ALM represents the genesis of the investment strategy formulation process where an optimised target investment return is determined that will ensure that future liabilities are funded while maximising investment value. For a retirement fund we don’t only focus on investments and their expected outcomes but on how future income can be protected today. An equally important aspect of the ALM process is to quantitatively assess the possible evolution of fund assets and liabilities over time through sensitivity and scenario analysis.
We apply an ensemble of quantitative techniques to determine an appropriate SAA that is best placed to meet the target investment return defined per the ALM. We apply a combination of the Black-Litterman approach, Monte Carlo simulation and mean-variance optimisation which translates into an efficient frontier from which a portfolio SAA representing the highest possible level of expected return at a given level of risk can be selected. Our clients’ unique objectives are incorporated into the modelling framework.
Macro-economic views and sentiment indicators are applied to the SAA modelling and empirically tested against the output of periodic style analysis and machine learning techniques. When both quantitative and qualitative views are consistent and present, a clear opportunity for either TAA or satellite alpha generating strategies are generated.
We apply a combination of best practice and experience together with advanced data science techniques to narrow a wide universe of managers into a subset who display skills that allow them to better convert commonly available data into information resulting in portfolios of opportunities which lead to outperformance. An in-depth assessment of people, philosophy, process and performance is then conducted on the subset allowing for the selection of managers with the highest probability of delivering future outperformance.
Private market fund selection requires a niche skillset and is done by our dedicated private markets team with practical experience and insight into private markets investing. The dispersion of returns is much wider in private markets investments where the investee company universe is unconstrained and there are no benchmarks, so deal origination, structuring, execution and value add are all critical to good outcomes.
Using a combination of return and holdings-based style analysis, we can decompose a manager’s performance into identifiable styles and use this information to blend managers together to achieve style optimised portfolios. We can also neutralise any style risk through the introduction and management of style completion portfolios.
A final and essential consideration post the evaluation and selection of managers is the optimal combination of managers within a portfolio framework. Portfolio construction is crucial post manager selection as it considers the optimal portfolio formation that balances return enhancement with risk mitigation through maximised diversification, incorporation of the client’s liquidity preferences and fee implications.
With a focus on regulations, tax, governance, costs, flexibility, ease of administration and transparency we will provide guidance and help you decide what portfolio structure best match your specific needs – UCITS, CIS, life pool, Limited Partnership etc. From portfolio set-up to pricing and reporting, we will ensure that all processes are effectively implemented.
We help our clients, depending on their set up, decide on the type of administration services they require. This may include multi-tiered portfolio unitisation across various categories of investments, asset and liability administration, fund accounting, regulatory compliance monitoring and reporting, mandate compliance, cashflow management etc. We will also manage, on behalf of our clients, a competitive process to identify a third-party administrator who is best suited to deliver the required services.
Changes to investment exposures due to portfolio-rebalancing, asset manager and asset class movements can result in unnecessary costs and introduce a multitude of risks if not managed properly. Our team of transition management experts will help you devise a plan, execute the plan and provide post trade reconciliation and reporting. Combining our skills in risk management, derivatives structuring, administration and trade execution using market leading technology we can help you mitigate transfer risk and enhance overall portfolio efficiency.
Our dedicated client reporting team can provide you with tailored reports to meet your specific needs. We provide our clients with detailed performance and risk, liability profile, style analysis, regulatory compliance, mandate compliance, ESG (stewardship and impact), and B-BBEE reporting.
Whether you are a Defined Benefit (DB) Fund or a Defined Contribution (DC) Fund, deciding on the most appropriate investment strategy for pension payments is a complex financial modelling exercise. If assets fail to track and keep up with pension liabilities, a DB Fund will have a solvency shortfall and, similarly with a DC Fund, the member will be unable to buy a reasonable future pension income. Not every retirement fund is the same. We help funds design and implement strategies that best fits their membership profile. This includes income protection solutions for the investment stage prior to retirement and seamlessly transitioning to a fit for purpose reasonably priced post retirement annuity (guaranteed, living, with profits, blended) strategy.
27four was the first in South Africa to establish an emerging Diversity, Equity and Inclusion Asset Manager Program (DEI AMP) in 2007 aimed at accelerating the participation of black and women led funds in South African asset management. Our pioneering efforts have led to the establishment of over 60 black and women-owned asset managers managing in excess of R1 Trillion across public and private markets. 27four were first investor to leading investment firms such as Mazi Capital, Aeon Investment Management, Sentio, Prowess Investment Managers, Perpetua Investment Managers, Lodestar Fund Managers, Independent Alternatives, Benguela Global Fund Managers, Excelsia Capital, Mianzo Asset Management, Sanari Capital, Kholo Capital and many others.
