How are Your Retirement Savings Invested?

Newsletter   •   Quarter 2   •   2022

How are your retirement savings invested?

In our Quarter 1 newsletter, we explained the different types of traditional asset classes (types of investments), which include equities, bonds, property and cash. Within each asset class there are many different companies that investors can choose from.
Making well-researched decisions

Choosing companies in which to invest is a critical decision and not an easy one to make.

An asset manager needs to know about a company’s business model, its current financial position and what the future potential is for growth and earnings. Under what circumstances may the business do well in the future, and under what circumstances may it do badly? Which of these circumstance are more likely to occur? Finding answers to these questions can be challenging.

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Employing skills and expertise

Choosing which companies to invest in is a specialised task. The Board of Trustees of the Woolworths Group Retirement Fund delegates this task to professional asset management firms who have the resources and skills to successfully make these difficult investment decisions.

Professional asset management firms have the expertise to do the necessary research on companies in which to invest, and work full-time on doing just that. The Fund enters into a contract with each asset manager. This contract specifies and controls the type of assets in which that manager is permitted to invest. It includes performance objectives and risk limits with which the managers must comply.

The Fund regularly monitors their performance and meets with them to check on their investment decisions and results.

The Fund's asset managers
The Fund has appointed Allan Gray, Coronation, Ninety One, Prudential and Stanlib Infrastructure to invest in a carefully chosen combination of equities, bonds, property and cash in South Africa. The Fund has also appointed a number of specialist global asset managers to invest in equities, bonds, property and cash outside South Africa.
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The Trustees follow rigorous and carefully considered criteria when appointing an asset manager:
  • Asset managers must fit into the Fund’s investment strategy, and not the other way around.
  • Only established, experienced and qualified asset managers are considered.
  • The Fund identifies a shortlist of appropriate asset managers for a specific part of the Fund’s investment strategy. They are then interviewed by the Trustees where they must clearly explain their investment process and philosophy and answer any questions.
Before going ahead with an asset manager’s appointment, the Trustees must be satisfied that:
  • The manager is appropriately skilled and has the resources to manage that specific part of the Fund’s strategy.
  • The manager’s investment selection process is clear and there is a good track record.
  • The manager’s fees are reasonable.
The Fund also employs an investment consultant to assist in developing and monitoring the Fund’s investment strategy and to research and select the asset managers. This investment consultant also negotiates with the asset managers, on the Fund’s behalf, for discounted fees. This is important as the asset manager's fees could erode the investment returns earned by the members.

THE INVESTMENT OF YOUR RETIREMENT SAVINGS IS LONG-TERM.
REMEMBER, STAY INVESTED!

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