs. Often the best thing to do is nothing.” Describing financial advisers as professional hand-holders, Eedes says, “They hold their client’s hands through difficult times and make sure they don’t make emotionally driven mistakes.”
Image: Getty Images/Anna Moneymaker
Continued from previous page
Despite the uncertainties surrounding Trump 2.0, analysts maintain a measured perspective. Patrick Mathabeni, Senior Research and Investment Analyst at Glacier by Sanlam, says the broad outlook is that the Trump presidency will bring about volatility in markets in 2025, but “the US economy is still set to be strong in 2025 (US economic indicators remain positive) and earnings remain fairly robust”.
Victor Mupunga, Head of Research at Private Clients by OM Wealth, points out that distinguishing between Trump’s rhetoric and actual policy remains a challenge. “There is also uncertainty around the sequencing of his policies, as some have conflicting economic effects. For example, his immigration stance could be inflationary, while his energy policies might lower prices. The net impact will depend on which policies take precedence and how they unfold.”
“Trying to make forecasts based on politics, geopolitical tension and ‘unknowns’ is a losing investment strategy”
Political events are notoriously difficult to predict, and their market impact is often counterintuitive. Rory Kutisker-Jacobson, Portfolio Manager at Allan Gray, warns against trying to time the market, noting that reacting to headlines rarely yields positive results.
The risks are real but so are opportunities South African investors should “get used to uncertainty”, says Bernard Drotschie, Chief Investment Officer at Melville Douglas, the boutique investment management company for the Standard Bank Group. He adds, “The advantages of investing offshore, such as diversification from South African-specific risks and access to a broader range of investment
ED'S LETTER
Aopportunities across sectors and asset classes, remain unchanged.” Drotschie adds that the prospects for emerging economies like South Africa “will largely depend on their own reform efforts, as financial aid and preferential tariffs can no longer be taken for granted”.
South Africa, despite its challenges, remains an attractive investment destination. Mathabeni says South African bonds are still offering handsome real yields as inflation is well under control, and equity valuations are still attractive with decent upside potential.
Vuyo Mashiqa, Head: Equity and Equity Derivatives at the JSE, is also measuredyet-bullish, saying, “In a volatile global environment, investors tend to prioritise markets that offer depth, liquidity and strong regulatory oversight – qualities that remain core strengths of the JSE.”
He adds, “While uncertainty can drive short-term market movements, it also creates opportunities for capital to be reallocated into well-structured, resilient markets. South Africa continues to offer a sophisticated investment ecosystem, underpinned by a strong financial sector, globally connected corporates, and a dynamic capital market. As geopolitical and economic conditions evolve, the JSE remains a key platform for investors seeking both stability and growth potential in a changing world.”
Navigating economic insights correctly
As always, a broader perspective is key and, as Mupunga from OM Wealth reminds us, history provides valuable lessons. Noting that markets have generally performed well under both Democratic and Republican administrations, he says economic fundamentals tend to outweigh short-term political fluctuations in the long term.
Glacier’s Mathabeni adds, “While Trump is a volatile character, he is, in the final analysis, pro-markets and pro-business, albeit in an unorthodox or unconventional manner. He is clear about the desire to grow the US
Trump Whitehouse has brought increasing uncertainty to the markets, and it’s not just the traditional investments that are under pressure – as I started writing this ed’s letter, Bitcoin has dropped below $80k for the first time since November last year. Before I had finished writing, it had risen again, on the back of Trump’s announcement of a crypto reserve. And before I could send it for subbing, it had dropped again, as some of the industry showed significant resistance. That’s just the nature of things right now.
It’s one of the reasons offshore investing is more crucial than ever in today’s interconnected global economy. With the increasing unpredictability of financial markets, offshore investing serves as a tool to achieve long-term financial stability and growth, ensuring a well-balanced investment portfolio. It offers your clients the
economy, contain inflation and possibly cut corporate taxes… all of which would be positive for global equities, notwithstanding the rollercoaster ride he introduces in the geopolitical realm, especially pertaining to tariffs (and their inflationary effect).”
The South African economy, while resilient, represents only a small fraction of global economic activity. The offshore opportunity set is enormous. There are currently 279 companies and 2 483 bonds listed on the JSE, against a global selection of tens of thousands of equities and hundreds of thousands of bonds.
South African investors cannot ignore global markets, especially with the shrinking JSE and higher Regulation 28 offshore limits. In February 2022, offshore investment limits for South African institutional investors, including pension funds, increased from 30% to 45%.
Glacier’s Mathabeni notes that South Africans have been allocating more to offshore assets: “While geopolitics have impacted offshore investing, the main driver has been negative domestic factors and strong offshore returns, particularly in the US, despite the rand deterring some investors.”
Offshore investing remains vital for diversification, protecting against local risks, and accessing global growth. While Trump 2.0 adds uncertainty, offshore diversification remains key. A well-structured portfolio helps navigate volatility and seize opportunities. The world is uncertain but for those willing to embrace it, opportunity abounds.
By Siobhan Cassidy MoneyMarketing contributor
potential to diversify risk, access growth markets and shield against currency volatility. By investing across different regions, investors can mitigate the impact of local economic downturns and political instability.
One sector of the market that has performed surprisingly well over the past few years is listed property. Is this a trend that’s likely to continue? We take a closer look to uncover the trends.
Are you fully on top of things when it comes to fiduciary duty? In this issue, Louis van Vuren, CEO of the Fiduciary Institute of Southern Africa (FISA), explains in detail what is expected of financial advisers and how it’s all about enacting your duty to act in the best interests of your clients. It’s about building trust and ensuring transparency.
Stay financially savvy.
Sandy Welch Editor, MoneyMarketing
Read more about Offshore Investing on page 18
Carl Lategan Head of IFA Distribution at Allan Gray
How did you get involved in financial services – was it something you always wanted to do?
I was very fortunate growing up to have a dad who worked in the financial services industry, and he encouraged and taught me to follow certain moneywise principles from a young age, such as budgeting, the benefits of starting to invest early, and the value of time in investing. His influence piqued my interest in the sector. At the time (the late 1980s), the industry was dominated by life assurance companies, and I started my career at Momentum. My very first job was to send the regional offices faxes for outstanding medical requirements for clients being underwritten by the underwriters. I studied, learnt new skills on the job and fulfilled various roles in the business before moving into the world of investments when I joined Momentum Wealth. After 11 years, I left Momentum to join Allan Gray in 2001.
What was your first investment and do you still have it?
My first investment was a retirement annuity that I started when I was 20 years old, and I still have it to this day.
What have been your best – and worst –financial moments?
Some of the best moments I have experienced over the course of my career have been seeing clients invest early enough, stay the course to see the benefit of their investment over time, and build long-term wealth. It’s great to see that what we do as a business delivers for our clients and that we get to play a role in providing insights that
are crucial to making good financial decisions – that’s rewarding to me.
On the flip side of that, the worst moments stem from people making poor investment decisions – be it chronic switching, chasing the next big investment or investing in ‘get-richquick’ schemes – that ultimately erode their wealth.
What are some of the biggest lessons you have learnt in and about the finance industry?
I have learnt many lessons but a few that stand out are the following: We work in a close-knit industry that is centred around people and building trust and relationships. If one doesn’t have a passion for people, one might find the industry challenging.
I’ve also learnt the importance of conducting yourself professionally, with competence, and putting clients first, always. Building a reputation in the financial services industry can take years but it can be destroyed in a moment, so it is prudent to protect your reputation. Lastly, the financial services industry provides those who work in it with a wonderful opportunity to build a career that adds significant value to clients.
What makes a good investment in today’s economic environment?
For me, a good investment is investing in great financial advice. I have seen, and experienced firsthand, the impact of good independent advice. This is not about making a call on what the best investment instrument, share or market will be, but rather to establish the financial goals you want to accomplish, to put a strategy together to accomplish it over time, and to stick to your strategy. Having an independent financial adviser to act as your financial coach and a thinking and accountability partner is invaluable.
“It’s great to see that what we do delivers for our clients and that we play a role in providing insights that are crucial”
What finance/investment trends and macroeconomic realities are currently on your watchlist?
Although we are bottom-up investors at Allan Gray, it is nevertheless important that we stay abreast of local current affairs and global macroeconomic views. This is especially true now, coming off the back of a year where half of the world’s population voted, as the outcome of these events and the knock-on impact affects where we invest and how our portfolios are constructed to achieve long-term returns.
For me, it is also vital to stay on top of regulatory changes and how these impact the independent advice industry, so we can respond and guide advisers appropriately.
What are some of the best books on finance/investing you’ve ever read?
Outliers by Malcolm Gladwell, The Psychology of Money by Morgan Housel, Good to Great by James C. Collins, The E Myth Revisited by Michael E. Gerber, and Same as Ever by Morgan Housel.
The Psychology of Money is one of the most meaningful and insightful books I have read about money, whether it is about making it, growing it or keeping it. It talks to the behaviour and discipline you need to display to become successful in growing your wealth over time. It also explains our relationship with money, our beliefs, and that creating wealth over time is not only about making good investment decisions, but also about your behaviour once you have.
Alternative investments: The potential of up-and-coming artists
Art has become an increasingly attractive alternative investment as part of a diversified portfolio. One of its biggest advantages is that, at the very least, it tends to hold its value and, over time, can increase in value. In the meantime, buyers get to enjoy their acquisitions.
The global art market was valued at $552bn in 2024, and is projected to grow to $585.98bn in 2025 and $944.59bn by 2033, primarily driven by increased sales of artworks, particularly among high-net-worth individuals. As the number of high-net-worth individuals rises globally, there is growing demand for art as a viable asset class to include in their investment portfolios alongside traditional assets like stocks, bonds and real estate.
The acquisition of artworks, however, is not only restricted to high-net-worth individuals, and aspiring art collectors can acquire more affordable pieces from emerging and upand-coming artists. When a purchase is made based on sound advice, an art investment can reap handsome returns.
The most common mistakes new art collectors make are not knowing the important components that influence the value of an artwork, its provenance and getting expert advice. The most important factor is the status of the artist and their biography, as well as the significance of the work within the artist’s repertoire and the social milieu in which it was created. Before acquiring an artwork, it’s essential to research the artist, their background, their creative output, what their work stands for and how it has been received –by the public, the art world and the position of the art market in general.
Look to the experts
This is where expert advice from specialists who understand the art market and current trends can make the difference. For example, in 2012, I sold a still life titled I Love You All the Time by artist Georgina Gratrix for R45 000. The work was from her first solo exhibition in the Cape, a career-defining moment for the young and emerging artist. By 2018, Gratrix’s career had flourished. She had participated in notable museum exhibitions, prestigious residencies and shows across Europe. I encouraged the owner to put the piece up for an Aspire Art auction, where it sold for R591 000, providing a 1211% return on investment to the seller and setting a new auction record for the artist.
Gratrix is far from the only local artist whose work has seen a significant appreciation in value in recent years. In 2018, an artwork by Lisa Brice (now living in London) sold for R39 000 at auction. In 2023, that same piece sold for R1,2m at an Aspire Art auction. Another Lisa Brice piece, Adult Show, was sold for R30 000 in 2019 but went on to fetch R364 000 at auction just one year later.
Cinga Samson, a self-taught artist who started painting after joining a shared artist studio, Isibane Creative Arts in Khayelitsha, Cape Town, is another rising star whose work has appreciated significantly. His breakthrough year was in 2021, with a solo show at the prestigious Perrotin Gallery in New York, being signed by leading contemporary gallery, White Cube, and an exhibition at the FLAG Art Foundation in New York, cementing his international reputation. His works now reach £321 300 at auction. A very early, formative work titled Figure was originally purchased at an exhibition in 2010 for R1 700 before selling at one of our auctions for R240 000 in 2023.
Curation is critical
Specialising in 20th-century, modern and contemporary art, Aspire Art curates live and online auctions and an exhibition and private sales programme, as well as offering art valuation and advisory services. Each piece that we put up for auction is carefully selected. We conduct detailed research into each artist and the artwork we are putting up for auction, putting effort into highlighting each piece’s historical and cultural significance. Critically, we will never put an artwork up for auction that we’re not prepared to sell again later.
Online art auctions are an effective way to embark on an art-collecting journey, offering a good introduction to the art world for new collectors. To make art collecting more accessible to more buyers, Aspire Art recently introduced a buy-now-pay-later model, which allows buyers to pay off artworks over a threemonth period interest free.
Prepare to be patient
During my nearly two decades of handling both primary and secondary art markets, I have learned that the key to assisting a client build an art collection is understanding their long-term ambitions. Acquiring an Irma Stern painting is a reliable way to preserve value and hedge your investment. However, high-end purchases like this may take a long time to appreciate significantly in value. Currently the most valuable South African artist, Stern’s paintings sell for an average of around R5m, with the most expensive selling for £3 044 000 in London in 2011.
Acquiring an artwork from emerging talents will be significantly more affordable, but does come with a degree of uncertainty in terms of how much their work will appreciate in value over time. When it comes to art collecting, it takes experience and insight to recognise emerging talent – and a healthy dose of luck – which is why expert advice is always a good idea. Art collecting is essentially about patience: an art collection is not built up overnight and it does not always appreciate quickly. Instead, regard it as a passion project that has the potential to be a lucrative investment if you have bought carefully. It’s a buyer’s market right now, which means there has never been a better time to start collecting art.
New appointments
Ninety One appoints Leong Kae Xiang
Ninety One has appointed Leong Kae Xiang as Director. He will be responsible for originating, structuring, and executing infrastructure debt transactions across South and South-East Asia, as well as managing relationships with key stakeholders. Kae Xiang is based in Singapore. Ninety One is the manager for the Emerging Africa & Asia Infrastructure Fund (EAAIF), a Private Infrastructure Development Group (PIDG) company. EAAIF provides long-term commercial debt to deliver inclusive and impactful infrastructure projects in Africa and Asia.
