Retirement fund members whose savings are invested in market-linked portfolios are still getting returns that comfortably beat inflation, according to the latest Absa Monitor, a quarterly review of the performance of South African retirement fund portfolios. ( Click here to see the table.)
Francois Viljoen, the manager of asset consulting at Absa Consultants and Actuaries, says due to low inflation levels and generally good performance from the markets, all investment portfolios in the balanced category have more than out-performed inflation.
The JSE Securities Exchange All Share index has delivered a return of about 80 percent since April 2003, and bond markets have also delivered significant returns. This means that any retirement portfolio exposed to these markets would have enjoyed relatively good returns.
The market has run hard and, going forward, the potential for good returns from equities is limited, Viljoen says. This means that investment managers will have to carefully select shares within the various sectors to obtain performance in their portfolios.
The top portfolio among balanced portfolios over the three years to the end of March 2005 was Allan Gray's Life Global Balanced Portfolio, with a return of 21.5 percent.
A portfolio with a global balanced mandate invests across asset classes, including shares, bonds, property and cash-related investments in South Africa and overseas, subject to regulatory limits.
In second spot was the Allan Gray Full Discretion Portfolio, with a return of 21 percent over the three-year period.
The Foord Segregated Full Discretion Portfolio, with a return of 17.7 percent over three years, nudged ahead of the Oasis Segregated Full Discretion Portfolio, which held third place last quarter.
The Oasis portfolio slipped to fourth position, with a return of 17.2 percent over the three-year measurement period.
The laggards in the balanced survey category were portfolios managed by Metropolitan, Stanlib and m-Cubed.
Over the three-year period, the Metropolitan Managed SA Global Portfolio came in last in the balanced category with a return of 11.9 percent.
The Stanlib Asset Management Segregated Full International Discretion Global portfolio was second to last with a return of 12 percent.
Other yardsticks
You should not judge a portfolio solely on the basis of how it performed relative to its peers.
Other important measurements of performance include the portfolio's volatility and the portfolio's performance in relation to its benchmark.
In the balanced category, the top performer when measured against its own benchmark was the Foord Segregated Full Discretion Portfolio, which beat its benchmark by 7.9 percent over the three years to the end of March 2005.
Four funds in the balanced category failed to meet their benchmarks. They were the Momentum Multimanager Fulcrum Balanced Portfolio, the Sanlam Global Unique portfolio, the Stanlib Preferred Assets portfolio and the Stanlib Segregated Full International Discretion portfolio.
The Investment Solutions Medium Equity Portfolio achieved first place for producing the return with the lowest volatility over the three years in the balanced category.
How the survey affects you
The returns of the portfolios included in the Absa Monitor may or may not affect you. Ask your employee-sponsored retirement fund or the company from which you bought your retirement annuity (RA) policy if your fund is invested in one of these portfolios. Your retirement fund or RA may have invested in a tailor-made portfolio with one or more investment manager, in which case the performance of the portfolios in the survey will not reflect the returns you, as an individual fund member, will have received. Even if your fund has not invested in any of the portfolios included in the Absa Monitor, it includes all the major portfolios offered by South African investment managers and therefore reflects how these market-linked portfolios have fared in general.