CityPress - - Business -

peak­ing at a 10X In­vest­ments re­tire­ment fund con­fer­ence in Johannesburg this week, Steven Nathan, the CEO of 10X In­vest­ments, said it was im­por­tant to dis­tin­guish be­tween sav­ing for re­tire­ment and in­vest­ing for re­tire­ment. Sav­ing is de­layed spend­ing, or de­fer­ring your salary.

“The re­spon­si­bil­ity for sav­ing usu­ally rests with the em­ployer who, for ex­am­ple, will tell you to save 15% of your salary. The em­ployee also needs to take re­spon­si­bil­ity for sav­ing money each month and the trustees of the re­tire­ment fund also share re­spon­si­bil­ity for sav­ing,” he said.

Nathan said in­vest­ing was a sep­a­rate ac­tiv­ity, which in­volved grow­ing your sav­ings to be as large a pot as pos­si­ble un­til you need to spend the money in re­tire­ment.

“In­vest­ing is the re­spon­si­bil­ity of the as­set man­age­ment in­dus­try,” he said.

In a bid to en­cour­age more South Africans to not only save for re­tire­ment but re­main in­vested un­til they re­tire, Trea­sury is slowly in­tro­duc­ing re­tire­ment re­forms.

Olano Makhubela, chief di­rec­tor of fi­nan­cial in­vest­ments and sav­ings at Trea­sury, told the con­fer­ence the latest set of draft reg­u­la­tions re­leased last month were in­tended to en­cour­age house­hold sav­ings and re­duce poverty in re­tire­ment.

The draft reg­u­la­tions in­clude mea­sures to reg­u­late re­tire­ment funds so that they of­fer mem­bers bet­ter de­fault op­tions.

“Peo­ple tend to stay in the de­fault op­tion, so the idea is to pro­vide them with a de­fault op­tion that will give them the best out­come in re­tire­ment,” he said.

Gidon Novick, head of global dig­i­tal strat­egy at Dis­cov­ery Hold­ings, agreed with this opin­ion.

“In Den­mark, 4% of the pop­u­la­tion are reg­is­tered or­gan donors, while in Swe­den, the num­ber of reg­is­tered or­gan donors is 85%. They are both sim­i­lar coun­tries with sim­i­lar economies and pop­u­la­tions. The only dif­fer­ence is that in Swe­den, you are an or­gan donor by de­fault, while in Den­mark you have to make a con­scious choice and fol­low through on your de­ci­sion,” he said.

Fees and dis­clo­sure

South African unit trust fund fees rank among the high­est in the world, par­tic­u­larly if you in­vest via a bro­ker and not di­rectly with an as­set man­ager. This was one of the key find­ings of the re­cent Morn­ingstar Global Fund In­vestor Ex­pe­ri­ence 2015 study, con­ducted in 25 dif­fer­ent coun­tries.

At the 10X con­fer­ence, An­thony Ser­han, the MD of re­search strat­egy for Morn­ingstar’s Asia-Pa­cific re­gion, said South Africa was lag­ging global mar­kets when it came to fees and dis­clo­sure. Funds are ex­pected to pro­vide you with sim­pli­fied prospect uses with ba­sic in­for­ma­tion in each doc­u­ment. The doc­u­ment should be fo­cused on the spe­cific fund you are in­ter­ested in in­vest­ing in and should use clear, sim­ple lan­guage to de­scribe the fund and the risks you face as an in­vestor in the fund.

When it comes to fees, Ser­han said it was un­for­tu­nate that many unit trust funds, both here and glob­ally, tend to talk in per­cent­ages rather than in mon­e­tary fig­ures.

“The in­dus­try might un­der­stand the sig­nif­i­cance of the per­cent­age fig­ure, but a lay per­son does not. What the con­sumer needs to know is how much money or rands they are pay­ing,” he said.

Only nine of the 25 mar­kets in the Morn­ingstar sur­vey re­quired funds to pro­vide fee dis­clo­sures to clients in mon­e­tary terms.

Ser­han said it was en­cour­ag­ing to note that South African funds dis­close the name of the fund man­ager. How­ever, he said this in­for­ma­tion should in­clude how long that fund man­ager had been man­ag­ing the fund, whether or not they were per­son­ally in­vest­ing in the fund and how they were be­ing paid for the man­age­ment of the fund.

“Typ­i­cally, we have found that man­agers who in­vest in their own funds are more likely to out­per­form the stock mar­ket than those man­agers who do not per­son­ally in­vest in the funds they man­age,” he said.

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