ADVERTORIAL Invest
ADVERTORIAL Invest globally, locally Satrix offers a wealth of offshore investment options South African investors are becoming increasingly comfortable investing all or a portion of their portfolios offshore. As the globe becomes more of a village and everyone and everything interconnects, it makes no sense to only expose your wealth to what we have to offer locally. Helena Conradie, CEO, Satrix With this awakening has come the concomitant explosion in choice as most South African asset managers have a global offering, and global asset managers increasingly offer their products in South Africa. Satrix is South Africa’s indexing pioneer. This year is our 20th year of indexing in South Africa. We have in excess of R100-billion AUM. And we are no stranger to offshore investing. You’ve heard it told that active managers struggle to outperform market indices and this is nowhere truer than internationally. Choosing an index-tracking international ETF or unit trust just simplifies this decision and at a very low cost. They are also great options to use to build a portfolio of randdenominated funds to complement your Reg 28 portfolio or just as stand-alone exposure in a well-diversified option. Currently Satrix has four rand-denominated global ETFs and one unit trust covering the MSCI World Equity index, the S&P 500, the Nasdaq 100 and the MSCI Emerging Markets Index. The MSCI World Equity Index is tracked in both a Satrix feeder fund unit trust, ETF and a true offshore UCITS fund domiciled in Ireland. This index covers 23 developed markets and more than 1 600 stocks. It focuses on large and mid-cap companies and covers 85% of the free float-adjusted market capitalisation in each country – in a single trade and at low cost. This has to be a consideration. The other indices cover universes as their names imply viz S&P 500 and Nasdaq 100. The Satrix Emerging Markets ETF tracks the MSCI Emerging Markets Index in ZAR. This index covers five regions, 26 countries and more than 1 100 companies. If you believe global growth will be driven by emerging economies in years to come, this is a must have allocation in your portfolio. All the ETFs are feeder funds which trade on the JSE. What’s more, all these products including the ETFs are available on Glacier’s LISP platform. This is a first for Glacier and already we have seen a growing interest in using the ETFs as part of a portfolio. They are also a great option to think about for tax-free savings accounts which by their very nature tend to be long term. By keeping the asset management fee low, the compounding of performance over time is magnified. And remember the Satrix World Equity Index Feeder Unit Trust Fund is also available through Sanlam Collective Investments as a tax-free option. You can invest lump sums or set up a recurring debit order here. Whatever your offshore need or point of access, there is a Satrix offshore option available for your clients. 26 www.bluechipdigital.co.za
DFMs Diligent evaluation How to get the most out of your relationship with your DFM Discretionary fund managers (DFMs) have been gaining traction among tied and independent financial advisers, accounting for about 20% of the total assets under management in the SA retail market. The rise in DFM solutions can be ascribed to the DFM’s role in negotiating better fees for underlying investments. Any credible DFM will be fully transparent in terms of fees and the reasons for its preference around underlying funds or strategies. The availability of solutions across multiple platforms is also often quoted as a prerequisite for appointing a particular DFM. However, not all DFMs offer the full range of capabilities, and advisers should consider their services. The adviser should conduct a thorough due diligence on any potential DFM to evaluate whether it possesses the necessary capabilities to assist the adviser in meeting the varying needs of its clients. At the very least, the due diligence should evaluate the DFM’s investment skill, level of independence, investment manager research capability, appropriateness of its quantitative tools, portfolio construction process, as well as the level and frequency of portfolio attribution and reporting. Each client’s needs differ and advisers should consider available solutions to suit these needs. Momentum Investment Consulting (MIC) now manages more than R7-billion in assets locally, while our offshore team in the UK manages a further US.5-billion. Our clients range from category I advisers to category II licensed advisers and we offer the full range of services. We believe the relationship between a DFM and an adviser needs to be reflective of a partnership, where advisers determine what investment needs they have and MIC will solve for this, executing either through model portfolios or fund of funds. We follow an outcome-based (or goalbased) investing philosophy, allowing us to construct portfolios that cater for specific outcomes over the relevant time frame. We evaluate different strategies within each asset class and our portfolios can include passive, smart-beta and active strategies (or combinations of these). This flexibility allows us to bridge the gap between investments and advice, allowing advisers to select the most suitable portfolio for each client’s needs. We believe the relationship between a DFM and an adviser needs to be reflective of a partnership As asset gatherers, we are often able to access investment mandates not usually available to retail investors and we can sometimes also get access to preferential pricing from the underlying investment managers. These benefits are passed directly on to investors, resulting in better investment outcomes. Investors should evaluate the DFM in the same way they do any investment manager. If your DFM isn’t able to give you consistent investment returns over the relevant time frame (after deducting all investment fees), you should be shopping around for an alternative. Arguably, the most important decision advisers face in the selection of a DFM is its compliance with legislation. Check whether they are compliant with all aspects of the Financial Advisory and Intermediary Services Act and the effect that following the Treating the Clients Fairly principles will have on their business. With the onset of the Retail Distribution Review (RDR) legislation, which is expected to be passed in the foreseeable future, it is also important to determine whether the selected DFM is RDR ready and, if not, what its plans are to ensure compliance. DFMs lessen the compliance burden for your advice practice, making your business more efficient. If you think you could benefit from a partnership with a DFM, make sure you enter into that relationship with the expectation that it will be with you for the long haul and that you plan for the unexpected and have the necessary contracts in place. For more information on Momentum Investment Consulting, email us at mic@momentum.co.za. Florbela Yates, Head of Momentum Investment Consulting at Momentum Investments www.bluechipdigital.co.za 27
