How a long-term strat­egy pays off

The PSG Wealth Reg­u­la­tion 28 Eq­uity Port­fo­lio is specif­i­cally de­signed for in­vestors in pre-re­tire­ment prod­ucts. As such, it is suited to in­vestors with a longer-term in­vest­ment hori­zon, want­ing to achieve high, long-term cap­i­tal growth.

Finweek English Edition - - Fundfocus - Adriaan Pask By Adriaan Pask

sav­ing for re­tire­ment is one of the big­gest chal­lenges clients are likely to face. But the un­for­tu­nate re­al­ity is that most clients are sim­ply sav­ing too lit­tle. Ac­cord­ing to National Trea­sury fig­ures, only 6% of South Africans can af­ford to re­tire com­fort­ably – a fig­ure that has re­mained stag­nant for the past 25 years. While sav­ing more is non-ne­go­tiable, in­vest­ing in ap­pro­pri­ate so­lu­tions is fun­da­men­tal to help­ing clients achieve their goals.

To out­pace in­fla­tion, you need growth as­sets

Out­per­form­ing in­fla­tion over time is key to build­ing long-term wealth. Clients there­fore need to max­imise their ex­po­sure to growth as­sets, which have the best chance of do­ing so, if they want to meet their long-term goals and ob­jec­tives. In­vestors want­ing to grow their cap­i­tal in re­tire­ment in­vest­ments, like re­tire­ment an­nu­ities and preser­va­tion funds, also need to con­sider the re­quire­ments of Reg­u­la­tion 28 of the Pen­sion Funds Act, which lim­its the max­i­mum al­lo­ca­tions to cer­tain riskier as­set classes.

The PSG Wealth Reg­u­la­tion 28 Eq­uity Port­fo­lio is a multi-man­ager so­lu­tion de­signed to help in­vestors meet their long-term in­vest­ment ob­jec­tives of grow­ing their cap­i­tal as much as pos­si­ble, by en­sur­ing they have the max­i­mum ex­po­sure to growth as­sets while still ad­her­ing to pen­sion fund reg­u­la­tions.

The PSG Wealth Reg­u­la­tion 28 Eq­uity Port­fo­lio is specif­i­cally de­signed for in­vestors in pre-re­tire­ment prod­ucts. The port­fo­lio’s ob­jec­tive is to de­liver long-term eq­uity-like re­turns while re­main­ing within the re­quire­ments of Reg­u­la­tion 28.

It aims to out­per­form the ASISA SA Multi-As­set High Eq­uity sec­tor av­er­age, which can be con­sid­ered a proxy for as­sertive, long-term unit trust in­vest­ing within the guide­lines of Reg­u­la­tion 28. It aims to achieve this ob­jec­tive by main­tain­ing an ap­pro­pri­ate bal­ance be­tween growth as­sets (eq­uity, prop­erty and off­shore as­sets) and fixed-in­ter­est in­stru­ments and cash, while re­main­ing within the lim­its of Reg­u­la­tion 28.

As such, it is suited to in­vestors with a longer-term in­vest­ment hori­zon, want­ing to achieve high, long-term cap­i­tal growth.

PSG aims to pro­vide con­sis­tent above-av­er­age re­turns while man­ag­ing down­side risk, and do­ing so cost-ef­fec­tively. Fur­ther­more, PSG Wealth’s multi-man­ager in­vest­ment so­lu­tions are de­signed to sup­port PSG’s ad­vice phi­los­o­phy. This holis­tic ap­proach ul­ti­mately aims to help achieve bet­ter over­all out­comes, so that clients are more likely to meet their in­vest­ment ob­jec­tives in the long run by con­sid­er­ing the big­ger pic­ture.

A fo­cus on con­sis­tent re­turns pays off

Achiev­ing the long-term ob­jec­tive of the port­fo­lio re­mains the pri­mary fo­cus, but

PSG con­sid­ers tac­ti­cal shifts in light of macro-con­sid­er­a­tions where this is ap­pro­pri­ate by con­sid­er­ing the rel­a­tive at­trac­tive­ness of var­i­ous as­set classes. In ad­di­tion, man­ag­ing down­side risks rel­a­tive to the typ­i­cal funds in the sec­tor on an on­go­ing ba­sis is in­te­gral to the PSG in­vest­ment phi­los­o­phy.

Over time, this ap­proach has trans­lated into peer-beat­ing re­turns for in­vestors in the PSG Wealth Reg­u­la­tion 28 Eq­uity Port­fo­lio.

Com­pared to the per­for­mance of funds in the ASISA Multi-As­set High Eq­uity sec­tor, the PSG Wealth Reg­u­la­tion 28 Eq­uity Port­fo­lio has de­liv­ered per­for­mance that would have ranked in the top quar­tile of the sec­tor over most pe­ri­ods un­der re­view. It has also con­sis­tently out­per­formed the sec­tor av­er­age.

Man­age down­side, se­cure po­ten­tial for up­side

Man­ag­ing down­side risk is im­por­tant for all in­vestors, but even more so as in­vestors ap­proach re­tire­ment. This is be­cause these in­vestors have less time avail­able to re­cover from cap­i­tal losses be­fore they start draw­ing an in­come in re­tire­ment. Any ero­sion in their cap­i­tal base would im­pact on the level of in­come they could hope to en­joy in re­tire­ment. Con­tain­ing down­side risks there­fore has the po­ten­tial to work in in­vestors’ favour and se­cure bet­ter long-term out­comes. This could also ul­ti­mately im­pact pos­i­tively on the longevity of the in­vestor’s cap­i­tal.

The graph above shows how the PSG Wealth Reg­u­la­tion 28 Eq­uity Port­fo­lio has cap­tured more of the up­side while con­tain­ing down­side risk, de­liv­er­ing a smoother in­vest­ment ex­pe­ri­ence. It also shows that the port­fo­lio achieved its aim of de­liv­er­ing aboveav­er­age re­turns at be­low-av­er­age lev­els of risk.

When it comes to meet­ing the re­tire­ment chal­lenge, the first step should be to cul­ti­vate the cor­rect sav­ings be­hav­iour and dis­ci­pline.

A suit­able in­vest­ment ve­hi­cle is your next step

When it comes to meet­ing the re­tire­ment chal­lenge, the first step should be to cul­ti­vate the cor­rect sav­ings be­hav­iour and dis­ci­pline. Sav­ing in an ef­fi­cient and suit­able in­vest­ment ve­hi­cle is the next es­sen­tial step. A proven so­lu­tion that is specif­i­cally op­ti­mised for in­vestors in re­tire­ment prod­ucts, like the PSG Wealth Reg­u­la­tion 28 Eq­uity Port­fo­lio, can help in­vestors achieve their goals and ob­jec­tives. ■

is chief in­vest­ment of­fi­cer at PSG Wealth.

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