STANLIB’s new Head of Money Market
STANLIB Asset Management has appointed Eulali Gouws to take over from Ansie van Rensburg as Head of Money Market on 1 March 2025. Gouws’s promotion reflects a considered succession plan that has been under way for several years. Gouws, who holds a BCom (Hons) in Accounting from the University of Johannesburg, is a qualified chartered accountant and registered CFA Charterholder.
Webber Wentzel announces strategic appointments
Webber Wentzel has appointed new partners to its team, who will join the firm in phases between January and June 2025.
Kathryn Gawith has rejoined as a consultant in the Dispute Resolution Business Unit. Gawith first joined the firm in 2016 as a partner and is highly regarded for her expertise in professional liability, insurance advisory, privacy and data protection laws (including the POPI Act), administrative law, and regulatory compliance.
Lerato Nkanza joined the firm in January 2025 as a partner in the Banking, Projects & Regulatory Business Unit. A highly skilled Debt Capital Markets and Treasury practitioner, Nkanza brings extensive
experience in debt securities transactions, regulatory advisory, and deal execution across Southern, East, and West Africa, as well as North America.
Alfred Sambaza will join the Forensic Services team as a partner in March 2025. With over two decades of experience in forensic and fraud advisory services, strategic governance, and expert accounting, Sambaza’s appointment will enhance the firm’s capacity to manage complex forensic investigations, delivering comprehensive multidisciplinary solutions.
Returning to the firm in March 2025, Samantha Farren will join as a partner in the Commercial Business Unit. With over 25 years of experience in commercial property law, Farren specialises in property finance, renewable energy, and largescale property developments.
Joining the firm in May 2025, Livia Dyer will take on the role of partner in the Commercial Business Unit. With a strong background in South Africa’s regulated sectors – particularly telecommunications, media, and technology –Dyer’s expertise in broad-based black economic empowerment, licensing, and regulatory compliance will help clients navigate an increasingly complex regulatory environment.
New appointments at Bonitas Medical Fund
Vurhonga Rikhotso has been appointed the new Chief Financial Officer (CFO), effective 1 February. She takes over from CFO Luke Woodhouse, whose contract has ended. Rikhotso has 16 years’ experience in both the public and private sectors. Her expertise spans financial reporting, risk management and strategic leadership. She has a proven track record in governance and financial oversight, having held leadership roles in organisations such as Transnet and the Auditor General of South Africa. She also served on the Board of Bonitas, where she was instrumental
in providing strategic oversight and promoting financial stewardship.
Shane Perumal, currently head of operations, has been promoted to Chief Operating Officer (COO), also effective 1 February. With over 25 years of experience in the healthcare industry and a Master of Business Administration (MBA) specialising in Healthcare Management, Perumal has driven operational effectiveness and optimised business processes within the Scheme.
OM Bank CEO gets Reserve Bank backing
OM Bank has received approval from the South African Reserve Bank’s Prudential Authority to appoint Clarence Nethengwe as Chief Executive Officer (CEO) of the country’s newest bank, effective immediately. OM Bank will launch with a select group of clients in early 2025, ahead of a broader public rollout later in the year. The bank will offer a comprehensive range of personal banking solutions, including transactional accounts, savings, and credit products.
Nethengwe has significant work ahead of him. Since 2009, he has built one of Old Mutual’s largest and most successful businesses, the Mass and Foundation Cluster (MFC). His leadership has been instrumental in driving customer-focused solutions that deliver genuine, meaningful value.
Paycorp appoints new board member
International payments provider Paycorp has appointed John Chaplin as a Non-Executive Director to its Board. Chaplin brings over 30 years of global retail payments and fintech expertise. Chaplin has played a pivotal role in the evolution of the payments industry, with extensive experience across card payments, mobile transactions, and B2B financial solutions. His career spans executive and board-level positions at some of the world’s leading payments and fintech organisations.
Leong Kae Xiang
Livia Dyer
Eulali Gouws
Vurhonga Rikhotso
Kathryn Gawith
Shane Perumal
Lerato Nkanza
John Chaplin
Alfred Sambaza
Samantha Farren
Professional fund analysis made easy
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Fund Analytics is an industry-leading research solution for comprehensive fund research, portfolio analysis and reporting. It combines decades of investment datacollection expertise with cutting-edge software to help financial advisers and their teams create a robust investment proposition. It has been powering investment decisions for over a decade, and focuses on providing advisers with an efficient solution to build successful centralised propositions and improve profitability, while remaining compliant and keeping costs down.
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Calling Financial Advisors
How Franc is making investing simple and accessible
Franc is a digital wealth platform focused on simplify investing in South Africa. It uses cutting-edge technology and innovative products to bridge the gap between saving and investing, with the aim of providing financial freedom to users.
Helping South Africans grow their money
In South Africa, the latest reported Household Saving Rate is -0.9%, which means that South Africans are spending more than they save. This is coupled with the fact that only 6% of the population are on track to retire comfortably, according to the 2023 10X Retirement Reality Report
There are two big problems that have led to this state of affairs: only 42% of South Africans are considered financially literate (and this proportion is declining), and the world of saving and investing is confusing and inaccessible, often shrouded in convoluted terms and conditions.
Franc was founded by Thomas Brennan and Sebastian Patel to address these two problems. With Thomas’s engineering background and Sebastian’s expertise in actuarial science and investment, the duo has built Franc to be intuitive, accessible, and tailored for every user, cutting through the confusion to help users get started.
A user-friendly investment app Franc’s impact is most evident in its commitment to inclusivity. The userfriendly platform guides individuals in setting up goal-based investment pots through a robo-adviser – the first registered in South Africa. The goal-based approach makes it easier for them to align their savings with their big dreams, whether for personal growth, family support, or starting a business. Each investment pot is underpinned by a combination of handpicked funds – from a money market fund to an offshore exchange-traded fund – selected for being among the top-performing and lowest-cost in their category.
With the goal of helping people build generational wealth, Franc also caters to invested parents who are seeking to secure their children’s future through a dedicated Child Account that is simpler and quicker to set up than many other products on the market. Their Shared Goal feature allows for collaborative saving and investing between couples, families, friends or stokvels.
The savings account, one of Franc’s top-performing products, encourages users to keep their savings separate from day-to-day banking, ensuring users can more effectively set money aside without being tempted to use those funds on a transactional level. The innovative and exciting live interest tracker allows users to see their money grow second by second.
Franc has big growth ambitions
Backed by venture builder Aions Creative Technology (headed by serial entrepreneur Mitchan Adams), Franc is proudly South African, and as a Level 2 BBBEE contributor and 52% Black-owned business, Franc is reshaping the financial landscape while contributing to economic transformation. With a compound annual asset under management growth rate of 70% since its inception, the platform’s scalability and user engagement reflect its success in addressing real market needs.
“We believe that every South African deserves to see their money grow and work for them. Having Aions on board as our latest investor, we hope to leverage their ecosystem of partners and resources to achieve our upcoming growth objectives,” says Sebastian Patel, Chief Operating Officer of Franc.
The investment app soon plans to expand its offering to include a tax-free savings account and retirement annuity, as well as business management tools to help sole proprietors manage their finances better. This funding will also enable Franc to scale its impact further, refine its technology, and introduce new features to meet the evolving needs of its users.
DeepSeek’s energy efficiency challenges AI industry
WBy Philip Short Senior Equity Analyst, Flagship Asset Management
e’ve all read about DeepSeek and the remarkable competitive edge it presents to existing mega-cap AI companies. It’s more efficient, costs less to operate, and has decent output. The energy efficiency that DeepSeek achieves evidences that AI can operate on less energy than the dominant AI players are running on. Thus, the market is taking an axe to AI energy providers.
However, this energy efficiency may have unintended consequences –encapsulated in a 160-year-old economics paradox, the Jevons Paradox, which has come to light again in AI circles. It theorises that efforts to reduce the demand of a commodity, say energy, through energy-efficiency initiatives may actually increase the use of it because the resultant lower prices for the commodity spur significantly higher demand.
DeepSeek’s performance is in line with the latest OpenAI results (see chart below), but it is less energy intensive and apparently significantly cheaper; therefore opening the door to more applications being taken up in the everyday world. This increase in penetration will create a net positive demand and increase AI’s total energy consumption.
When computers and mobile phones were first invented and trialled, people thought they would be used by a fraction of the actual Total Addressable Market (TAM), which is why their unit prices in the beginning were so high. Then, because pricing came down, the TAM opened dramatically. Prices came down X and then another X, but volumes went up 10X, taking up the total net demand of the market.
Margins will be affected
I’m not sure how this plays out in the semiconductor chips space (e.g. Nvidia) in terms of their pricing and margins – they will sell a lot more chips/units, but their margins are likely to come down with an unknown result on profit growth vs current estimates, in my opinion. With the increasing demand for energy, especially in sectors like data centres and computing, I believe DeepSeek will have a net positive impact on AI energy and infrastructure companies. In fact, I think DeepSeek’s rollout has likely accelerated faster than the progress seen with chipmakers and designers in this space.
By Francois du Toit CFP® PROpulsion
WTrust and technology: Making it work in financial advice
hat keeps financial advisers awake at night? It’s not the ups and downs of the markets or the latest economic news. It’s the trust their clients place in them. It is the fact that the client’s entire future is in their hands. I was reminded about this when an adviser told me about their client who’d just received a large inheritance. The client felt completely lost about what to do next.
At that moment, what mattered wasn’t clever technology or complex strategies – it was simply being there to listen and understand. Technology is changing how we give financial advice, but one thing stays the same: putting clients first. This will not, and should not, ever change.
A new kind of trust
Being a financial adviser means making a promise to your clients – to always put their needs first. But what does this look like in today’s digital world? Think of it like going to the doctor. You trust them with your health, just as clients trust advisers with their money and future dreams. Whether it’s helping someone invest wisely, choose the right insurance, or plan for retirement, every choice must focus on what’s best for them.
The move to digital has brought new things to think about. How do we keep client information safe? What’s the best way to stay in touch? When should we use automated tools? These are all part of taking care of clients today.
Making technology work for people
“How do we keep things personal with so much tech and AI around?” I hear this question a lot. The trick is seeing technology as a helper, not a replacement. Yes, computers can work out complex cashflows and identify shortfalls, but they can’t understand why someone wants to retire early to spend time with their
grandchildren, or feel the worry in someone’s voice when they talk about their savings.
Look at the clever tools we have. They can quickly spot opportunities and risks that might take hours to find by hand. But the real magic happens when advisers use these insights to have better conversations with their clients about their future.
Getting it right day-to-day
Here’s what works well:
“The trick is seeing technology as a helper, not a replacement”
• Write everything down: Keep good records of every conversation and decision. If it’s not written down (and in your CRM), it didn’t happen. This helps you give consistent, reliable help to every client.
• Keep learning: Things change quickly in finance. From online advice to digital currencies, staying up to date helps you give better advice.
• Make sense of the numbers: Let computers crunch the numbers while you focus on what they mean for each client’s own situation.
• Be flexible: Find ways to work that suit each client. Some might love video calls; others prefer face-to-face meetings. What matters is staying connected in a way that works for them.
Solving real problems
Here’s something that happens often: your computer programme says a client should invest cautiously, but when you talk to them, you realise they’re quite comfortable taking more risk. What do you do?
This is where experience and judgment matter most. The best advisers use technology to help make decisions, but they also trust what
they learn from really getting to know their clients. Tools are helpful, but they’re just one piece of the puzzle. Building trust today means:
• Being open about how you use technology
• Explaining things clearly without jargon
Keeping in touch in ways that suit each client
Using digital tools to give better advice
Keeping information safe while making it easy to access
• Making each client feel special by mixing technology with personal care.
The best advisers use technology to free up time for what really matters – understanding their clients’ hopes and worries. This turns financial advice from just a service into a true relationship.
Always do the right thing, for the right reason, with the right intent, and see how everything else follows and falls in place.
Stay curious and keep raising the bar.
The changing face of property investing
Two new business models are aiming to revolutionise traditional property ownership. MoneyMarketing takes a closer look.
The world changes when people take action. I started FracProp because too many people are excluded from property ownership due to outdated policies, financial barriers and high entry costs. Others, despite years of paying mortgages, are losing their homes. We must redefine property ownership to align with modern, innovative solutions. Our challenge was twofold: how do we help people enter the market, and prevent homeowners from losing their properties? FracProp offers a communitydriven model, allowing individuals to co-own high-yield properties without massive upfront capital or credit checks. With FracFin, we introduce Home Equity Agreements to support homeowners who face financial distress with over 50% equity. We also empower stokvel groups by connecting them with developers to co-invest in large-scale projects. FracProp is rewriting the rules of ownership, making it more accessible, profitable and community driven.”
“We must redefine property ownership to align with modern, innovative solutions”
How does FracProp’s model work to make property ownership more accessible, and what makes it different?
FracProp is built on one powerful idea: ownership should be for everyone. Traditional property ownership demands large deposits, mortgage approvals and financial risk. With FracProp, you can own a piece of highvalue property for as little as R100 (or the equivalent in pula or dollars), with no deposit, credit checks or barriers. Properties are registered under a company and divided into property fractions. You buy what you can afford, earn rental income, and benefit from capital growth, without the hassle of property management. Our Home Equity Agreement helps homeowners facing financial difficulties. If you own over 50% equity but are struggling, our sale-leaseback model lets you stay in your home, preserve equity, and buy back ownership within three years. Beyond
financial returns, FracProp builds communities
– connecting property developers with savings groups (stokvels) to create wealth and uplift communities.
What is your long-term vision for FracProp?
Our vision is bold: we’re here to change the game. We’re shifting the landscape of property ownership and building a future where:
• Communities co-own developments from the ground up
People start building wealth today, no more decades of waiting
No one loses their home after years of paying a mortgage
• Property ownership is for everyone, not just the wealthy elite
Aspiring owners access multiple pathways, including fractional investment, Instalment Sale Agreement Mortgages, and innovative financing models
• Our platform becomes a one-stop shop, offering financial wellness, education, ownership planning tools, and alternative financing solutions.
