As­set man­agers muscling in on um­brella fund space

Weekend Argus (Saturday Edition) - - SPORT -

AL­THOUGH dom­i­nated by the big life com­pa­nies, smaller play­ers such as as­set man­agers are en­ter­ing the com­mer­cial um­brella fund space. Syg­nia launched its Syg­nia Um­brella Re­tire­ment Fund (SURF) in 2016 and Al­lan Gray launched its um­brella fund in May last year.

Saleem Son­day, the head of group sav­ings and in­vest­ments at Al­lan Gray, says, ac­cord­ing to re­search done by Credit Suisse in 2016, the South African re­tire­ment in­dus­try (ex­clud­ing the Gov­ern­ment Em­ploy­ees Pen­sion Fund) man­ages as­sets of about R1.8 tril­lion. Of this, about 49% is in non-com­mer­cial funds (which in­clude stand­alone em­ployer funds and trade union funds), 17% is in com­mer­cial um­brella funds, and about 34% is in in­di­vid­ual re­tire­ment an­nu­ity and preser­va­tion funds. Over the four years to 2016, the mar­ket share of com­mer­cial um­brella funds in­creased by 70%, at the ex­pense of stand­alone em­ployer funds.

Son­day says Al­lan Gray sees the shift con­tin­u­ing, but at a slower pace, and says it is mainly con­fined to funds that have as­sets of un­der R1 bil­lion. The larger stand­alone funds are mov­ing over at a much slower pace, he says.

He says the en­try of as­set man­agers into the in­dus­try is pro­vid­ing much-needed com­pe­ti­tion and in­no­va­tion. Al­lan Gray’s of­fer­ing, he says, is backed by a strong in­vest­ment team and su­pe­rior ad­min­is­tra­tion ca­pa­bil­ity. It has a sim­ple and trans­par­ent fee struc­ture and is able to com­pete on value for money and ser­vice.

SURF’s pack­age in­cludes group life cover, but Al­lan Gray’s does not – em­ploy­ers need to ar­range sep­a­rate life as­sur­ance for their em­ploy­ees, al­though Al­lan Gray can as­sist in this process. Son­day says sep­a­rat­ing the two means that mem­bers know heir con­tri­bu­tions are used for the in­tended pur­pose: sav­ing for re­tire­ment.

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