Investments Explained

The Board of Trustees is supported by investment experts and chooses portfolios in line with industry best practices. 

The Board of Trustees selects portfolios with the correct risk/return profiles to ensure that you will receive the promised retirement benefit as per the Rules of the Fund. You can sit back and relax, the Fund investments are taken care of. 

 

The Fund provides a range of investment options to cater to the diverse needs and preferences of its members. Here is an overview of the investment strategies and portfolios available to members.

Investment Strategy

The aim of the Fund's investment strategy is to target an income at retirement of approximately 75% of the salary that you earned before retirement. This requires consistent contributions from both you and your employer over a period of at least 35 years.

The investment strategy is designed to provide flexibility and to meet members' retirement needs, while complying with Regulation 28 of the Pension Funds Act, which governs how retirement funds invest savings.

Investment Options

When you are younger, you can afford to take more risk, to earn higher returns. If you are not comfortable with making investment decisions, not to worry, the Fund’s Goals-Based LifeStage Model is the default investment option.  If you are invested in this portfolio, your money will be moved for you, automatically, as you reach the next age category. 

If you understand investments or have received advice from your financial planner, you can choose which LifeStage Model or portfolio you want to invest in. 

There are two LifeStage Models to choose from as well as a range of portfolios.  Let’s look at these:

LifeStage Investment Models

1. Default Goals-Based LifeStage Model:

• Growth Phase (Performer Portfolio): High exposure to shares and other growth assets to maximize returns.
• Transition Phase: Gradual transfer of investments from the Performer Portfolio to the Protector Portfolio starting five years before normal retirement age.
• Protection Phase (Protector Portfolio): Focuses on preserving capital and generating real returns above inflation over a two-year period.

2. Passive LifeStage Model:

• Growth Phase (Balanced Index Fund): Aims to track a benchmark index closely at the lowest possible fees.
• Transition Phase: Similar gradual transfer process as the Goals-Based Model.
• Protection Phase (Conservative Index Fund): Also tracks a benchmark index closely and focuses on preserving capital.

Both models are designed to protect retirement savings as members near retirement and do not wish to make their own portfolio selections.

Investment Portfolios

Members can choose from the following portfolios:

Active Portfolios:

• Performer Portfolio: Focuses on high growth by investing in a mix of equities, property, bonds, cash, and alternative investments.
• Protector Portfolio: Designed to protect capital while still earning returns.

Passive Portfolios:

• Balanced Index Fund: Tracks a benchmark index with a focus on growth.
• Conservative Index Fund: Tracks a benchmark index with a focus on capital preservation.

Smooth Bonus Portfolios:

• Absolute Smooth Growth Portfolio (AGP50): Provides a 50% capital guarantee and aims for inflation plus 5.5% returns over rolling three-year periods.
• Absolute Stable Growth Portfolio (AGP80): Provides an 80% capital guarantee with similar return targets as the AGP50 portfolio.

Specialist Portfolios:

• Shari’ah High Growth Portfolio: Conforms to Islamic Law, avoiding investments in non-permissible activities.
• Banker (Money Market and Cash): Invests in short-term money market instruments and cash for stable returns.

Members can select their investment portfolios based on their individual risk tolerance, years to retirement, and overall financial situation.

It is highly recommended to consult with a personal financial advisor to make informed decisions.

 

Members can change their investment portfolio online via the Old Mutual website or by submitting a switch form obtained from HR or the Bursar. Changes can be made three times a year at no cost, with additional switches available at a nominal fee.

The Fund allows members to defer their retirement, leaving their accumulated credit invested within the Fund. Deferred members can choose from the same portfolios available to active members.