We’re not just building a property ownership platform, we’re creating an ecosystem that ensures access, sustainability, and financial empowerment for all.
What are the biggest challenges you’ve faced in disrupting the property market, and how have you overcome them?
We’ve encountered challenges such as: Changing mindsets: Many believe traditional mortgages are the only path to ownership. We tackle this through financial and property education, showing fractional ownership as a viable, scalable and profitable alternative.
• Regulatory hurdles: Property laws weren’t designed for fractional ownership, making compliance complex. We work with legal, property and financial experts to ensure a legally sound, scalable model.
• Building trust: People are sceptical of new ownership models. We prioritise transparency, governance and strong partnerships while consistently delivering value to our investors.
BRIX
Redefining the perception of real estate in South Africa, Brix is set to disrupt conventional methods of investing into property and create ease of access to all. This pioneering platform defines a new era of property exchange in South Africa, allowing fractional ownership of properties. Brix is on a mission to make property investment a reality for a wider demographic by breaking down financial barriers, enabling individuals from all walks of life to enter the property market.
“Brix provides a secure and innovative environment for property investment,” says Tyran Faber, Brix co-founder. “By digitising and dividing tangible assets into digital tokens, we enable fractional ownership, increased liquidity and seamless transferability for investors. This platform allows individuals from all walks of life to participate in the property market without the usual financial constraints.”
Through their strategic partnership with SchindlersX, Brix has positioned itself to shift the traditional mindset around real estate investment. The platform allows individuals to enter the property market with minimal investment, starting from as little as R100.
“Tokenising assets enables investors to participate in previously inaccessible opportunities such as student accommodations, real estate properties, infrastructure and more by creating userfriendly, straight-forward processes,” explains Maurice Crespi from SchindlersX.
The investment projects available on the Brix platform are sourced by property professionals, ensuring access to high-quality investments. “Tokenisation is transforming the investment landscape,” adds Faber. “Brix is leading this charge by connecting digital finance and technology with real assets and investments.”
As part of its broader vision, Brix leverages blockchain technology to offer a transparent, secure, and user-friendly environment for investors. The partnership with SchindlersX further enhances this offering by providing expertise in Real-World Asset (RWA) tokenisation.
Monametsi Kalayamotho, FracProp and FracFin founder.
Tyran Faber, Brix co-founder.
Where is listed property headed in 2025?
Compiled by Sandy Welch
Listed property continues its phenomenal performance in South Africa. The market’s comeback rally kicked off in October 2023, fuelled by growing optimism over an impending interest rate cutting cycle. This sentiment was driven by the US Fed pausing rate hikes and slowing inflation. As investor confidence rebounded and SA’s risk premium eased, SA listed property followed suit, experiencing a strong re-rating.
In 2024, it was one of the best performing asset classes, riding on the back of unexpected election results and the green shoots of the turnaround in economic fortunes. It outperformed both SA bonds and SA equities, which returned 26% and 25%, respectively.
According to Luqman Hamid, Portfolio Manager at Ninety One, helped by declining local bond yields, listed property returned almost 30% for the year. “The majority of this return was through re-rating, with comparatively smaller contributions from income and income growth,” he explains.
“It’s expected that in 2025, there will be continued improving trajectory for local property”
“This echoed the case for many SA assets in 2024, where returns were driven by increasing expectations from a low base, rather than fundamental improvement.” It’s expected that in 2025, there will be continued improving trajectory for local property as rental reversions begin to trend upwards across the retail, office and industrial sectors. “We continue to see select opportunities in SA-orientated names exposed to retail and industrial subsectors (i.e. Hyprop, Equites Property Fund and Vukile), while the UK retail names (Hammerson and Shaftesbury Capital) also offer an attractive combination of yield, growth, strong balance sheets and accelerating improvement in fundamentals.”
Real Estate Investment Trusts (REITs) and Real Estate Investment Company (REICs) are companies that own, operate or finance
income-generating real estate across various sectors, such as commercial, residential, industrial and retail properties. The five top performing REIT and REICs in South Africa are:
GrowthPoint
GrowthPoint's latest results will be out later this month, but in the most recent results, up until 30 June 2024, the company reported improvements in the majority of key performance indicators (KPIs), including arrears, rental reversion rates, valuations and vacancies. The company noted, however, that a strong operational performance has been overshadowed by the negative impact of high interest rates, lower dividends from Globalworth Real Estate Investments (GWI), and reduced profit from the South African trading and development division.
Adding to its portfolio, GrowthPont this year delivered the multiyear, multimillionrand revitalisation of the historic Longkloof precinct. The multifaceted project involved the renovation of several Growthpoint-owned buildings and the creation of a public square. “Growthpoint’s vision was to reimagine six buildings – made up of a historical school and an industrial building with its boiler room –and a vacant parking lot as a hip and vibrant mixed-use precinct that embodies Cape Town’s essence in something new and exciting, yet respectful of its heritage,” says Wouter de Vos, Growthpoint’s Regional Head: Western Cape. “Five years after the start of the pandemic, the resilience of the Cape Town market is undeniable, with an upswing in international tourism since mid-2023, together with ongoing ‘semigration’ from other parts of South Africa to the Western Cape,” he explains. Included in the precinct is the 154-room Canopy by Hilton Cape Town Longkloof Hotel, the first of its kind
in Africa. De Vos says the hotel is the perfect complement to the mix of uses and tenancies in the Longkloof precinct.
Fortress
Fortress is a REIC with a focus on developing and letting premium-grade logistics real estate in South Africa and Central and Eastern Europe (CEE). Fortress’s direct portfolio (excluding NEPI stake) is still predominately focused in South Africa, with around 85% of direct portfolio exposed to South Africa. Its direct CEE portfolio is focused on two key regions, Poland and Romania, and has exposure to the logistics sector only. “Including NEPI, our total CEE exposure (of total assets) represents 40%,” says Steven Brown, CEO of Fortress. “The recent interest rate cuts continue to support increased appetite for the sector, both from a listed and direct perspective. Growth across the real estate sector is expected to be driven primarily by continued demand for mixed-use developments and logistics spaces, sustainable building practices, and strategic investments by key players like Fortress Real Estate.” He says that as interest rates decrease, cost of funding reduces, sentiment improves and bond yields adjust accordingly, making real estate exposure an attractive opportunity, on a relative basis, all else equal.
The performance of South African retailers is somewhat correlated to the overall economic health of the country and, as such, are not immune to a low growth environment and economic shocks. However, Fortress’s commuter-focused retail portfolio is highly defensive and has a strong portfolio of tenants who are less exposed to discretionary spend, with a focus on essential goods and services.
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He attributes the company’s strong investment in the logistics space to the emergence, growth and prevalence of online retail platforms. “South Africa’s e-commerce sector has experienced exponential growth, reaching a record R71bn in sales in 2023,” he points out.
Attacq
JSE-listed REIT Attacq, the strategic development partner of Waterfall City, had a robust set of results for the year ending 30 June 2024. The company reported full year dividend growth of 19.0% to 69.0 cents per share, with distributable income per share increasing by 19.9% to 86.2 cents. Operationally, Attacq delivered a solid performance, with the occupancy rate rising to 92.8% and collection rates remaining high at 100.2%. The group maintained its intent of being a client-focused, innovative and trusted real estate business, prioritising client needs and satisfaction in its operations.
“Prospects are clearly very closely tied to the anticipated economic recovery in SA”
According to Jackie van Niekerk, Attacq CEO, the company concentrated on executing against their strategy, which included concluding key deals such as the R2.7bn Waterfall City transaction, completed in October 2023. In this deal, GEPF acquired a 30% stake in Attacq Waterfall Investment Company
Proprietary Limited (AWIC). This strategic partnership provides additional capital, facilitating the ongoing development of Waterfall City. In May 2024, Attacq’s 70% held subsidiary, AWIC, acquired the remaining 20% stake in Mall of Africa from the Atterbury Group. AWIC currently holds an 80% stake in the asset.
Vukile Property Fund
Vukile Property Fund is a consumer-focused Retail REIT, with a significant portion of its assets located in the Iberian Peninsula (59%), both in Spain and Portugal. Vukile’s financial year ends on 31 March 2025. For its interim results, Vukile reported a 6.0% increase in its interim cash dividend to 55.2cps for the six months to 30 September 2024, positioning on a trajectory toward the upper end of its 4% to 6% DPS growth target for the full year.
CEO Laurence Rapp states, “Vukile's businesses in South Africa and Spain are intentionally structured for seamless success, driving the strategic and operational progress.” Locally, it focuses on commuter, township and rural malls, which has performed successfully to date. “Vukile
proactively enhances its portfolio to boost shopper engagement and optimise tenant performance,” says Rapp. “We integrate technology, data analytics, and consumer insights to add value to our assets and enhance their performance.”
Redefine
Redefine Properties announced in its investor update for the half-year ending 28 February 2025 that its earnings outlook has stabilised despite a challenging operating context, driven by a focus on efficiency and strong demand for quality assets.
The company reported that its South African portfolio achieved a net operating profit margin of 77.8%, while EPP, its directly owned Polish retail property platform, improved its margin from 66.4% to 71.7%. This led to a consolidated group net operating profit margin of 75.9%.
Redefine CEO Andrew König highlighted that the global path to economic normalisation has been disrupted by changes in US policy under President Donald Trump, which introduced uncertainty around interest rates and inflation. “The stage is now set for a shallow easing cycle, and rates may not reach the levels we previously expected,” he says. “While European interest rates continue to trend downward, escalating geoeconomic tensions cloud the 2025 outlook. To sustain growth in valuations, we cannot rely solely on interest rate movements. Our strategic focus remains on organic income growth, as this will drive value creation in the current market.”
Redefine’s South African portfolio has demonstrated solid performance, particularly in the industrial and retail sectors, which drove a 1% increase in overall occupancy since August 2024. Additionally, 80% of renewals were completed at
stable or increased rental terms, a positive indicator of growth.
The industrial sector has proven especially resilient, with occupancy rising to 97.6%, alongside positive rental reversions in a competitive market. “The industrial sector continues to be one of our strongest performers, and we see potential for further growth if capital availability allows us to expand,” said Leon Kok, Redefine’s COO.
Conversely, the office sector remains challenged by excess supply and limited demand, except in select nodes. Looking ahead, Redefine’s strategy is focused on disciplined capital allocation, the sale of non-core assets to reduce its loan-tovalue ratio, restructuring joint ventures to enhance visibility of income streams while delivering income growth.
The year ahead
Overall, we expect a decent year for local listed property in 2025, says Ninety One’s Luqman Hamid. “While most of the rerating has probably already occurred, fundamentals for the sector appear reasonably favourable. Prospects are clearly very closely tied to the anticipated economic recovery in SA continuing to make progress, and any disruptions or noise, as we have seen in the early part of this year, will impact sentiment in the short term.”
He explains that dividend sustainability also looks much improved. With many companies having restructured their balance sheets, current dividend streams are well covered by operational income. Against the backdrop of moderately declining local interest rates, this should provide a favourable environment for decent returns in 2025. With anticipated income returns in the region of 8% on average likely to be bolstered by some growth and marginal rerating, we see low double-digit returns as an achievable target for the sector this year.
SA’s evolving real estate investment landscape
By Steven Brown CEO of Fortress
How has South Africa’s real estate investment landscape evolved in recent years?
South Africa’s real estate investment landscape has undergone various forms of transformations in recent years, influenced by economic shifts, evolving consumer preferences, and strategic corporate initiatives.
Sustainability has become a central focus, with a significant increase in certified green buildings and renewable energy solutions among new developments. This growth reflects a shift in consumer priorities.
Tell us about your company and the key investment opportunities. Fortress is a real estate investment company (REIC) focused on developing and letting premium-grade logistics real estate in South Africa and Central and Eastern Europe (CEE). Our logistics portfolio primarily consists of state-of-the-art logistics parks that we have developed. These parks play a crucial role in supporting the growing demand for efficient and sustainable supply chain solutions.
We are also expanding our convenience and commuter-oriented retail portfolio, comprising 43 shopping centres. Fortress holds a 16.3% interest in NEPI Rockcastle, the largest listed property company on the JSE, with a €8bn portfolio of 60 assets across eight countries. Our strategic focus and key opportunities revolve around increasing our specialisation in two core areas: logistics and commuter retail.
What factors are driving growth in logistics parks and commuter-oriented retail centres?
High-quality, secure logistics space continues to perform well and has experienced
buoyant demand over the past 24 months with very low vacancies across prime locations. Fortress has developed c.150 000m² of high-quality logistics space in the past 12 months, of which almost 100% was let prior to completion. Fortress’s current logistics development pipeline consists of approximately 65 000m² in South Africa and a further 30 000m² in Poland, of which 75% is already pre-let. We believe opportunities exist to extend, enhance and refurbish existing retail space in our portfolio, and grow our portfolio through value-enhancing inorganic acquisitions.
How have macroeconomic factors (inflation, interest rates, foreign direct investment) impacted real estate investment?
The recent interest rate cuts continue to support increased appetite for the sector, both from a listed and direct perspective. As interest rates decrease, cost of funding reduces, sentiment improves and bond yields adjust accordingly, making real estate exposure an attractive opportunity, on a relative basis, all else equal. The persistent low growth environment, however, continues to hamper real economic sustained growth, which directly affects the demand for new logistics warehouses and the performance of our retail tenants.
Why should financial advisers tell their clients to invest in real estate (and retail or logistics)?
Fortress is a listed real estate investment company (REIC) and not a REIT. The tax consequences for an investor are material (profile dependent). Fortress intends to pay semi-annual dividends at a 100% payout ratio. Investors receive an attractive investment opportunity (focused real estate fund with exposure to high-growth well-performing sectors of retail and logistics). From a valuation perspective, the investment is attractive as Fortress is currently trading on a 12-month forward, post-tax dividend yield of 8,5% and a discount to Net Asset Value of 25%. Other positive aspects include an internal development team with high expertise, strong management, focused strategy and ability to unlock shareholder value through corporate action.
