In January, we discussed our investment process, but does all this work result in higher returns? Do the equity funds we use perform better than the market? Will your money being invested in our preferred balanced funds in your Retirement Annuities and Preservation funds translate to more income in retirement? After another year of record volatility and uncertainty, here is how your investments have done, compared to the Jones’s.

 

The easiest to compare is our preferred equity funds against the market. The best market comparison is against the JSE CAPI as this index limits exposure to one share at 10%. This index therefore caps the large shares such as Naspers, Anglo and BHP Billiton at 10% which is sound investment risk mitigation used by many investment managers. In a market where the 5 biggest stocks add up to half of the index, such a limit is important to contain risk.

For good measure we added in the returns of the average equity fund, which includes low cost passive funds.

 

 

If you had invested R1 million in our preferred funds 10 years ago it would have grown by R550,000 more than the average equity fund and R840,000 more than the JSE Capped index.

 

When looking at “balanced funds”, we compared to all other balanced funds with a similar asset mix (up to 30% offshore and max 75% in equities). All money in Retirement Annuities, Pension, Provident and Preservation funds will be within these limits.

 

 

Besides achieving higher returns, our investment process includes blending funds with different styles so in both of these examples, the volatility of our portfolios has been lower than other funds and the market. This means that our blend of funds has achieved higher returns at lower risk than the market average.

 

The Ascent process of researching and selecting some of the best fund managers and blending them to reduce volatility has paid off over the long term. Over the short term, there will be funds that outperform and others that underperform but trying to predict which fund will outperform for which period in the future is a bit like playing roulette. We believe that doing the research upfront and staying invested in these funds through these cycles rewards our clients over time.