How the Fund chose the investment managers

The trustees may delegate their duty to invest the Fund’s assets if the rules of the Fund provide for it to a licensed investment manager, but they cannot relieve themselves from their responsibility to invest the Fund’s assets appropriately, just by appointing someone else to act in their place. 

If trustees delegate this function, they must enter into a proper agreement with the investment manager. 

The Board of Trustees must: 

  • Ensure that the assets and contributions of the Fund are invested in accordance with the rules of the Fund; 
  • Draw up a document that sets out the Fund’s investment policy, including delegation to investment managers and custodians where required, with the procedures necessary for monitoring investment performance and the appropriateness of investments; 
  • Invest the monies and manage the assets of the Fund so as to receive an adequate return; 
  • Ensure that the responsibilities of investment managers are clearly defined in a written agreement; 
  • Ensure that the investment manager operates within the Fund’s investment policy, and has adequate controls to ensure security of the assets; 
  • Ensure that clearly defined investment guidelines and performance benchmarks are in place. 

The method followed by the PetroSA Retirement Fund

The Trustees first survey several asset managers under the advice of the Fund’s appointed investment consultants (Willis Towers Watson) to understand the different investment strategies that can be followed to achieve the stated purpose of the Fund. The critical step is to choose the actual investment managers who are most appropriate, given the purpose of the Fund. The Trustees apply many criteria in choosing the managers, but the main ones are:

  • Business ethics – the Trustees want to ensure that the interests of the asset manager are aligned with the interests of the Fund.
  • Investment philosophy – the Trustees look for a clearly defined investment philosophy, with evidence that this philosophy is working for its investors.
  • Quality of people employed – the Trustees are interested in how the manager’s business is structured to bring out the best in their investment professionals.
  • Investment process – the Trustees want to know how investment decisions are made, how they manage their risks and how the investment decisions are implemented.
  • Performance – the Trustees are interested in future performance, rather than past performance. Past performance was used as a guide to understanding how the managers use their investment skills, so that they could understand whether they are likely to continue their past successes or failures into the future
  • Black economic empowerment – the investment manager must have a clear and cohesive strategy on black economic empowerment and employment equity, and must be able to demonstrate success in implementation.

Due to the fact that the PetroSA Retirement Fund is not yet large enough to allow the trustees to construct “customised” portfolios with the asset managers for each of the Fund’s investment channels, the trustees are generally limited to the “pooled” offerings (or even unit trust offerings) of the selected asset managers that offer the best “fit” to the trustees’ requirements.

INVESTMENT MANAGERS 

After the selection process, the trustees then choose who they believe are the right investment managers. The Fund’s investment managers are:

  • For the Market-Linked Portfolio: Allan Gray, Coronation and ABAX (SA Equity Managers)
  • Investec, Coronation (SA Bond Managers)
  • Willis Towers Watson Diversified Global Balanced Portfolio (global equity, global property and global bonds on Sygnia Life platform)
  • For the Stable Portfolio: Allan Gray; Investec and Coronation (multi-asset-class)
  • For the Shari’ah Portfolio: 27Four Investment Managers (multi-asset-class) 
  • For the Money Market Portfolio: Investec Asset Management

Allan Gray Limited 

Allan Gray Limited is the largest privately held asset management firm in South Africa. 

Allan Gray is a strong believer in the investment approach advocated by Ben Graham.

Coronation Asset Management 

Their investment approach is to take "bets" away from the benchmark and will change their investment approach depending on market conditions. 

ABAX Investments 

Their investment approach is to invest in quality, growth companies at relatively attractive valuations. 

Investec Asset Management 

Investec have an excellent SA bond team and an outstanding long term track record. The bond team works closely with the Investec global bond team, giving it a good understanding of international bond market trends.

Sygnia Life 

Sygnia does not manage the Fund investments, but provides a platform via which the Fund has access to a balanced portfolio of global equity, global property and global bond managers which are highly rated by Willis Towers Watson.

27Four Investment Managers 

The 27four Shari’ah Multi-Managed Balanced Portfolio is a multi-manager, multi-asset-class portfolio using specialist mandates, with a high allocation to “growth” type assets but which is Shari’ah compliant. The asset allocation decision is made by 27four Investment Managers and not the underlying investment managers, each of whom manages a specialist (single asset class) mandate.