Glacier Quarterly 1 - 2018

INVESTMENT INSIGHTS
Ask the right questions
Cornel suggests a checklist of five key
questions to consider when choosing a
guaranteed or fixed-return investment
product:
1. What level of guarantee is offered
within the investment? Does it
provide full capital protection after
all fees, or does it only offer a certain
level of protection?
2. Are the investment returns calculated
in rand or another currency? You’d be
surprised by the difference this makes
in your pocket. If it isn’t calculated
in rand, you could be exposed to
currency exchange movements.
3. Does the guarantee stay level
throughout the term of the product
or will it increase over time? The
guarantee offered on our Sanlam
Escalating funds increases over time
if there’s any growth within the fund.
4. How accessible is your money before
the investment’s maturity date? What
are the chances you will need the
funds before the product’s term has
expired? Most guaranteed investment
products are five-year products.
While we acknowledge that life
happens, it’s best to stay invested
for the full period to realise the full
benefits of the product.
5. Who is providing the guarantee?
Young financial services and product
providers often offer high guarantees
in an attempt to attract and grow
their client base. What is your level
of comfort with a young company?
How does it compare to one that’s
established with a track record of, say,
50 years or more? Where guarantees
are concerned, established brands
count.
Guarantees come with risks
The Glacier Research team concurs with
Cornel. In a global context of low returns,
high volatility and uncertainty, guarantees
have become critical and attractive, they
say. But they caution against the inherent
risks in guaranteed funds, summing them
up as follows:
• Single counterparty risk – the risk
of the underlying entity for the
guarantee becoming insolvent. This
may be a low-probability event but
the risk does exist.
• Opportunities lost – while an investor
is guaranteed to earn a fixed return
over the predetermined period,
they’re also guaranteed not to earn
anything above the predetermined
amount. This removes the
opportunity to participate in markets
where there are substantial returns, as
experienced in the past.
• No access to your money – they
agree that ‘locking funds’ is a good
thing for a long-term savings plan but
intermediaries and their clients need
to make provision for emergency
funds to reduce this risk.
It all comes back to the plan
The most critical question is always: as
an ordinary consumer, are you qualified
to make an informed decision about
any investments? A reputable financial
adviser is qualified, has experience and
has exposure to the product offerings of
numerous financial services companies.
Such an adviser is best placed to help
you make the best choices as part of
your carefully constructed, diversified
financial plan.
Glacier offers you a suite of
guaranteed solutions to choose from:
1. Glacier Capital Enhancer offers
full capital protection, enhanced
returns, uncapped upside and taxefficiency.
If you’re nervous about
entering the market, you can get
exposure to the growth potential
of equities – without the volatility.
2. Sanlam Fixed Return Policy
reduces the anxiety you may
have about portfolio fluctuations
over time and the potential of
not meeting your investment
objective due to market volatility.
3. Sanlam Fixed Investment Product
offers capital protection in the
form of a fixed return, combined
with a regular income throughout
the investment term.
4. Sanlam Escalating funds –
although not a product, but rather
a fund selection within a wide
product range at Glacier, these
funds provide exposure to the
market, with built-in protection
and guaranteed minimum returns.
Cornel Basson
Product Manager
at Glacier by Sanlam