Growth powering Logistics Real Estate across South Africa
Better accessibility to major arterials, custom built, advanced security and control, more efficient storage techniques, unrivalled energy-efficiency and ultimately greater cost reductions across the supply-chain.
By Laurence Rapp CEO, Vukile Property Fund
The evolution of REIT investing
The nature of property investment has fundamentally changed. Historically, real estate investment was viewed as a passive rent collection model, but today, it is better understood that these assets require active management. Real estate has become an operating asset class.
This shift has profound implications for investors, particularly when evaluating retail REITs (real estate investment trusts), where understanding asset management, tenant strategies and operational efficiencies is key to identifying outperformance.
Investors willing to delve into the nuances of property as an operating asset will find excellent opportunities in today’s market.
When unpacking Vukile’s investment proposition, shrewd investors will discover an unrivalled retail REIT distinguished by its singular focus: its customers. Driving consumer activity benefits tenants, increases rental income, and ultimately delivers superior returns to investors, providing them with annuity income and highquality cashflows from blue-chip tenants.
Uncovering outperformance
In asset management, alpha and beta are key indicators of investment performance. Alpha
measures how well an investment performs relative to a benchmark index. Beta measures systematic risk and volatility. In this equation, a high alpha is always good as it indicates outperformance. Beta is more subjective based on risk appetite.
For REIT investors, identifying a high alpha means focusing on factors that drive superior returns. Besides the physical property assets in a portfolio, investors must evaluate which management teams have the expertise, strategies and resources to create the most value.
Evaluate REIT investments by thinking like a business owner
Investors who still view property purely as an immovable asset miss the true value proposition. The most effective investors see properties as dynamic, income-generating businesses requiring active oversight and proactive positioning.
Success in real estate investment comes from managing each property as a business. Maximising value requires a deep understanding of the various components across the value chain. While this understanding of property as an operating business is more prevalent in South Africa’s alternative asset classes – be it storage, student accommodation, or retirement living –the same logic should apply to traditional real estate sectors. It is especially critical for shopping
Buy-to-let investments hold value
South Africa’s property investment landscape is changing as investors tap into the growing demand for coastal homes and explore alternative rental models to build wealth. Data from Standard Bank highlights a significant increase in buy-to-let property investments, with one in eight mortgage applications nationwide over the past year linked to this investment strategy.
The Western Cape has emerged as a prime hotspot for property investors, with 31% of new home loan applications in the province attributed to buy-to-let purchases – more than double the national average of 12%.
“Over the past decade, the Western Cape has consistently positioned itself as an investment destination. Areas like Cape Town have benefitted from consistent demand driven by tourism and a growing expat community,” says Chiko Manokore, Head of Personal and Private Banking at Standard Bank.
Gauteng, South Africa’s economic hub, continues to show strong buy-to-let activity, nearly doubling the national average. Within the province, Tshwane leads the way in rental market investment. The region’s property investors are largely focused on generating long-term rental income. “In Johannesburg, property investment tends to focus more on rental income, unlike the Western Cape, where short-term rentals are particularly popular,” explains Manokore.
Multifamily residential rentals
Institutional investors are increasingly turning to the multifamily residential rental sector as a robust and scalable asset class. The South African Multifamily Residential Rental Association (SAMRRA) is at the forefront of this transformation, working to unlock valuable data and promote investment in this sector. Established nearly a year ago, SAMRRA has released its second comprehensive report, compiled by the Centre
centres, where operational excellence dictates financial performance.
Growing understanding of different real estate
asset classes
Previously, investors viewed real estate as a homogeneous asset class. Today, sophisticated investors distinguish between the office, industrial, retail, and residential sectors.
However, the most discerning investors go further – layering sector insights with assetlevel analysis to identify the highest-performing portfolios within a sector. As sub-sectors become more specialised, expert management becomes crucial for outperformance. The best investment decisions come from understanding the expertise and resources of the management teams within a sector and their ability to leverage tools, technology, and data to create a competitive advantage.
What drives outperformance in Retail REITs?
Retail property performance depends on more than location and size. The right management approach significantly impacts rental income and capital appreciation.
Key strategies include optimising space utilisation, curating superior tenant mixes, driving consumer traffic and dwell times with marketing and promotions, and controlling costs through, for instance, solar energy adoption.
for Affordable Housing Finance (CAHF), detailing the growth and stability of this emerging investment category.
SAMRRA currently represents 13 major players in the multifamily rental market, collectively managing over 75 000 units across 550 properties, with a combined asset value exceeding R72bn. As the sector becomes more organised and data-driven, investment confidence is growing, further fuelling expansion.
“Our research confirms that the multifamily residential rental sector in South Africa is characterised by its resilience, stability, and potential for long-term growth and sustainable value creation,” says SAMRRA CEO Myles Kritzinger. According to the CAHF report, approximately 4,5 million (23%) of South African households are renters, highlighting a strong and growing demand for rental housing. Notably, 15% of these households – around 685 000 – live in apartments, reflecting a significant opportunity for institutional-grade rental developments. Over the past five years, the market has witnessed a 9% increase in households renting apartments, adding approximately 54 000 new rental units.
PIC’s landmark investment
In a groundbreaking move, the Public Investment Corporation (PIC) has made its first-ever investment in the multifamily residential rental sector by partnering with Divercity Urban Property Group, South Africa’s leading investor in affordable rental housing. This investment will facilitate the development of an additional 2 500 rental units, addressing the country’s urgent need for affordable housing.
“As South Africa faces an acute need for housing, well-located, well-managed affordable rental portfolios offer immense value for both investors and society. This investment signifies growth in the multifamily asset class,” says Carel Kleynhans, CEO of Divercity Urban Property Group.
PIC’s Chief Investment Officer, Kabelo Rikhotso, underscores the broader impact of the partnership: “As South Africa confronts a critical housing shortage, the PIC is committed to investments that not only deliver sustainable financial returns to its client portfolios but also drive impactful socio-economic outcomes.”
OUR 220 MILLION SHOPPER VISITS A YEAR CREATE SUSTAINABLE GROWTH AND SUPERIOR VALUE .
This is Gemma B, aged 30. As someone who’s only just starting to find her feet in the corporate world and saving up for her dream honeymoon, she doesn’t have a lot of disposable income, so her monthly grocery shopping trips are brief, but she also enjoys visiting the centre on weekends to socialise with family and friends.
Gemma loves the centre’s energy and vibe. There’s always something new going on, and she also enjoys the convenience of being able to find most things she needs and wants at one destination, which saves on travel expenses and frees up more time to have fun.
We know all this and more about Gemma B and our other visitors, too. Our multi-faceted consumer behaviour research, combined with our deep understanding of the needs and desires of the communities we serve, leads us every step of the way.
Our unique focus on a superior customer experience ultimately benefits all our key stakeholders, including our tenants and investors.
As a Vukile stakeholder, you too will benefit from our extensive analysis of shopper behaviour and the factors that drive continuously evolving retail trends.
There has never been a better time to invest in people like Gemma B.
BUILDING COMMUNITIES, GROWING VALUE.
Peregrine Capital had an exceptional year, despite the unpredictability of global and local markets. CEO and Portfolio Manager Jacques Conradie shared his insights with MoneyMarketing on what contributed to their success.
“The beauty of this job,” Conradie says, “is that you hardly ever know what a year is going to bring at the start. Almost every year, unexpected events occur, and they provide opportunities. Our job is to keep our eyes open and look for those opportunities.”
Peregrine Capital’s strong performance and AI insights
Reflecting on last year’s performance, he highlighted two major themes: the South African market and the global AI-driven tech boom. “We did quite well out of South Africa, realising before the election that valuations were very attractive. The sentiment was extremely negative – people were worried about loadshedding and political uncertainty. But when negativity is already priced into the market, opportunities arise.”
Peregrine Capital strategically positioned itself ahead of the South African elections, anticipating potential upside regardless of the outcome.
“Even if the election had gone badly, we still saw upside because valuations were so low,” Conradie explains. “Fortunately, the election played out well, and we now have the Government of National Unity (GNU).”
The market implications of AI
Discussing the broader investment landscape, he notes, “The way AI is playing out reminds me of past technological revolutions. When the internet emerged, it gave rise to companies like Amazon. When mobile took off, it propelled Facebook and Apple.”
Conradie believes AI’s momentum will continue. “AI will keep skyrocketing. Our job is to ensure we don’t overpay for these investments and monitor how new entrants impact the market. However, in general, this benefits the companies we own.” On a broader scale, he sees AI as a key battleground for global superpowers. “The AI arms race between the US and China will define the next 20 years. The Trump administration understands this and is highly pro-US tech companies. While previous administrations imposed regulatory pressures, Trump will likely support major tech firms, which is a positive for our portfolio holdings.”
Discussing the rapid advancements in AI, Conradie highlighted the impact of emerging players like DeepSeek on the industry. “What DeepSeek has done is remarkable. They’ve demonstrated that a smaller company with a smart team can release a model almost on par with the largest AI firms, despite having significantly fewer resources and a much smaller budget,” he explains.
The rise of such companies could have implications for tech giants like Nvidia. “For a business like NVidia that makes AI chips, this could be a short-term negative if people decide to use more efficient models that lower demand for high-end hardware. However, this development is quite positive for most AI-driven companies,” says Conradie.
He remains optimistic about AI’s trajectory. “Even with new competition, AI remains a gamechanger. Companies like Meta, one of our major holdings, use AI extensively for ad targeting and content recommendations. If they can reduce costs while maintaining efficiency, that’s a significant advantage.”
South African market outlook
Conradie expresses cautious optimism about the South African market. “Investors must always balance the outlook with stock prices. The outlook was uncertain a year ago, but share prices were low, often presenting a good investment opportunity. Now, while the economic outlook is slightly better, valuations for retailers and banks have risen significantly, making them less attractive than a year ago.”
He points to economic factors that could shape the market in the coming months. “Interest rate cuts will help, and the economy received a boost
with a recent R43bn of two-pot withdrawals from pension funds. However, that tailwind will fade, so we need to see whether economic momentum continues. Loadshedding has improved, but economic growth hasn’t picked up as much as some had hoped. We remain watchful.”
US-South Africa relations
Geopolitical developments, including US-South Africa relations and potential trade disruptions, are on Conradie’s radar. “The US’s stance on South Africa is something to monitor. It’s never good to have the world’s largest economy scrutinising your country. Our government should prioritise resolving any tensions to avoid prolonged uncertainty.”
Investment agility
Peregrine Capital prides itself on pivoting quickly when market conditions change. “One of our biggest strengths is that we can adapt fast. We have a small, agile team of 13 analysts, and if there’s a major market event, we immediately convene, debate the impact on our portfolio, and reposition accordingly,” Conradie explains. “For example, when DeepSeek entered the market, we had an early-morning strategy session to assess how this would impact the AI value chain. We did the same when Covid-19 hit. Our ability to move quickly is core to our investment philosophy.”
Keeping the competitive edge
The company recently expanded its team, reinforcing its competitive position. “We’re always on the lookout for top talent to enhance our research capabilities. The ability to make fast, informed decisions is critical, and having the right people in place ensures we maintain our edge,” says Conradie. As global markets continue to evolve, he remains committed to flexibility and strategic positioning. “We’re not stuck to any opinions – we hold strong views but remain extremely adaptable. If the data changes, we adjust accordingly. That’s how we stay ahead.”
What COFI will mean for hedge funds
Compiled by Sandy Welch
Over the years, South Africa has taken significant steps to regulate its hedge fund industry, aiming to enhance transparency, protect investors and ensure financial stability.
Back in April 2015, South Africa became the first country to formally regulate hedge funds as collective investment schemes under the Collective Investment Schemes Control Act (CISCA). This integration aimed to align hedge funds with the regulatory standards applicable to traditional investment funds, enhancing oversight and investor protection. The regulations introduced two primary categories of hedge funds:
• Retail Investor Hedge Funds: Designed for the general public, these funds are subject to stringent regulatory requirements to safeguard less experienced investors.
• Qualified Investor Hedge Funds: Targeted at institutional and high-net-worth investors with a minimum investment requirement of R1m. These investors are presumed to have a deeper understanding of the associated risks, allowing for a more flexible regulatory approach.
As of June 2023, the South African hedge fund industry managed assets totalling R120bn, up from R113bn at the end of 2022. This growth indicates a steady net inflow
and a slight increase in the number of funds, reflecting a growing investor interest in hedge funds. To mitigate systemic risks, regulations impose specific limits on hedge fund managers, including a 200% gross exposure cap, a 20% one-month Historical Value-atRisk (HVAR) limit, and a 30% cap on single positions. These measures are designed to ensure prudent risk management within the industry.
The impact of COFI
The Conduct of Financial Institutions (COFI) Bill is set to introduce a new licensing framework for ‘alternative investment portfolios’, which includes hedge funds. This initiative aims to address the unique risks associated with diversified pooled investments, further strengthening the regulatory environment. COFI is poised to significantly impact South Africa’s hedge fund industry, but it’s primarily aimed at enhancing market conduct and consumer protection. Key implications include:
• Licensing requirements: Hedge fund managers, previously operating with limited oversight, will now be required to obtain conduct licences from the Financial Sector Conduct Authority (FSCA). This move ensures that all financial institutions, including hedge funds, adhere to regulatory standards.
• Enhanced transparency: The COFI Bill emphasises a shift from a ‘rules and regulations’ approach to a
‘principles and outcomes-based’ framework. This transition mandates hedge funds to prioritise fair customer treatment and clear disclosure of investment strategies and risks, fostering greater transparency and accountability.
• Alignment with sustainability goals: In line with global trends, the COFI Bill encourages financial institutions, including hedge funds, to support South Africa’s sustainability objectives. This includes integrating environmental, social, and governance (ESG) considerations into investment decisions, promoting responsible investing practices.
