Fund managers and their fees

The growing international popularity of tracker funds helps to explain why SA investors are paying more.

The SA fund management industry is sophisticated, professional, internationally adept … and expensive. The question is whether this expense is justified and if not, are the costs of investing the hard-earned cents of retirees coming down?

In some ways, the second part of the question is the easiest to answer; costs are coming down and respectably fast. Part of the reason is that the SA industry is tightly bound to trends in the international industry, and the megatrend internationally has been a drop in the cost of investing.

Proceed to Source : BusinessLive

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Former FNB CEO Michael Jordaan trusts machines to manage all of his pension savings – here’s why

  • SA’s pioneer in machine-driven investing is NMRQL, which has an ardent backer in its shareholder and chair, former FNB CEO Michael Jordaan.
  • Jordaan has invested all of his pension fund and provident fund savings into the NMRQL unit trust.
  • NMRQL’s investment decisions are determined by crunching big data and formulating algorithms.
    It has been said that the stock market is driven by two emotions: fear and greed.

Both have caused ruin. Fearful investors sell when headlines are bad and other people are selling, and fear keeps them from investing in unpopular shares. Greed drives overconfident investors to buy when shares are already overcooked.

Removing an emotional bias from investing will keep you from doing the wrong thing at the wrong time. But how?

Enter the machines.

Or, to be more exact, heavy-duty computers, which crunch massive amounts of information and come up with algorithms to make investment decisions.

South Africa’s pioneer in this field is NMRQL (pronounced “numerical”), which was established in 2015 by Thomas Schlebusch, and has a large shareholder and backer in former First National Bank (FNB) CEO Michael Jordaan. In fact, Jordaan has invested “100% of his pension and provident fund savings” in the NMRQL unit trust, he tells Business Insider South Africa.

“My main reasons are that NMRQL doesn’t make decisions based on emotions, but on data only; in addition, the product’s management fee is low for an active fund,” Jordaan, who also chairs NMRQL, says.

“Also, I believe in [former trader, statistician and author] Nassim Taleb’s principle that fund managers and owners need to have skin in the game. It wouldn’t make sense for me to recommend an investment in NMRQL if I’m not invested in it myself.”


Proceed to Source : Business Insider

The balanced solution that’s far from passive

By Kingsley Williams, CIO of Satrix

As investors we’re all looking for the same thing: a certain outcome and a smooth ride to that destination. On top of that, we also want maximum returns with minimum risk. Sounds impossible? Over the short term perhaps. But over the medium to long term it’s not that far-fetched. The key remains: sufficient equity exposure; diversification; low fees and low correlation between funds in a multi-managed solution.

Proceed to Source : Sanlam Investments

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