How asset managers are doing with your retirement savings

OVER five years to the end of 2024, multi-asset retirement funds with an offshore component fared only marginally better than funds invested wholly in South Africa, showing that, although there has been a significant shift towards offshore investments in that time, the domestic market has managed to provide solid returns.

- MARTIN HESSE

The annual Alexforbes Manager Watch™ Survey of retirement fund investment managers tracks trends in the industry that are relevant to both retirement fund trustees and members, looking at investment performance, investment strategies, the B-BBEE credentials of asset managers, and environmental, social, and governance (ESG) integration, among other things.

And although the survey applies only to institutional funds, which are different in many respects from retail investment funds, parallels can be drawn, and the trends tend to apply across the asset management industry.

Fund composition and performance

Retirement funds fall under the Pension Funds Act and are subject to stricter regulations than retail collective investment schemes. Regulation 28 under the Act imposes limits on exposure to higher-risk asset classes and to offshore investments. Funds may not invest more than 75% of the portfolio in equities, and they may not invest more than 45% offshore.

The Alexforbes survey makes a distinction between institutional multi-asset funds that invest 100% in South Africa (Domestic Best Investment View category) and those that have an offshore component (Global Best Investment View category). In the most recent survey, to the end of 2024, the report noted “a strategic shift towards international investments”.