"It is my pleasure to introduce our inaugural issue of Invest Insights. This publication is intended to keep you abreast of the latest thinking in investments and retirement planning to enable you to better prepare for the future." – Kenny Rabson, CEO: Discovery Invest
The 2017 Discovery Financial Planning Summit that took place in Sandton on 29 May had the theme Future-focused financial planning. This first issue of Invest Insights expands on this theme, looking not only at future-focused financial planning but also future-focused investing.
Some of the key trends we see emerging, some of which we cover in this issue, are increasing political instability and the impact of this on local growth. South Africa entered a technical recession in the first quarter of this year. GDP declined by 0.7% quarter-on-quarter (annualised), having declined by 0.3% in the final quarter of 2016.
Financial Times undercover columnist Tim Harford writes an interesting piece on the robot revolution. Instead of the threat of being replaced by machines, the problem is that we are still waiting for the robot revolution to begin, he says.
The article brings interesting insights on topics such as robo advisers. The future of global growth hangs in a delicate balance as growth remains largely predicated on President Trump’s ability to deliver on his ambitious campaign growth promises. Michael Power, Strategist for Investec Asset Management analyses President Trump’s first 100 days in office.
When looking to the future of our own country, as South Africans, we have a tendency to believe that things are getting worse despite data to the contrary. In an article based on Adrian Gore’s introduction at the Discovery Financial Planning Summit, we learn why we are mis-coded for financial planning and what we need to do to ensure successful financial outcomes.
Total assets invested through LISPs in South Africa are growing rapidly with around R60 billion in gross new investments in the first quarter of this year. 95% of this has been from lump-sum investments. The unit trust industry is now R2.17 trillion in size and shows signs of continued growth and strengthening.
Money market funds have been the best performing asset class for close on two years, causing investors to look for alternative sources of returns aside from traditional asset classes. South African investors have started moving towards lower risk solutions and away from multi-asset solutions, which previously dominated the retail industry in terms of net flows.
At Discovery Invest, our assets under administration now exceed R69 billion at the end of May, a 13% increase from a year ago. We are the fastest-growing unit trust company in South Africa with growth of 16% year-on-year in funds under management at the end of the first quarter of 2017.*
The Discovery Balanced Fund has provided highly competitive returns and has maintained a first or second quartile performance position over all rolling three-year periods since inception. The rest of our stable has also performed well, with 76% of our funds achieving first or second quartile performance over the six months to the end of March 2017.
Our shared-value model has allowed us to return over R5 billion in value to clients in the form of upfront boosts and boosts to retirement income since our inception. These boosts are based on clients’ improving financial and health behaviours, a key determinant of successful financial planning into the future.
The need for financial planning has never been greater than now. Our future as an industry, as well as our strength and future as a business is intertwined with your future. Together, we aim to make the industry stronger, deeper and more able to respond to the challenges clients are grappling with.
Kenny Rabson | CEO of Discovery Invest
Nothing contained in this article should be construed as financial advice and is meant for information purposes only.
* Source: US Global Research Report: SA Insurance Sector, Q4 2016. Unit trust ups and downs.?