16 September 2024
The Glacier Investment Summit Mpumalanga & Limpopo 2024 was hosted in Dullstroom on 5 and 6 September, with more than 100 intermediaries in attendance at what has become an annual engagement. The theme, ‘The Future. Now.’ points to the exciting tomorrow that we are preparing for today, amid global uncertainty, technological transformation and an ever-evolving industry.
The future of SA politics and the economy
Theo Venter | Professor of Practice | University of Johannesburg
Theo pointed out that of all of the elections across the globe this year (four billion people are likely to make their way to the polls), the US one is the most important. The political dynamics are intriguing. While Donald Trump was a sure prediction for the US Presidency three months ago, this is not the case currently with Kamala Harris in the running. He also observed some of the geopolitical tensions and how the US under Trump’s administration, is likely to approach them.
He went on to unpack the Government of National Unity (GNU), which is the presiding dispensation marking South Africa’s seventh administration. It is a coalition of a kind, where the opposition parties were invited to participate (where usually, coalitions are formed by political parties that have some commonality). The GNU presents political parties with a ‘clearing house’ between party or individual and decision making. It marks a positive turning point in SA’s history and is moving South Africa in the right direction, with corruption and loadshedding, just two key factors being dealt with.
Understanding hedge funds and their moving parts
JP Matthews | Head of Product | Matrix Fund Managers
All hedge funds are not born equal. That was one of the take-outs from JP Matthews’ presentation where he unpacked the different categories of risk, and how hedge funds can be positioned to perform in declining or rallying markets.
Alternative thinking for investment linked living annuities (ILLAs)
Steph le Roux | Chief Investment Officer| SA Asset Management
Steph outlined how advisers can be assisted to think about investing differently. While they perform a balancing act between flexibility and stability in a living annuity, their biggest consideration is client needs regarding income and longevity. Accommodating these factors is the bedrock of solutions that offer the best outcome, post-retirement.
Panel discussion: How is SA viewed by global investors and should they find opportunity in SA equities, or not?
Why would foreigners consider SA for investment opportunities, given that we contribute so little to global indices and just 0.6% to the global economy? To put this into perspective, the US contributes 25%. The discussion, moderated by Jaco-Chris Koorts, and with panellists, Murray Winckler (Laurium Capital), Pieter Koornhof (Allan Gray) and Yaser Survé (Ninety One), centred on an examination of SA Inc. The local economy is small, but we have produced heavyweights in the past like SA Breweries and Richemont. Also, in order to invest in PGMs, participating in the JSE is inevitable. Over the long term, though, earnings growth is a critical factor and matters most. Growth in SA has been low, and the cost of capital is really high. We also need to be a lot more welcoming and conducive to foreign investment.
The good, the bad and the ugly of private equity
Rafiq Taylor | Head of Implemented Consulting | Glacier Invest
Rafiq delved into the intricacies of private wealth and in particular, private equity, that relies on business development and growth. Therefore, it has the potential for high returns in a portfolio. Private equity has challenges, but they are outweighed by their opportunities. There is a good investment case for this alternative investment, as it also offers the opportunity to participate in high impact investing. For example, Glacier Invest has invested into the Mahlako Energy Fund, which offers sector exposure to renewable energy, green hydrogen, gas to power and energy services.
Panel discussion: Credit risk and defaults
In the panel discussion, moderated by Shawn Phillips, the panellists Bronwyn Blood (Granate Asset Management), Jonathan Myerson (Visio Fund Management) and Philip Bradford (PortfolioMetrix), discussed bond yields coming down by 160 basis points recently, and how there is still value in this asset class. However, it is unlikely that we will see the same kind of returns going forward as we have seen in recent years. It will be more challenging as the tide has shifted and interest rates are on their way down.
Panel discussion: Managing the razor’s edge between volatility and stability
In the panel discussion moderated by Rafiq Taylor, panellists Miranda van Rensburg (M&G Investments), Cornelius Zeeman (Fairtree) and Rupert Hare (Prescient Investment Management), discussed, among other matters, inflation and interest rates, which are the two most topical themes since COVID. Predicting what the interest rate cuts will be, is tricky. The US economic slow-down obviously would have an impact on South Africa with one of the responses by managers to be underweighting the US.
Panel discussion: Are the lines blurred between active and passive management?
In the panel discussion, moderated by Jaco-Chris Koorts, panellists Nico Katzke (Satrix Investments, James Murray (Old Mutual Investment Group) and Dirk Jooste (PSG Asset Management) debated whether passive management truly is passive and if active truly is active. While the move is toward blending passive with active, the panellists agree that every asset manager has a role to play, and that all asset managers can’t be great at everything. That’s where the industry is going – managers perfecting where they fare best.
The opportunities to deliver sound investment solutions in the public sector.