• Standardised regulatory landscape: By consolidating various financial sector laws, the COFI Bill aims to streamline the regulatory environment. This uniformity reduces complexity for hedge funds, ensuring consistent application of conduct standards across the financial sector.
These regulatory measures underscore South Africa’s commitment to fostering a robust and transparent hedge fund industry, balancing innovation and growth with investor protection and market stability. The overarching goal is to align with international best practices and supporting the country’s broader economic and sustainability goals.
By Dino Zuccollo Head of Investor Solutions, Westbrooke Alternative Asset Management
The appeal of private assets in offshore markets
The art and science of investing lies in connecting capital with opportunities. Wealth creation operates like a two-sided marketplace, where having both capital to invest and assets to invest in, is key to success.
In a world where liquidity has been boosted by accommodative central bank policies, attracting capital to the right opportunities isn’t the more challenging side of that marketplace. The real challenge is in finding opportunities that offer appealing risk-reward dynamics.
Public markets are shrinking
So, where does one look? The listed market isn’t providing much in the way of new ideas, especially once you look beyond the technology sector in the United States. There’s a reason why the Magnificent 7 seem to hog the headlines –in a stock exchange with a shrinking number of listed counters, that’s where most of the activity in public markets has been.
For example, the London market saw fewer than 20 Initial Public Offerings (IPOs) in 2024, the lowest number in well over a decade. Although South Africans are used to reading about delistings on the Johannesburg Stock Exchange (JSE), few realise that the London Stock Exchange (LSE) is facing the same problem, if not worse. This is a market that used to welcome roughly 60 new listings a year from 2015 to the start of the pandemic. In 2024, 88 companies either delisted or transferred their primary listing from the main market. Although the pandemic period saw a flurry of new listings as interest rates plummeted, the story since then has clearly been depressing for London bankers who are operating in a city that has lost its shine as a hub for capital raising activity. Brexit, regulations and other issues have all contributed.
For investors who appreciate the legal system and familiar language offered by the UK, this presents a conundrum in terms of how to access the opportunities in that market. Liquidity is a pressure point on the LSE and this has a direct negative impact on valuations. The flywheel effect is clear: lower valuations attract fewer new listings, which in turn leads to a further decrease in liquidity.
Looking beyond public markets
Importantly, this doesn’t mean that opportunities don’t exist. It just means that many of them are to be found outside of public markets. Accessing such opportunities requires specialist skillsets and deep relationships built over a long period.
Private equity has been a feature of the landscape for as long as anyone can remember and there’s no sign of that changing. As IPOs become an increasingly less appealing way to raise capital or crystallise value for founders, many companies are now choosing to negotiate directly with sophisticated investors in the hope of achieving a more efficient outcome (private markets are less regulated) and in many cases a better valuation.
Beyond private equity, there’s an appealing growth story elsewhere on the capital stack. For companies seeking other forms of capital, private debt and hybrid capital markets have become appealing. Growth in private debt was triggered by the Global Financial Crisis (GFC), which saw banks pull back significantly as regulators clamped down on their activities in the hope of preventing another such crisis from happening. This made it more difficult for banks to operate in certain spaces that offer attractive risk-reward dynamics. Private debt is one such space, with a clearly positive trajectory since the GFC.
Why
private debt appeals to investors and borrowers
Today, private debt is a $1.6tn asset class that represents 12% of the overall alternatives market. It is no longer a sub-category of private equity, but rather a powerful standalone asset class that offers benefits to both investors and borrowers alike.
For investors, private debt is a yieldenhancing asset class that offers attractive absolute value returns alongside a capital preservation focus. Diversification is key here, with low correlation to traditional markets and reduced volatility. For borrowers, the potential debt structures are far more flexible than would typically be available from traditional banks. At deal sizes where banks have no choice but to offer cookie-cutter solutions, experienced private debt and
hybrid capital professionals can offer bespoke structures that are attuned to the objectives and cashflow profiles of the borrowers.
This has not escaped the attention of major institutional investment houses, many of whom are now making meaningful allocations to alternative assets of up to 30% of a portfolio. The traditional 60/40 split of equities and bonds is no longer appropriate in the modern world, with increasing correlation in performance and thus lower diversification benefits. This approach is even more appropriate in a higher-for-longer interest rate environment, as private debt funds tend to achieve positive real yields, i.e. yields in excess of inflation.
Simplifying alternative investments
Westbrooke Alternative Asset Management is focused on addressing the hurdles that South African capital allocators face when dealing with alternative investments. These range from accessibility of platforms through to complexity and frequency of pricing and reporting. With deep experience operating in this space, Westbrooke manages R13bn of shareholder and investor capital across South Africa, the United Kingdom and the United States of America.
For example, The Westbrooke Yield Plus UK private debt fund earns risk-adjusted cash returns between 7% and 9% per annum in GBP. As part of a wider, diversified portfolio, this is a helpful source of inflation-beating returns with low correlation to the other assets typically found in portfolios. The post-tax return is also enhanced through the fund-generating income in a more tax-efficient manner.
In offshore portfolio strategies that are typically bloated with technology companies in the United States that are highly correlated as a sector, an allocation to alternatives can provide both yield and diversification benefits. Westbrooke makes it easier than ever before to make such allocations, which becomes even more important in the current geopolitical environment that is driving heightened volatility and risk in public markets.
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a investment offshore private debt available for investment on a quarterly basis visit our website to learn more about our next trading deadline
earn 7% - 9%* in GBP through a diversified portfolio of 40-50 secured UK loans
By Francois Lombard Head: Investment
Distribution at Momentum Distribution Services
Diversification decoded: Why South African investors should look offshore
In the everevolving world of investments, one mantra remains as steadfast as a vuvuzela at a soccer match: diversification, diversification, diversification. South African investors increasingly recognise the pivotal role offshore investments play in crafting resilient and growth-oriented portfolios. South Africa accounts for less than 1% of the global market. This limited exposure can be as restrictive as trying to braai without wood. By venturing offshore, investors can tap into high-growth sectors such as technology, biotechnology, and renewable energy, industries that offer substantial growth potential.
The perks of packing your investment bags
• Geographic diversification: Spreading investments across various countries reduces reliance on the South African market, mitigating risks associated with local economic downturns or political instability.
• Asset class diversification: By spreading investments across equities, bonds, real estate, and commodities, investors can mitigate risks associated with any single asset’s underperformance.
• Sector diversification: Within each asset class, it’s wise to diversify across various sectors. This
Offshore tax regulations: All the implications
By Lance Lawson Business Development Consultant at
In the ever-evolving world of investments, one mantra remains as steadfast as a vuvuzela at a soccer match: diversification, diversification, diversification. South African investors increasingly recognise the pivotal role offshore investments play in crafting resilient and growth-oriented portfolios. South Africa accounts for less than 1% of the global market. This limited exposure can be as restrictive as trying to braai without wood. By venturing offshore, investors can tap into high-growth sectors such as technology, biotechnology, and renewable energy, industries that offer substantial growth potential.
The perks of packing your investment bags
• Geographic diversification: Spreading investments across various countries reduces reliance on the South African market, mitigating risks associated with
ensures that a downturn in one sector doesn’t disproportionately impact the entire portfolio.
• Currency hedging: Holding investments in multiple currencies can act as a buffer against currency volatility. For South African investors, this means that assets held in stronger currencies, like the US dollar, can help preserve the portfolio’s value if the rand weakens.
• Access to global markets: Through international markets, investors can benefit from global economic growth and opportunities not available locally.
Strategies for financial advisers
To effectively use offshore opportunities for clients, financial advisers should consider the following approaches:
• Understand client goals: Assess each client’s financial goals, risk tolerance, and investment horizon. Tailor the offshore allocation to fit their long-term needs and objectives, whether it’s wealth preservation, growth, or funding international education.
• Stay current with regulations: Understanding the nuances of the yearly R1m discretionary allowance and the broader R10m investment limit is crucial to guide clients through compliance and optimise their offshore exposure.
• Focus on tax efficiency and holistic planning:
local economic downturns or political instability.
• Asset class diversification: By spreading investments across equities, bonds, real estate, and commodities, investors can mitigate risks associated with any single asset’s underperformance.
• Sector diversification: Within each asset class, it’s wise to diversify across various sectors. This ensures that a downturn in one sector doesn’t disproportionately impact the entire portfolio.
• Currency hedging: Holding investments in multiple currencies can act as a buffer against currency volatility. For South African investors, this means that assets held in stronger currencies, like the US dollar, can help preserve the portfolio’s value if the rand weakens.
• Access to global markets: Through international markets, investors can benefit from global economic growth and opportunities not available locally.
Navigating offshore waters with Brenthurst Wealth
Embarking on the offshore investment journey can feel like navigating the treacherous waters of the Cape of Good Hope. This is where seasoned financial advisers, like the team at Brenthurst Wealth Management, become invaluable allies.
According to the Intellidex Private Bank & Wealth Manager awards, Brenthurst Wealth has been recognised as a leading boutique wealth manager in South Africa for seven consecutive years. Their expertise spans investment planning, including offshore investing, retirement and estate planning, risk planning, and tax planning.
Collaborate with tax and legal experts to structure offshore investments that optimise tax outcomes and integrate seamlessly into broader estate planning.
• Educate clients: Use relatable analogies to demystify complex concepts like currency hedging, tax efficiency, and global diversification. Clear communication builds trust and empowers clients.
Offshore diversification remains a cornerstone strategy for South African investors aiming to build resilient and growth-oriented portfolios. By embracing global opportunities and adhering to informed investment practices, financial advisers can guide their clients towards achieving their financial objectives amidst local and international market dynamics. For investors looking for guidance in navigating offshore investment strategies, working with experienced financial professionals can make all the difference. Wealth managers with expertise in offshore structuring, estate planning, and tax considerations – such as those at Brenthurst Wealth – can help investors make informed decisions tailored to their longterm objectives. Recognised for their advisory services in South Africa, their insights contribute to helping investors manage risk while capitalising on global opportunities.
Strategies for financial advisers
To effectively use offshore opportunities for clients, financial advisers should consider the following approaches:
• Understand client goals: Assess each client’s financial goals, risk tolerance, and investment horizon. Tailor the offshore allocation to fit their long-term needs and objectives, whether it’s wealth preservation, growth, or funding international education.
• Stay current with regulations: Understanding the nuances of the yearly R1m discretionary allowance and the broader R10m investment limit is crucial to guide clients through compliance and optimise their offshore exposure.
• Focus on tax efficiency and holistic planning: Collaborate with tax and legal experts to structure offshore investments that optimise tax outcomes and integrate seamlessly into broader estate planning.
• Educate clients: Use relatable analogies to demystify complex concepts like currency hedging, tax efficiency, and global diversification. Clear communication builds trust and empowers clients to make informed decisions.
By embracing global opportunities and adhering to informed investment practices, financial advisers can guide their clients towards achieving their financial objectives amid local and international market dynamics. Partnering with experienced firms like Brenthurst Wealth ensures that investors have the guidance they require to navigate the complexities of offshore investing.
Sovereign Trust SA
With our true o shore investment platform, more than 20 years of delivering excellence, and the latest technology at your fingertips, we make it a personalised and exciting journey for you and your clients. Speak to your Momentum Consultant today to find out more about a world of investing possibilities, or visit momentum.co.gg.
By Rob Perrone Investment Counsellor at Orbis
The returns of the US stock market over the last 15 years have been outstanding. However, based on our research, we are sceptical that the US market is poised for attractive long-term returns today. As the US represents some 70% of world stock market indices, we are similarly sceptical about the longterm returns on offer from global passive portfolios.
In addition, there are signs of speculative enthusiasm. Valuations are high and stock markets are concentrated in both composition and performance. Froth in cryptocurrencies is alive and well. Investors able to hold cash don’t hold much of it. Parallels with past speculative periods, like the Nifty Fifty era in the early 1970s or the technology bubble in the late 1990s, are starting to pop up more often.
Yet we don’t see an obvious stock market bubble, nor an inevitable stock market crash. Unlike the tech bubble, the leading stocks today are real companies, and really good ones. Why, then, would we not hold more of the market juggernauts, or have a larger exposure to their thriving home market?
Rigorous research, ruthless selection
ever-slower growth. And Nvidia, which three different Orbis analysts have looked at over the past two years, seems to us an excellent business – but one with exceptionally high expectations reflected in its share price.
Most of our best ideas, however, are not the stocks you see in headlines.
Navigate volatile markets with Marriott’s new portfolio
In 2024, significant developments across politics, economics, and financial markets underscored the unpredictability of the global landscape. Despite the highest interest rates in decades, the anticipated global recession never materialised, highlighting both the adaptability of economies and the challenges of forecasting economic outcomes. Geopolitical uncertainty remains high: volatility in the Middle East underscores the fragility of global stability, with potential disruptions to energy markets and supply chains; Donald Trump’s political resurgence emphasises the enduring influence of populism and polarised politics; and within South Africa, despite initial optimism, the inherent fragility of the Government of National Unity remains a concern.
“We scratch our heads at Apple’s ever-rising valuation for everslower growth”
We think we can find much better opportunities from today’s starting point, and we try very, very hard to find the best ideas we can.
Some of those ideas are the juggernauts. We have owned Alphabet for years. Some of our stock pickers find Microsoft and Amazon attractive, and Meta looks reasonable enough to warrant some work. On the other hand, Tesla’s share price is a hypedriven rollercoaster with little regard for its fundamentals.
We scratch our heads at Apple’s ever-rising valuation for
Last year, our analysts around the world looked at 395 companies. From there, ideas run the gauntlet of our phased research process. Being a contrarian investor means disagreeing with the market, and that is testing. Challenging voices vastly outnumber supportive ones. This difficulty is why contrarian investing can work. But to endure it, you need to really understand what you own. Building that understanding requires time, and finding that time requires focus. Accordingly, we encourage our analysts to be ruthless in rejecting all but their most compelling ideas. Of the 395 companies that we analysed last year, only a fifth were considered for purchase in the Orbis Strategies. Those 81 ideas were then picked apart at thesis defence meetings, where we interrogate the analyst’s investment thesis to reduce the risk of making mistakes. Only 14 companies were ultimately bought as significant new positions in our Global Equity Strategy.
