presentation to the agm...presentation to the agm 27 may 2016 duncan theron page 2 asset consulting...

Presentation to the AGM

27 May 2016

Duncan Theron

ASSET CONSULTING | FINANCIAL PLANNING | PRIVATE WEALTH

The Road Less Travelled

“Two roads diverged in a wood, and I,I took the one less travelled by,

And that has made all the difference.”~ Robert Frost


DB Fund Cumulative Performance – April 2015

Period DB Fund CPI + 4%

3 years 56.5% 31.4%

Period DC Fund CPI + 6%

3 years 57.1% 39.2%


Historical Real Returns


Expected Asset Class Returns

Lower your members’

expectations


Economy is in “Granny Gear”

Market Update


From “Granny Gear” to “Baby Gear”


Increased Volatility and Uncertainty...?


Local Market Performance – April 2016

INFLATION CASH BONDS PROPERTY SHARES

6 months 3.53% 3.34% 0.25% 4.84% -0.18%

1 year 6.28% 6.66% 1.75% 6.57% 0.21%

3 years 5.45% 6.04% 3.24% 12.40% 14.38%

5 years 5.65% 5.84% 7.71% 19.40% 13.45%

10 years 6.39% 7.31% 7.60% 16.67% 12.83%


Local Market Performance – April 2016


Local Sector Performance – April 2016

INFLATION FINANCIALS INDUSTRIALS RESOURCES

6 months 3.53% -3.01% -2.74% 2.21%

1 year 6.28% 1.32% 3.53% -21.66%

3 years 5.45% 18.29% 19.15% -5.17%

5 years 5.65% 20.86% 21.58% -7.32%

10 years 6.39% 16.69% 18.74% 1.57%


Local Sector Performance – April 2016


Net Monthly Flows


Offshore Market Performance (USD) – April 2016

INFLATION CASH BONDS PROPERTY SHARES

6 months 0.08% 0.20% 6.09% 4.78% -1.05%

1 year 0.85% 0.30% 4.84% 4.28% -4.17%

3 years 0.76% 0.21% 0.85% 3.46% 6.28%

5 years 1.28% 0.22% 1.46% 7.77% 5.96%

10 years 1.77% 1.29% 4.29% 4.91% 4.13%


Offshore Market Performance (USD) – April 2016


Offshore Market Performance (ZAR) – April 2016

CASH BONDS PROPERTY SHARES ZAR/USD

6 months 3.18% 9.24% 7.89% 1.89% 2.97%

1 year 20.85% 26.33% 25.66% 15.47% 20.49%

3 years 16.79% 17.53% 20.57% 23.86% 16.54%

5 years 16.99% 18.43% 25.80% 23.69% 16.73%

10 years 10.39% 13.66% 14.33% 13.48% 8.99%

Fund Performance


Life Stage Portfolios

Risk Profile Solution Time HorizonInvestment Objective

(net of fees)Risk Tolerance

AccumulationMore than 5 years before

retirementCPI + 6% 36-month rolling capital protection

ConsolidationLess than 5 years to


PreservationLess than 2 years to


Cash Plus Capital Protection STeFI + 1% 6-months capital protection


Performance Update to April 2016

12 Months Since July 2014

Accumulation 4.63% 7.14%

CPI + 6% 12.65% 11.59%

Consolidation 4.54% 9.35%

CPI + 4% 10.53% 9.48%

Preservation 5.25% 8.54%

CPI + 2% 8.40% 7.37%

Cash Plus 8.62% 7.67%

STeFI + 1% 7.75% 7.55%

Pensioners Strategy


Pensioner Investment Strategy

The main goal is to have sufficient assets to meet both current and future

liabilities.

• Existing commitments

(level pensions)

1

• Pension increase (i.e. at 60% of CPI)

2

• Discretionary Bonuses

3


Pensioners: Funding Level

Year in Review


Investment Philosophy

“…if you want better performance than the crowd, do things differently.”

“First mover” advantage.

Minimising “implementation shortfall”.

It’s about doing things right, always.

Continuously enhancing the way to do things.


Responsible Investment Approach

The responsibility to include ALL risk and return considerations

Market Risk

Liquidity Risk

Credit Risk

Equity Risk

Inflation Risk

Currency Risk

…

Environmental Risk

Social Risk

Governance Risk

These risks have been overlooked

in the past. Regulation 28 has now

explicitly added such to require a

more holistic risk assessment.


Volkswagen Scandal – we missed it!


Investment Cost Savings last 12 months

Direct reduction in investment fees.

Performance fees to flat fees.

Lower fees as a result of lower returns.

Lower investment manager fees of R15 million.

Investment Management fees now 0.40% (vs. 0.57%).


Tactical Asset Allocation

Tactical Asset Allocation

Periodic tilts away from baseline weights during economic swings

Short- to medium-term

Driven by valuations, cyclical analysis, timing and market sentiment


Hedge Funds in Down Months


Investing in Africa Listed Equity


Understanding the Stock Market

Summary


Fund in Perspective

Top performer and leader amongst its peers.

Diversified but focussed number of premium mandates.

Costs have been reduced materially.

Increased focus on “flexibility”.

Always enhancing the way to manage the assets.

Managed as per a “Responsible Investment” approach

presentation to the agm...presentation to the agm 27 may 2016 duncan theron page 2 asset consulting...

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