Our superior track record is testament to our proficiency at identifying, growing and supporting tomorrow’s black and women leaders in asset management. Let us help your institution catalyse the growth opportunities presented by diverse asset managers.
Asset owners recognise that B-BBEE is a necessary tool to redress the economic distortions created by apartheid, which if not remedied, will result in an unstable and vulnerable economy that threatens their ability to generate sustainable investment returns on behalf of their members. They understand that achieving good returns and investing sustainably are not mutually exclusive. Maintaining this balance is a fiduciary responsibility that many South African asset owners are taking very seriously. However, our research indicates that for many asset owners, articulation and implementation of transformation plans is weak and fragmented resulting in poor outcomes.
Our experienced B-BBEE investment team work closely with retirement funds to workshop their goals to ensure alignment to their core values and develop B-BBEE investment policies, within the legislative framework, which define how to invest alongside those values. This includes establishing minimum criteria to be met by asset managers appointed to the retirement fund, developing allocation targets for black and women led asset managers and investing in opportunities which promote the achievement of positive shifts in black and women economic participation. This is supported by close monitoring of the strategy to ensure that the retirement fund remains on track to meet their objectives. An ESG assessment to measure the direct impact of the retirement fund’s efforts on the overall economy is also conducted, aiding asset owners in making evidence-based decisions.
The Financial Sector Code (FSC) requires retirement funds to annually complete and submit the B-BBEE Scorecard for Retirement Funds to the Financial Sector Transformation Council (FSTC) to demonstrate progress in implementing the provisions of the FSC.
The complexity of the FSC necessitates detailed planning by retirement funds to achieve good transformation outcomes. Allow our team of B-BBEE experts to provide you with professional guidance and support on how to meet the objectives of the FSC. From conceptualisation of a transformation roadmap to the implementation and monitoring of the strategy, we empower fiduciaries with the tools to enhance B-BBEE compliance. This includes providing advice on procurement decisions, member education, composition of Trustee boards, the ongoing collection of service provider information and the completion and submission of your Fund’s B-BBEE Scorecard to the FSTC.
Women are severely underrepresented in asset management and in the overall economic ecosystem. As a business founded by women and where women represent the majority in leadership and in the workforce, we understand that the pathways for women to earn a seat at the table can be extremely difficult and so in 2007, established a Diversity, Equity and Inclusion Asset Manager Program to create market entry opportunities for women led funds across both public and private markets. To date we have been first investor to several women-led funds including Sanari Capital, Prowess Investment Managers, Perpetua Investment Managers and Terebinth Capital.
To invest with a gender lens means to be deliberate in the integration of gender factors in the formulation and implementation of an investment strategy. This means allocating capital to women-led and gender-forward asset managers including channelling capital to investment opportunities which seek to improve the lives of women. Let our team of experts help your institution successfully invest with a gender lens and close the gender inequity gap.
Our dedicated and experienced private markets team advises and assists many of Southern Africa’s large institutional investors on their private markets exposure. We support our clients in setting strategy, designing portfolios, selecting managers and monitoring portfolios. These services can be performed as pure advice or include implementation and discretionary management.
Sub-Regulation (2)(b) of Regulation 28 of the Pension Fund Act 1956 states that a retirement fund must “have an investment policy statement, which must be reviewed at least annually.” Let our team of experts document your retirement fund’s investment policy and objectives in a clear and easily understood manner and ensure alignment to all applicable legislation.
Sub-Regulation (2)(C)(iii) of Regulation 28 of the Pension Fund Act 1956 states that a retirement fund must “in contracting services to the fund or its board, consider the need to promote broad-based black economic empowerment of those providing services.” Let our team of experts document your retirement fund’s approach and commitment to investing with a DEI lens.
Sub-Regulation (2)(C)(ix) of Regulation 28 of the Pension Fund Act 1956 states that a retirement fund must “before making an investment in and while invested in an asset consider any factor which may materially affect the sustainable long-term performance of the asset including, but not limited to, those of an environmental, social and governance character.” Let our team of ESG experts document your retirement fund’s approach and commitment to integrating ESG.