We turn over hundreds of ideas, but less than 4% are compelling enough to beat out the companies the portfolio already holds. The bar ideas must clear is not ‘average’ or ‘reasonable’ or ‘fair’ – we are looking for the most attractive opportunities we can find, anywhere in the world. Every day, our work continues.
Looking ahead, global uncertainty shows no signs of abating. This has translated into a volatile start to the year for global markets, further fuelled by tariffs, trade wars, and shifting sentiment surrounding the path of interest rates. Additionally, increasingly concentrated global markets –where the ‘Magnificent 7’ now account for approximately 35% of the S&P 500 – add another layer of complexity, with any shift in sentiment having a material impact on global equity markets. In such an unpredictable environment, investors would be well-served by focusing on quality investments. This has always been a key focus of Marriott’s portfolios, where we aim to provide investors with more predictable outcomes.
Quality investing has become a distinct and effective strategy embraced by many global asset managers. While funds in this category often share similar traits, each fund remains unique. Marriott’s newly launched Smart International Equity Portfolio harnesses this approach, offering diversified access to a range of quality-focused investment funds, with the goal of achieving robust risk-adjusted returns, greater consistency, and lower costs.
The Smart International Equity Portfolio:
Focuses on quality businesses characterised by strong balance sheets, established brands, and consistent earnings. These companies tend to perform well during downturns and deliver above-average riskadjusted returns over the long term.
Provides access to a diverse range of actively managed funds, including the Fundsmith Equity Fund and Dodge & Cox US Stock Fund, managed by leading professionals, extending beyond offshore options available in South Africa.
• Blends active management with high-quality passive funds, such as the iShares Core S&P 500 ETF, which helps maintain low overall costs. Diversifies risk across different fund managers, sectors, and geographies.
Offers tax efficiency, as South African investors will not be subject to situs tax (all underlying investments are in UK-domiciled funds in situsfree jurisdictions). Further, by opting for accumulating funds instead of distributing funds, investors can compound dividends tax-free, with any increase in value subject to capital gains tax rather than income tax upon repurchase.
The Smart International Equity Portfolio is ideal for investors who believe that long-term ownership of shares in high-quality businesses is an effective strategy for wealth accumulation. Its quality-focused investment strategy, along with blending the world’s best actively managed funds with low-cost passive options, offers a diversified approach to quality investing. While this makes it an attractive option irrespective of the prevailing macro-economic conditions, it is particularly well suited to navigate the current uncertain geopolitical and economic climate.
The Smart International Equity Portfolio (SIEP) can be accessed via Marriott’s International Investment Mandate (using your annual individual offshore allowance).
the limits are.
Fiduciary duty and conflict of interest
In short, fiduciary duty entails the obligation to look after the affairs of another person or an entity while taking proper care and acting in the best interests of that other person or entity in all dealings with their property, rights and interests. In South African law, there is no general duty to care for the interests of another person.
Fiduciary duty usually arises whenever an unequal relationship exists where one person is tasked to care for the affairs of another, e.g. the relationship between a trustee and the beneficiary of the trust, a director and a company and its shareholders, a member of the board of a retirement fund, a public functionary towards the members of the public served by that function, an executor in a deceased estate, and a financial planner and his/her clients.
managers bound by the Municipal Finance Management Act, Act 56 of 2003, not to use the position or privileges or confidential information for personal gain or to improperly benefit another person. I shall leave it to readers to decide whether the municipal managers where they live comply with this requirement.
planner, will always have a secondary interest, i.e. the remuneration. That should not be a problem as that secondary interest is out in the open –everybody knows about its existence. It is also unavoidable. A secondary interest becomes a problem and causes a conflict of interest when it is not in the open and is not disclosed.
The fiduciary duty of a director exists to ensure that the company produces sustainable profit for shareholders while complying with all legal requirements.
“The main reason for the existence of the fiduciary duty is the unequal relationship”
A board member of a retirement fund’s board of trustees is required by legislation to act independently, impartially and with due care, diligence and good faith to ensure that the best interests of members are always protected, while avoiding conflicts of interest.
A trustee of a trust is required to act with the care, diligence and skill that can reasonably be expected of someone who manages the affairs of another, and an executor of a deceased estate has been held in our case law to stand in a fiduciary relationship to the beneficiaries in respect of his administration of the estate.
Public functionaries like civil servants and politicians are also bound by legislation and case law to act in the best interests of the public they serve. So, for example, are municipal
The main reason for the existence of the fiduciary duty is the unequal relationship. The fiduciary is subject to the duty because the beneficiary of the duty is unable to control the actions of the fiduciary, e.g. a minor beneficiary of a testamentary trust is not able to keep an eye on what the trustee of that trust is doing.
A further example is the relationship between financial planner and client. As the financial and tax legislation and environment, as well as financial products and solutions, become more and more complex, the superior knowledge of a properly qualified financial planner places the client at a disadvantage. This gives rise to the duty of the financial planner to care for and act in the best interests of the client. Legislation deals with this to an extent, but the standard of behaviour of a financial planner should be beyond the minimum requirement set by legislation.
Conflict of interest
Fiduciaries are, by the nature of what they do, always in danger of finding themselves in a conflict-of-interest situation. Conflicts of interest arise where behaviour in relation to or professional judgement about a primary interest or task is influenced unduly by a secondary interest.
Someone who is remunerated for acting in a fiduciary capacity, like an executor, company director, trustee, public functionary, or financial
A municipal manager who is in an intimate relationship with a director or employee of a company tendering to deliver services to that municipality is immediately conflicted, must disclose the relationship to the council, and should refrain from taking any part in decisions about that tender.
Legislation prohibits the purchasing of an estate asset by the executor of that deceased estate without permission from the Master of the High Court, and a professional trustee of a trust should avoid supplying other goods and services to the trust at a cost to the trust.
In a 2021 Western Cape High Court judgement, the court removed executors of a deceased estate due to a conflict of interest, because they were also trustees of a trust and lodged a claim in that capacity against the estate for a loan which they alleged was granted to the deceased by the trust. As there was also a claim from the widow under the Maintenance of Surviving Spouses Act, 27 of 1990, the court held that the executors were fatally conflicted as they had to decide between competing claims. The outcome of their decision had a direct impact on their own interests, and they had a secondary interest which interfered with their duty as executors. Existing or potential conflicts of interest should be disclosed at all times to all interested parties. The golden rule should be: When in doubt, disclose.
By Andre Troskie
TManaging the third-party blind spot for DORA
he financial services industry is no stranger to stringent regulation. Unlike other sectors that have scrambled to comply with legislation such as NIS2, FS organisations are comparatively diligent when it comes to data resilience and cybersecurity. Having operated under some of the strictest regulatory standards for some time, for most DORA (Digital Operational Resilience Act) compliance should be manageable – for internal operations, that is.
Despite the confidence that many FS organisations likely have in their ability to comply with DORA audits and reporting, they can’t afford to take their eyes off the ball. DORA compliance extends beyond internal procedures, covering third-party service providers as well. It’s here where most organisations risk tripping up in the initial stages of DORA enforcement. With consequences ranging from significant fines to brand and reputational damage, it’s an issue that organisations can’t afford to overlook.
Well prepared?
Unlike other sectors that must also comply with NIS2, financial services organisations by necessity are typically further ahead of the curve when it comes to regulatory compliance. For many, DORA’s requirements will have been about building on (and proving) the strength of the foundations already in place. The main focus on DORA for financial services will likely instead be on operational resilience testing, ensuring internal awareness of different scenarios and their risk impacts.
Most financial institutions and banks will have felt confident in their scenario-based testing and, by extension, their compliance with DORA when the deadline passed this January. And if the scope of DORA didn’t cover beyond internal organisation compliance, they would be right. Unfortunately for most, DORA extends to cover all of an organisation’s third parties and supply chains – creating the risk of a pretty large potential blind spot.
Time to put the work in
Financial services organisations can do all the work they want ensuring internal compliance to DORA, but unless their third-party and supply partners are also compliant, they will fail regardless. And these are no small stakes. According to EY’s Global Third-Party Risk Management Survey, in the US alone, 98% of financial services organisations have partnerships with third-party vendors. Although
they may not realise it, third parties are one of the biggest risks to FS organisations when it comes to DORA compliance.
Sadly, there is no quick fix. At the very minimum, every bank and financial institution in every EU Member State that falls under DORA is going to have to renegotiate many Service Level Agreements (SLA) with existing and new thirdparty partners. Financial services organisations can’t afford to be under any illusions – this will be a necessary but significant piece of work. Cementing DORA compliance as a prerequisite will be essential for continued DORA compliance but will require collaborative work from across businesses. Security, risk management, and legal teams will all need to band together to pull this off.
DORA’s double-duty for data resilience
Of course, even having DORA compliance confirmed among your third-party providers won’t make your organisation completely invulnerable to cybersecurity threats. But it will put you in good stead when it comes to recovering from an attack. After all, regulatory compliance has never equalled complete security. DORA is more of an exercise in operational resilience improvement, which is a key piece of the puzzle for recovery from cyberattacks.
But this doesn’t mean that compliance should be an afterthought. For financial services organisations to achieve compliance with DORA and secure their third parties, they’ll need to dedicate around-the-clock attention. It’s not a one-and-done deal; it will be a reiterative and continual process to achieve compliance consistently across all providers. That is if they want to avoid the chaos that 11 000 Starbucks stores dealt with when their third-party cloud provider was taken out by a ransomware attack last winter.
Sure, it’ll require a significant amount of resources to completely map out all of your
duty. Not only will you ensure compliance, but you’ll also cement robust data resilience as a backbone of your organisation’s incident response plans. Last year alone, the cost of downtime for financial services organisations was $152m. So, if the worst does happen, you’ll want to be able to bounce back as quickly as possible, or face adding to that number this year.
There are, of course, other benefits to compliance, primarily the avoidance of any consequences. DORA comes hand-in-hand with European Supervisory Authorities (ESAs) that will regularly check for compliance and hand down any relevant repercussions. For financial services, if their external critical software providers don’t comply in time, they could face anything from a fine of 2% of their annual turnover to criminal charges.
So yes, DORA compliance can’t bulletproof you against every threat out there, but being able to prove that everything is in place and that it all works within the defined timeframes will set you up to recover as swiftly as possible from cyberattacks. And, perhaps more prudently, it’ll prevent you from incurring any of the severe consequences attached to non-compliance. Organisations need to step it up a notch when it comes to DORA compliance and, most importantly, ensure their third parties are along for the ride.
EMEA Field CISO, Veeam
Energy transition and private markets drive appetite for impact
By Catherine Macaulay Impact Investment
Lead, Schroders
Dand Anne Dardelet Sustainability and Impact Investment Lead at Schroders
espite apparent political headwinds and an oft-cited ESG (environment, social, governance) backlash in some parts of the world, investor demand for impact investing strategies has continued to grow. This has been driven by potential for positive diversification and the opportunity to access return opportunities across the global energy transition and via private markets.
According to the Global Impact Investing Network’s (GIIN) Sizing the Impact Investing Market 2024 report, there is currently close to $1.6tn in impact investing assets under management (AUM) globally, being managed by more than 3 900 organisations.
For the first time, GIIN was also able to calculate a compound annual growth rate (CAGR) for impact investing AUM since 2019. At 21%, this rate is well above that for the wider asset management industry and outstrips even the fast-growing private markets segment, albeit in both cases from a much lower base.
Opportunities in the global energy transition
One of the key sector and thematic areas that is driving this continued appetite for impact investing, and sustainability-related investing more broadly, is the global energy transition.
This reflects a continued investment focus towards decarbonisation that we believe will continue even despite political changes in the US. It is fuelled by both a strong economic and regulatory rationale across multiple jurisdictions, as well a growing opportunity set related to the evolution in broader energy-transition technologies.
In relation to impact investing specifically, the GIIN State of the Market 2024 report, based on its annual impact investor survey, found energy-related investments accounted for the largest share of impact AUM at 21%. Half of all survey respondents have allocated at least some of their impact AUM to this area.
Investments linked to housing and financial services came in second and third respectively, with both accounting for 14% of impact AUM. Financial services incorporate microfinance, a segment that has helped to shape the modern impact investing market over the past two and half decades through a focus on offering inclusive access to commercial financing across emerging markets. It is also a space in which BlueOrchard, an impact asset manager that is part of the Schroders Group, is a recognised pioneer.
Meanwhile, and in relation to sustainability-aligned investments more broadly, just 9% of the more than 800 institutional investors that responded to Schroders’ Global Investor Insights Survey 2024 stated their organisation has ‘little to no appetite’ for sustainable investing, while 90% said they are either already investing (60%) or planning to invest (30%) in the global energy transition.
Importantly, in terms of what is driving the decision to allocate to this theme, portfolio diversification (39%) and potential for positive returns or alpha generation (38%) were the second and third most cited responses, following closely behind the role energy transition assets can play to aid the decarbonisation of portfolios (41%).
Private markets remain key area of focus
Private markets, which are noted for their potential for higher returns, as well as a long-term investment horizon and hands-on approach that can be especially relevant for sustainability and impact investments, are the key area of focus for those looking to make impact allocations.
GIIN’s report states that 43% of all impact AUM is allocated to private equity specifically, making this by far the largest single asset class for impact investing. A substantial 73% of survey respondents have at least some of their impact AUM in private equity.
Private debt was also a prominent area, accounting
for 14% of impact AUM but with close to half (48%) of impact investors having allocated to the asset class. Overall, GIIN noted that 78% of respondents allocate more than three-quarters of their impact AUM across private equity and private debt combined.
Real assets, covering private infrastructure and real estate, was the second largest asset class by impact AUM at 16%, and the third largest by investor allocation at 20%.
