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.
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.