Jabu Sibanyoni | Business Development Manager | Glacier by Sanlam
Jabu closed off Day 1 of the Summit by illustrating the opportunities in the public sector, which start first-and-foremost with financial education, advice and sound financial planning. Generally speaking, employees in the public sector have funeral and life cover, but holistic financial, investment, estate, retirement and tax planning are sorely needed.
Day 2
With interest rates coming down, what role will life investments play in future?
Ilza Lötter | Business Development Manager | Glacier by Sanlam
lIza kicked off Day 2 bypointing out that in a low interest-rate environment, bond rates are impacted, which impacts on the income in a post-retirement life investment. In her presentation, she cautioned that the interest rate is not the only factor to take into account for clients’ portfolios. While a reduction in the interest rate will result in more disposable income and cheaper debt for clients, the interest rates are still higher now than what we saw in 2021 and 2022. They are lower, but not low. Therefore, life investments still have a place in a client’s portfolio, where a blended solution (combining a living annuity, life annuity and a discretionary investment in one solution), offers the best outcome in a post-retirement scenario.
The importance of digital transformation in the linked investment industry
Werner Lotriet | Executive Head of Business Development | Glacier by Sanlam
In his presentation, Werner outlined the deeply considered reasons for the digital transformation at Glacier, and in particular, the digital evolution of Glacier’s platform. The key pillars of this strategy are to drive simplicity; digital enhancement (which includes digital tools as well as understanding how to use data effectively); and client and intermediary experience (tech for service and tech for experience). These are necessary to be able to embrace the opportunities of the future where changing client needs and intermediary service requirements are of critical importance.
Panel discussion: What impact do electric vehicles (EVs) have on the platinum group metals (PGMs) sector? Will SA benefit or be left behind?
In the panel discussion moderated by Shawn Phillips, panellists Peter Duminy (Sanlam Private Wealth), Wessel Joubert (Amplify Investment Partners) and Warren Riley (Bateleur Capital), unpacked the various aspects of PGMs and how electric vehicles (EVs) impact on this sector. SA has been a difficult environment in which to do business, and specifically the mining sector has had profound challenges. Loadshedding and transport sector gaps have put mining under significant pressure. Managers across the industry are pessimistic toward this sector in light of these challenges that have impacted adversely on mining production. While production of a petrol vehicle requires 20kg of copper, hybrids and EVs use 80kg of copper. Also, due to the practicalities of using pure EVs, hybrid vehicles may be more appealing. In the global sale of all vehicles, EVs make up 15%, and that percentage is dropping. Very few pure EVs will come to SA, but Chinese hybrids across brands, are on their way.
Ready or not? The Two-Pot Retirement System is here
Valery Mkwevho | Business Development Manager | Glacier by Sanlam
In her presentation, Valery explained that the Two Pot Retirement System is yet another step in the government’s retirement reform plans that started in 2014, although it is the biggest one yet. It applies to every registered retirement fund in South Africa. She went on to unpack the three components and what the key issues are that intermediaries need to be aware of regarding their clients making a withdrawal from their savings pot. The financial education of clients will be critical going forward, regarding the tax implications and clients’ possible loss of . She pointed out that Glacier is poised to support intermediaries to meet this need.
Currency conversion: an edge to offshore investing
Nico Le Roux | Managing Director | Merchant West Incompass Treasury Solutions
“How anxious should you be about forex and its administrative requirements when investing offshore?” That was Nico’s opening question as he unpacked how Incompass supports Glacier International (GI) with simplified processes in GI’s offshore investment solutions. Complexity in forex for the purpose of offshore investing, is a myth that Incompass is helping to debunk. Forex is a necessity for offshore investing. If intermediaries are not participating in this area of the investment market, their clients are potentially missing opportunities for diversification or alpha in their portfolios. He also went on to outline what will drive changes in SA’s exchange rate next year. The results of the US elections as well as interest rate cuts will be two critical factors.
Making the decision between investing into a feeder fund or directly offshore
Neal Sinclair | Business Development Manager | Glacier by Sanlam
Staying on the offshore theme and considering “The Power of 12”, Neal helped advisers understand what it takes to make the decision between investing into a feeder fund or offshore directly. He delved into the value of advice (an adviser adds 4.91% of value through tax savviness, behavioural coaching and customised solutions) and the “Power of 12” refers to the 12% capital gains tax paid on rollup funds, which is a strong argument for these solutions in terms of their tax efficiency.
The power of purpose
Richard Wright | Author, Ironman Athlete, Cancer Survivor, Keynote Speaker
In the final session of the Summit, Richard unpacked how actions and behaviour are products of our thinking. Without change, there is no future, only a recurring past. However, does not come easily to human beings. Our reptilian brains tell us that change is a threat, but while we fear change, the whole world is changing around us. Despite a rare and aggressive type of brain cancer and pronounced terminal ill and with six months to live, Richard has survived the worst kind of ordeal for a decade, through positivity and re-defining his purpose. His story is fascinating.