Outside of private markets, we expect impact investments through public debt and equity, currently accounting for 12% and 7% of impact AUM, will increase over time, as more asset managers, including Schroders and BlueOrchard, launch dedicated listed strategies focusing on delivering impact alongside financial returns. These strategies could enable a wider range of traditional investors to invest in line with impact objectives while prioritising liquidity.
Emerging focus on biodiversity
Turning to emerging drivers of impact and sustainability investing, there has been a notable surge in interest in strategies targeting biodiversity.
Biodiversity loss is recognised as an increasingly urgent global challenge and is a growing area of focus in regulation and public policy. Given that anywhere from a third to more than half of assets held by financial institutions are considered to be ‘dependent on ecosystem services’, according to a review of central bank studies cited by the OMFIF’s Sustainable Policy Institute, biodiversity risk is also increasingly recognised as a key investment risk.
In its review of how impact investments align to specific UN Sustainable Development Goals (SDGs), GIIN noted remarkable increases of 82% and 64% in allocations targeting SDG 14 (life below water) and SDG 15 (life on land). Currently 28% and 32% of impact investors have made at least one investment aligned to these SDGs, respectively.
The uptake of the Task Force for Nature-related Financial Disclosures and the growing number of its adopters (from 320 in January 2024 to over 500 as of end 2024) will provide tailwinds for nature-related risk management and corporate reporting.
Source:
Game changer renewable deal for Standard Bank
While the trajectory of South Africa’s (SA) renewable energy sector reflects on challenges on the path towards a more diversified and liberalised energy landscape, Standard Bank continues to be at the forefront of breaking new ground in many ways.
A first-of-a-kind project has reached financial close and entered construction with Standard Bank as sole mandated lead arranger. The 140MW Ishwati Wind Farm was led, co-sponsored and developed by Africa Clean Energy Developments (ACED), with the African Infrastructure Investment Managers (AIIM) managed IDEAS Fund and Reatile as shareholders. The R4.9bn wind project was the first sizeable renewable energy project to sign a GPPA (Generator Power Purchase Agreement) with renewable energy aggregator NOA. Ishwati reached close and started construction in September 2024, and will start generating electricity in 2026. NOA Group received its trading licence on 31 January 2025, enabling the business to buy all the renewable energy generated by the Ishwati Wind Farm.
“Standard Bank has been mandated for four renewable power aggregators in South Africa”
First of its kind
“This marks the first large-scale renewable project in South Africa to reach financial close with an energy trader as the off-taker,” said Karel Cornelissen, CEO of NOA Group. With NOA Trading, the trading arm of NOA Group, now holding its trading licence, we are authorised to purchase electricity from Ishwati and other thirdparty IPPs, aggregate it, and wheel it through the Eskom grid to geographically dispersed offtakers across the South African market.
The utility-scale wind farm comprises 32 (4.5MW) wind turbines, each standing 120 metres high, and is set for commissioning in 2026. ACED is managing construction with Energy Infrastructure Management Services (EIMS Africa) providing asset management. The power generated by the ACED-EIMSIDEAS-Reatile generation consortium will be sold to NOA under a long-term power purchase agreement, enabling NOA to supply multiple business customers through shorter, more flexible arrangements.
How it will work
“In the case of Ishwati, wind power generated in the Western Cape will be wheeled through the Eskom transmission network and then transmitted to end users such as Tronox, MMC, Old Mutual Properties, Netcare and others,” Karel Cornelissen explains.
“Together with our partners, ACED, EIMS Africa and Reatile, we are the sole mandated lead arranger to this first-of-a-kind project, presenting a long-term solution and response to the market liberalisation in SA. NOA is facilitating not wind or solar energy to end users but rather a profile of green electrons achieved by aggregating multiple generators (wind, solar and battery projects) and providing this to multiple end users under more flexible arrangements,” says Standard Bank Executive: Project Finance, Energy and Infrastructure Finance, Sherrill Byrne.
Innovating power sources
Two years ago, Standard Bank recognised aggregators as a key emerging theme, prompting it to intensify efforts in sourcing like-minded partners in addressing market needs towards innovation in supplying power to the market.
There has seen a big shift in the market, most notably the change in reform in line with the amendments of the Electricity Regulatory Act. This has provided room for more flexible power-generation options through aggregators.
Standard Bank has been mandated for four renewable power aggregators in South Africa. These aggregators source renewable energy from various generation assets, such as wind and solar, and sell it to multiple off-takers Additionally, Standard Bank aims to achieve net zero carbon emissions from its own operations by 2040 and from its portfolio of financed emissions by 2050, aligned with the Paris Agreement
Job creation and more
We’re delighted to have closed and commenced construction on this complex and pioneering project – the first trader offtake project at scale. It’s the long-term PPAs we sign, such as that with NOA, that bring these projects to life. We are grateful for the opportunity to serve NOA, so that they can in turn do so for their growing list of energy customers, all the while driving sustainable development and job creation –at the site locally, and where the renewable energy is used. Such is the power of the green electron!” said James Cumming, CEO of ACED.
Standard Bank remains dedicated to empowering clients in their journey towards a greener future, reinforcing the bank’s role as a catalyst for change in the energy sector, which is demonstrated through our dedicated sector focus on banking aggregators and traders towards more flexibility.
“Banking the first project with an aggregator required a unique partnership approach with a joint vision to ensure appropriate risk allocation and alignment. At the core of the partnership is enhanced value creation and delivery through an innovative aggregated flexible portfolio approach from a power supply and purchase perspective addressing market needs,” says Vincenzia Leitich, Standard Bank Executive: Energy and Infrastructure.
By Thomas Berry Head of Sales, PSG Wealth
AMaking the great wealth transfer last
study by The Williams Group, which tracked 3 200 families over two decades, has found that 70% of wealthy families lose their fortunes by the second generation, and 90% by the third. Interestingly, this trend transcends geography and culture, as reflected in the Chinese proverb “Wealth does not last beyond three generations”, which echoes the American saying “Shirtsleeves to shirtsleeves in three generations”.
This is particularly relevant considering that the biggest global transfer of wealth is currently underway. In the coming years, Baby Boomers are set to pass down more than $68tn – that’s more than double the size of the whole US economy. This, however, is not only an American – or developed market – phenomenon, but a global one, affecting wealthy families around the world, including in South Africa.
The economic impact of any intergenerational wealth transfer depends largely on how it is managed. Some beneficiaries may reinvest in commerce, real estate or education, but there is always a risk that others may opt to pay off debt or fund early retirements rather than fuelling economic growth. Governments, too, are likely to increase scrutiny around inheritance tax, adding another layer of complexity to generational wealth transfers.
The current risks facing great wealth transfer beneficiaries If proper succession planning isn’t in place, disputes, lawsuits, or reckless spending can quickly erode fortunes. Many families unfortunately fail to implement the necessary structures to protect their wealth over time.
Sound financial education is one of the most critical factors in effective intergenerational wealth transfer. A sudden influx of wealth, coupled with a lack of financial literacy, can lead to poor investment decisions, overspending and, in extreme cases, complete financial ruin. For instance, a recent baseline survey by the FSCA has shown that only 51% of South African adults are financially literate. Without guidance and education, heirs risk making decisions that diminish their inheritance.
Furthermore, it is often assumed that wealthy families openly discuss financial matters with their children, but studies suggest otherwise. A reluctance to discuss finances can leave heirs unprepared to manage their wealth effectively, making them vulnerable to making poor financial choices.
Additionally, the modern economy presents new challenges. Inflation, economic downturns, and geopolitical instability could erode wealth if it is not carefully protected and invested. As wealth becomes increasingly tied to financial markets, a thorough and well-thought-out financial plan should be put in place to avoid client fortunes diminishing at a faster rate than anticipated.
Long-term
planning and financial education
There is a well-known saying by Warren Buffet that aptly illustrates why long-term wealth planning is essential: “Someone’s sitting in the shade today because someone planted a tree a long time ago.” We see time and time again that generational wealth is not self-sustaining; it requires active management, strategic planning and, above all, patience. For younger generations, growing up in a digital world provides an opportunity to enhance financial literacy and investment strategies through online platforms, digital financial tools, and educational courses on personal finance. By leveraging technology, Gen Z and Millennial heirs can gain a better understanding of wealth management and ensure their inheritances last.
From a macroeconomic perspective, the ongoing wealth transfer could drive significant economic growth – but only if it is managed effectively. True generational wealth is not just about passing down assets; it’s about passing down the knowledge and discipline needed to sustain them.
Time to review and optimise your trusts
Trusts are established for various reasons, each with a carefully crafted trust deed, designed to meet specific objectives of the parties involved.
By Stacy Rouchos, BCom, LLB Managing Director at Bannister Trust and Estate Planning Consultant at Hobbs Sinclair
Notwithstanding the diligent efforts of founders and trustees, estate plans can inadvertently result in complications, thereby disadvantaging beneficiaries. Even the most well-structured trust can become outdated due to changes in legislation, the evolving needs of family members, or due to unforeseen circumstances. As a result, it is imperative to ensure your clients conduct periodic reviews of trust deeds to ensure they continue to serve their intended purpose efficiently and remain a tax-effective component of an estate plan.
South African trust law mandates that a trust must be governed by its trust deed, provided it complies with the Trust Property Control Act and other applicable legislation. But what happens when provisions in a deed are no longer relevant, or are in conflict with new regulations? If a trust deed was drafted by a qualified legal professional or an expert in trust administration, it will contain provisions allowing for amendments to accommodate future changes. However, some deeds, when originally drafted, impose strict limitations, such as restricting the addition of new beneficiaries or setting specific criteria for appointing trustees. Typically, trustees and beneficiaries have the authority to make specific modifications under clearly defined circumstances, thereby allowing them to:
• Extend the trust’s duration
• Rectify errors or ambiguities
• Replace trustees or redefine conditions for the distribution of trust income or capital.
Consolidating and streamlining trusts
A well-structured trust should facilitate seamless asset management, safeguard wealth, and minimise administrative burdens. Consolidating family trusts is a strategic move that can:
• Enhance investment oversight
• Reduce administrative costs
• Minimise legal complexities
• Prevent the fragmentation of wealth across multiple accounts or structures.
By consolidating assets within a trust, families or other entities can more effectively preserve wealth, ensuring that all assets are properly accounted for and aligned with long-term succession plans.
The growing compliance burden
With regulatory requirements for trusts becoming increasingly stringent, the annual costs of proper administration can sometimes outweigh the benefits. Recently, South African authorities have implemented more rigorous oversight on trust governance, requiring even greater transparency and accountability from trustees. New compliance measures, including detailed record-keeping, mandatory disclosures, and stringent tax regulations, place a significant responsibility on trustees to ensure full compliance. Many older trusts find themselves burdened by ongoing compliance obligations, including tax filings and Financial Intelligence Centre Act (FICA) submissions. In such cases, restructuring or dissolving a trust may be the most prudent course of action, preventing unnecessary penalties for non-compliance with the South African Revenue Service (SARS).
It is also crucial to recognise that all trusts are legally considered taxpayers, and trustees must file an annual income tax return, even for inactive trusts. Under the Trust Property Control Act, trustees are required to manage trust affairs with due care, diligence and skill. Even when responsibilities are delegated to legal or tax professionals, the trustees are the ones who remain ultimately accountable. They can be held personally liable for any tax non-compliance, underscoring the importance of regular oversight and compliance reviews. Trustees and beneficiaries should take a proactive approach by reviewing their trust structures to ensure:
• Full compliance with tax and regulatory requirements
• Alignment with the latest legislative changes
• Optimisation for financial efficiency and estate planning goals.
A professional trust adviser can offer customised guidance, ensuring that a trust remains current, valuable and compliant as an integral part of a broader wealth strategy.
Redefining the landscape through mutuality and digital innovation
By Michele Jennings Chief Executive, glu
The financial world is changing, and it’s about time. Gone are the days when financial services were time consuming and complex. glu, a new financial services provider, is redefining what it means to simplify financial services through a mutuality-led value proposition. At the heart of glu lies a commitment to extend the benefits of Mutuality to more people. For Financial Advisers, that means bringing holistic solutions through digital-first systems that fast-track the often slow and cumbersome onboarding process. glu aims to deliver on the ambition of shared success while ensuring that the member experience is seamless and even enjoyable.
Empowering advisers
glu aims to empower Financial Advisers to be key stakeholders in enabling better financial outcomes for members. glu focuses on both adviser ambitions and member wellbeing
to ensure an ecosystem that is conducive for mutual and shared success. Building longlasting relationships is an essential part of fostering a sustainable and thriving business, which is why glu positions itself as the Financial Bestie for both advisers and members – a reliable and trusted companion that takes the anxiety away from financial planning.
Mutuality ensures value for all
As a division of PPS, Mutuality for members also emphasises empowerment and transparency, as well as the promise of collective prosperity. Unlike traditional models, Profit-Share provides members with a true sense of ownership and reward. The focus therefore shifts from just selling products to delivering real value.
Our digital-first approach ensures that advisers spend less time on administrative tasks and can rather focus their attention on building relationships that stick by leveraging the true essence of Financial Togetherness™. Enhanced functionality such
What insurance should businesses be prioritising in 2025?
By Sean Hanlon Executive Director at BrightRock
As South Africa navigates 2025, businesses are confronting a marked by a projected budget deficit increase to 4.55% of GDP for the fiscal year starting in April. This is up from the previous 4.30% forecast. This widening deficit is attributed to rising debt-service payments, social spending programmes, and ongoing support for stateowned enterprises. Such fiscal pressures underscore the importance of comprehensive insurance solutions that can help businesses mitigate financial risks.
Tailored insurance solutions as a response to emerging risks
In response to these challenges, the South African insurance industry is evolving to offer more flexible and tailored solutions. The 2024/25 Deloitte Africa Insurance Outlook highlights a transformative period influenced by changing economic landscapes, rapid technological advancements, and regulatory reforms. New-generation life insurers are focusing on creating tailored products to better address specific business needs. These include contingent liability insurance for major debts, buy-andsell agreements for seamless ownership transitions, and key person insurance to protect against the loss of essential personnel. Customised life insurance offerings are designed to provide businesses with financial
protection against the impact of unforeseen risk events, like the sudden exit of a business partner because of a serious illness or injury.
Financial advisers play an important role
By working with a skilled financial adviser to proactively adopt insurance strategies as part of their risk management plans, South African businesses can better position themselves to ensure long-term sustainability.
Below are three critical components that businesses should consider when consulting with their financial adviser regarding their insurance needs:
1. Long-term and short-term insurance for businesses
Business owners need both short-term and long-term insurance. Short-term insurance covers immediate risks such as property damage or operational disruptions. Long-term insurance plays a crucial role in ensuring business continuity. It does this by securing the financial future of a company in the event of unforeseen circumstances. Products such as buy-andsell agreements, key person insurance, and contingent liability cover are designed to protect businesses from the financial strain caused by ownership changes, outstanding debts, or the loss of essential personnel due to disability, death or severe illness and injury.
For example, contingent liability insurance is crucial for businesses where shareholders or directors sign surety or provide personal security for business loans. If a key shareholder or director becomes permanently disabled or passes away, this insurance ensures the business can
as straight-through processing for a standard life, seamless claims processing, and policy management on the intuitive and easy-touse adviser portal are some of the ways in which glu’s digital ecosystem is empowering advisers to thrive while ensuring a quick and easy onboarding process for members.
Financial services are no longer just about transactions; the focus should be on building authentic connections, pursuing excellence, and constantly thriving to innovate in order to offer enhanced experiences.
pay off the outstanding debts, preventing financial strain. Similarly, buy-and-sell agreements, backed by life insurance policies, help remaining co-owners purchase the shares of a deceased or incapacitated partner. This ensures the business’s continuity and fair compensation for the deceased owner’s estate, while also settling any outstanding credit loan accounts.
Another essential long-term insurance solution is keyperson insurance, which protects businesses from financial losses resulting from the death or permanent incapacity of a critical team member. By compensating the business for potential revenue loss or operational disruptions, keyperson insurance supports stability and long-term resilience.
2. Affordable and flexible insurance solutions for sustainable growth
Traditional one-size-fits-all insurance policies are no longer sufficient in addressing the unique risks faced by modern enterprises. BrightRock stands out in the insurance space by offering tailored solutions that align with a business’s specific needs. Whether it’s structuring flexible payment options or ensuring cover adapts as the business grows, customised insurance is key to building financial resilience.
3. Adapting to an evolving risk environment
The insurance landscape is shifting to meet the demands of businesses navigating an increasingly uncertain world. The latest reports indicate a growing need for adaptive risk management solutions, integrating technology, and more responsive cover models. As regulatory requirements evolve and businesses face new challenges, insurance providers must continue to innovate and understand the importance of comprehensive insurance, ensuring that businesses remain protected against both current and future risks.
Global commercial insurance rates fall 2%
According to the Global Insurance Market Index released by Marsh, a leading insurance broker and risk adviser and a business of Marsh McLennan (NYSE: MMC), global commercial insurance rates fell 2% in the fourth quarter of 2024 following a 1% decline in Q3 2024 –marking the second consecutive quarterly decrease following seven years of rising rates.
The result continues the moderating rate trend first seen in the Index in Q1 2021, which is being driven by intensified competition in commercial property insurance, a moderation of casualty rate increases, stabilising pricing in financial lines, and accelerated rate reductions for cyber risks.
By region, Pacific (-8%), UK (-5%), Asia (-3%), Europe (-2%), and Canada (-2%) all experienced year-over-year composite rate decreases in Q4, while Latin America and the Caribbean (LAC) and India, Middle East, and Africa (IMEA) experienced increases of 1%. Rates in the US were flat, following a 3% increase in Q3 2024.
Other findings included:
Property rates declined 3% globally, following a 2% decline in Q3 2024.
The Pacific region experienced the largest decrease, at 8%; the US and UK declined 4%; while Canada, LAC, and Asia recorded low single-digit decreases. Property rates were flat in Europe, and IMEA experienced a 3% increase in Q4. The global property market remains sensitive to loss events, particularly the ongoing Los Angeles wildfires, which will likely impact aggregate catastrophe losses in 2025.
• Casualty rates increased 4% globally, following a 6% rise in the previous quarter. US casualty rates continued to increase more than in other regions (7%). LAC recorded a 5% increase while the other regions ranged from 2% declines to 1% increases.
Financial and professional lines rates decreased by 6% globally – the tenth consecutive quarter of declines – with rate decreases recorded in every region as a result of robust competition and available capacity.
• Cyber insurance rates decreased 7% globally – following a 6% decline in the previous quarter – with decreases in every region driven by strong competition among both incumbent and new insurers, as well as continued improvements in cybersecurity at many companies.
By Regan Duarte Claims Specialist at SHA Risk Specialists
Commenting on the report, John Donnelly, Global Head of Placement, Marsh, says: “The softening of rates across property, financial lines and cyber are a positive development for clients, while the challenges in other areas of the market, particularly in US casualty, are acute. We are committed to helping clients manage costs, protect their balance sheets, and successfully navigate the evolving market conditions.”
Omar Gemei, Global Head of Placement, Marsh, India, Middle East and Africa, says: “The insurance landscape in Africa remains stable, with modest rate changes across various sectors, while South Africa is actively addressing historical pricing issues. In South Africa, property insurance rates have seen minor increases, and efforts to reprice underpriced coverage in the financial and professional lines sector are gaining momentum. This reflects a cautious yet proactive approach by insurers to adapt to evolving market conditions and ensure sustainable growth.”
Key insurance rate trends Africa and South Africa Q4 2024 Africa
• The insurance market in Africa remained relatively stable, with various sectors showing modest changes in rates
Insurers in Africa are adjusting their strategies to maintain stability amid evolving market conditions.
South Africa
• In South Africa, property insurance rates saw minor increases of up to 5%
The financial and professional lines sector is undergoing efforts to reprice historically underpriced coverage, with D&O liability insurance rates increasing by 10% to 15%
The professional indemnity market in South Africa experienced decreases of 5% to 10%, reflecting a cautious approach from insurers in response to market dynamics
Overall, both Africa and South Africa are navigating a complex insurance landscape, characterised by regional variances in rate changes and strategic adjustments by insurers to address market challenges.
Insuring infrastructure for climate change
Climate change has been debated since the 70s, but evidence has become increasingly apparent over the last two decades. South Africa is not exempt from this phenomenon, and the country continues to experience significant changes in its weather patterns. In 2022, days of heavy rainfall in KwaZulu-Natal (KZN) led to the deadliest storm in the country since the 1987 floods, accounting for more than R17bn in damages to critical infrastructure.
South African businesses must consider whether they are sufficiently protected against the far-reaching consequences of climate change. Professionals and building owners need to plan for a worst-case scenario and not the predicted rain patterns from 30 years ago. The flood modelling should be updated for what transpired in KZN.
Poor maintenance and outdated planning
The heavy rainfall and catastrophic flooding in the last few years that led to the collapse of infrastructure – most
noticeably in KZN and the Eastern Cape – highlights the vulnerability of these structures. Poor maintenance like clogged stormwater systems also played a key role in the failure to abate excessive flooding. Other provinces, such as the Western Cape and Gauteng, suffered similar albeit less severe flood damage, with the Western Cape racking up over R1.8bn just in damages to roads.
Operational and supply chain disruption, damaged infrastructure, and loss of income are some of the significant challenges businesses face due to intensified weather events. It’s imperative that the private sector adapts to these changes.
SHA claims statistics from 2022 indicate most floodrelated claims were from the KZN region (65%), followed by 35% from Gauteng and the balance between the Eastern Cape and Western Cape – revealing that certain regions are more susceptible to flooding and therefore require suitable urban planning and infrastructure to mitigate flood risks.
Incorporating the prospect of unusually heavy rainfall and flooding that a region may experience into the planning and risk management – which includes taking out the proper insurance cover – is crucial for industries to mitigate the impact of such events.
Claims reveal vulnerabilities in cover
Looking at the construction industry in particular, the reasons for claims vary from defective designs, ineffective planning and preparation, to commercial property claims against the landlord or managing agent for lack of maintenance. Insurers cannot be held liable for wilful negligence, which is why most policies require that certain measures are in place to mitigate these risks.
SHA’s data reveals several claims against the professional teams appointed on construction projects wherein there are allegations of insufficient application of waterproofing to the roof and inadequate drainage systems, which lead to damage to property of the tenants and other parties.
The worst situation for any business already dealing with its own losses, is to face litigation for third-party damages or injuries.
Acclimatising to a new risk environment
Given recent extreme weather events both locally and globally, it’s hard to deny the need for business and property owners to take precautionary measures that will safeguard their buildings or construction plans against severe weather.
Brokers can provide expert advice specifically suited to business needs, identify any coverage gaps and recommend the appropriate insurance policies within the context of the current risk climate.
By Damian McHugh Chief Marketing Officer, Momentum Health
SUnpacking the state of our nation’s health
outh Africa is at a critical juncture in its healthcare landscape. The burden of disease –primarily driven by non-communicable diseases (NCDs) such as diabetes, hypertension, and mental health disorders – has escalated alarmingly. Over the past two years, NCDs have increased from 51% in 2022 to 55% in 2024, with diabetes rising by 12% and hypertension increasing from 8% to 10%. Not only straining our healthcare system but also substantially hampering economic productivity and growth.
Current state of our nation’s health
It’s estimated that poor-health-related absenteeism costs the South African economy up to R19.1bn annually. Beyond these direct financial implications, this hidden drain stifles business growth, reduces workforce efficiency, and hinders overall economic progress. Lifestyle-related diseases contribute significantly to rising healthcare costs – with an estimated R270bn in healthcare claims projected to be linked to preventable conditions in 2023.
However, we have an opportunity to reverse this trend by embracing preventative care and incentivised wellness – two powerful levers that can help shift our healthcare paradigm from sick care to proactive disease prevention.
Why prevention is the key to a healthier, wealthier nation
I’ve always believed in the notion that your health is your wealth. Preventative healthcare is no doubt one of the most effective ways to reduce the burden and cost of disease. Simple lifestyle changes, such as regular exercise, balanced nutrition, deeper connections with loved ones, routine screenings to know one’s numbers, and effective stress management, have all been proven to dramatically lower the risk of chronic conditions. Yet, despite these clear benefits, many South Africans struggle to prioritise their health due to financial constraints, limited access to wellness education, and the ever-evolving demands of daily life.
This is where the private healthcare sector, in collaboration with policymakers and employers, can
make a significant impact. By incentivising wellness behaviours, we can empower citizens to take control of their health while alleviating the financial burden on our healthcare system.
The power of incentivised wellness
At Momentum Health, we have witnessed firsthand the positive outcomes driven by wellness rewards programmes. By rewarding members for engaging in preventative health activities – such as completing health screenings, maintaining an active lifestyle, or adopting healthier eating habits – we foster sustainable behaviour change through our wellness rewards programme, Momentum Multiply.
When effectively designed, these programmes offer tangible benefits, such as lower healthcare costs through a rewards system, and encourage healthier lives that rely less on medical intervention in the first place. There is sound evidence that a healthier population results in fewer medical claims and lower insurance premiums, benefiting both individuals and employers.
solutions that track and reward healthy habits and behaviour. Where employers adopt and implement workplace wellness programs that encourage employees to prioritise their health through corporate wellness incentives and adequate mental health support.
Where we, the private sector, work alongside government and policymakers to strengthen the current system, build capacity for future skills and implement national awareness campaigns to showcase the importance of preventative care.
“It’s estimated that poorhealth-related absenteeism costs the South African economy up to R19.1bn annually.”
As it stands, in 2024 the Gauteng Department of Health (GDoH) set aside R38.1m in the 2024/25 financial year and R119.7m over the MTEF allocated for health and wellness campaigns, as well as physical activity programmes in prioritised areas such as townships, informal settlement and hostels.
More recently, the GDoH announced a budget of R474.6m in 2024/25 and R1.4bn over the MTEF allocated for strengthening mental healthcare services. But even more importantly, we need South Africans to take proactive steps to manage their health by making better choices in their lives.
It can also be linked to increased productivity, as healthy bodies host healthy minds. We have seen that employees who proactively manage their health take fewer sick days, leading to enhanced workplace performance and reduced absenteeism. As a result, these factors contribute immensely to stronger economic growth, as a healthier workforce contributes to improved business efficiency and a more resilient economy. However, to fully realise the potential of preventative care and incentivised wellness, we cannot do it alone. It’s pivotal that we adopt a multistakeholder approach.
Stronger and healthier together
A collaborative approach where healthcare insurers and providers expand access to preventative screenings, personalised health coaching, and digital health
A shared responsibility for a healthier future
The numbers are clear. If we don’t act now, the cost of preventable diseases will only continue to rise –jeopardising both the sustainability of our healthcare system and economic stability. By harnessing the power of preventative care and incentivised wellness, we can significantly reduce the burden of disease, improve quality of life, and foster a healthier, more productive South Africa.
We remain committed to leading this change by innovating healthcare solutions that empower South Africans to take charge of their health and provide more healthcare to more South Africans for less when they need it. Together, through collective action and a preventative mindset, we can and must build a healthier nation – one choice at a time.
Since 1989, we’ve remained focused on adding value for our clients over the long term. We do this by selecting shares that trade at lower prices than their true worth. This often means forgoing short-term gains and keeping our focus firmly fixed on tomorrow. Because we believe that thinking long term is the best way to invest on behalf of our clients.
Don’t just invest offshore. Invest differently offshore with Allan Gray and Orbis.
To find out more about our Orbis Global Equity Fund and Orbis SICAV Global Balanced Fund, visit www.allangray.co.za or call Allan Gray on 0860 000 654, or speak to your financial adviser.
