the wealth perspective - PSG

THE WEALTH PERSPECTIVE THIRD QUARTER 2016

THIRD QUARTER 2016 | 1

Having a visionary spirit is about looking beyond the obvious to find and explore the best investment opportunities.

Contents Introduction - Marilize Lansdell

2

A word from our CIO - Adriaan Pask

3

Industry views - Lizé Visser

9

Investing and trading - Shaun van den Berg

11

Estate matters - Willie Fourie

12

Quarterly insight - Grant Meintjes

13


INTRODUCTION Marilize Lansdell CEO PSG Wealth

In this edition, Adriaan Pask, our Chief Investment Officer, explains why global equities are our preferred asset class for long-term investing. Lizé Visser, Executive Director of Sales and Client-centricity, explores how the unbiased range of products and underlying investment instruments on our platform can help you provide quality advice. Shaun van den Berg, Head of Client Education, goes back to the basics by setting out the timeless investment principles in a way you can easily share with your clients. Guest author Grant Meintjes explains the benefits of using the platform to trade online for yourself or your clients. Willie Fourie, Head of Estate and Trust Services, explains how a discussion about wills can help you serve your clients better.

Welcome to the latest edition of The Wealth Perspective With an end to local and global volatility nowhere in sight, it is more important than ever to help your clients make smart investment decisions so that they can continue to grow their wealth. That is why this edition of our newsletter has a general theme of local and offshore securities, whether they are used as stand-alone investments or within our suite of product wrappers.

We are pleased to say that both the local and offshore tax seasons are behind us A major challenge that the industry faced during tax season was the treatment of dual-listed shares. This year we produced offshore tax certificates for the first time. This means our clients didn’t have to use a collection of their past monthly statements to complete their tax returns, saving them time and effort.

Global equities – why we prefer this asset class Although global equities are trading at a premium, this asset class remains the most attractive asset class for long-term investors. The underlying valuations are still less stressed than most of the other asset classes and there are many quality individual firms to choose from. Adriaan Pask uncovers the art and science of making appropriate investment decisions when investing in global equities.

technology to digitise our offering in the form of the new platform. The platform provides access to a wide range of local and international investments and various tools to help you select investments to meet your clients’ objectives. Grant Meintjes discusses the benefits and tools in detail in his article. A solid foundation, however, is crucial to long-term investment success. That is why Shaun van den Berg re-caps the basic investment principles so that you can share these with your clients to help them avoid making costly mistakes, especially clients who are on non-discretionary mandates.

We are committed to helping you optimise your business through technology We are mindful of the operational demands that the increasing regulatory requirements place on your business and the impact of this on your time with clients. We are therefore committed to doing what we can to help optimise your efficiency through our platform developments and digital tools, such as the myPSG app. Grant Meintjes also provides an overview of this app’s functionality in his article. Saving you time on accessing and managing investment and client information means more time to spend with your clients. If you have any feedback or suggestions on the digital tools we make available, please share this with us.

We hope you enjoy the read Please share your feedback – we always look forward to hearing from you.

Our online trading platform provides convenient access to the benefits of share investing Lizé Visser explains how our platform can help you grow client wealth and improve your business efficiency in a way that suits your business model. We have also invested in and embraced


A WORD FROM OUR CIO The art and science of investing in global equities

Adriaan Pask CIO PSG Wealth

In unpredictable times when asset prices appear to ignore valuations, choosing an asset class to secure a reasonable return has become a bit of an art form. Although investment decisions should always be underpinned by science, or objective quantitative assessment, allocations do depend on what the investment is required to do, and the amount of risk an investor is prepared to take.

Equities have historically delivered better returns than other asset classes Despite the dot com bubble and the financial crisis, which had devastating effects on the stockmarket, the case for investing in equities over the long term remains strong. This is because the impact of these short-term market downturns diminishes when staying invested for 10 years or more. Data shows that equities have offered the best real returns over the past 5-, 10-, 20- and 48-year periods.

Unfortunately, there is a perception that equity is the highest risk investment While cash will grow at a steady pace, investments in equities managed by active managers can reduce one’s longevity risk. Investors are rewarded with a premium for their uncertainty,

since equities are the most volatile asset class. Investors often get fixated with characteristics of investments that are beyond their control, such as market volatility. We, however, believe that paying careful attention to sound investment principles could be of far greater value. Regardless of our preference for global equities we must caution that equities should form part of a well-diversified portfolio, along with other asset classes.

Two graphs inform our strategic decisions about global equities Domestic equity is overvalued by 38% Our assessment of the data shown in the graphs is that domestic equity is now roughly overvalued by 38% relative to its historic yield. Some expensive pockets remain in the market and investors should expect continued volatility at current levels.

Premiums and discounts in various global and domestic asset classes Current earnings yields versus long-term averages – premiums and discounts 79.3%

80% 70% 60% 50%

49.0% 38.0%

40% 30% 19.6%

20%

24.0%

24.3%

Domestic bonds

Domestic property

19.3% 13.3%

10% 0 Global cash

Global bonds

Global property

Global equities

Domestic cash

Domestic equities

% Premium (+)/Discount (-) Source: PSG Wealth investment division THIRD QUARTER 2016 | 3

A WORD FROM OUR CIO

Current earnings yields versus long-term averages 14 11.8

12

11.7

11.4

11.7

12.1

9.5

9.2

10 8.2

8

9.0

8.2

8.0 6.9

7.1

6 4.2

4 2 0

4.5 3.6

2.4

4.9

6.4

7.0

8.0

8.1

7.7

6.2 4.3

4.0

3.5 2.5

1.2 Global cash

0.9 Global Global Global Domestic Domestic Domestic Domestic Domestic Domestic Domestic Domestic Domestic Domestic Domestic bonds property equities cash bonds property equities industrials resources financials bonds bonds bonds bonds 1-3 3-7 7-12 12+ Average

Current

Source: PSG Wealth investment division

Listed property is also overvalued by 24% Based on our assessment of fair value, domestic listed property is now overvalued by roughly 24% relative to its historic yield. In addition, we believe that the interest rate cycle will affect domestic economic strength, affordability and sentiment. These are headwinds for capital growth in the listed property sector. We therefore expect property yields to normalise on the back of capital value pressure. However, as always, there are some exceptions. Selected listed property shares are experiencing growing yields, which may present some opportunities. Although broad-based property exposure is not appropriate now, we do believe there are some listed property shares that are able to make a contribution to a diversified portfolio. Domestic bonds are overvalued by 24% The aggregate yield of the BEASSA All Bond Index shows that this asset class remains generally overvalued. The implied premium is roughly 24%. With money market assets starting to offer some value, demand for bonds may decline in light of the increased risk of holding them. The relative risk-adjusted returns of bonds are also being compromised by higher interest rates on the horizon. Until recently, the gross real yield on most short-dated money market assets was nearly zero; and on an

after-cost, after-tax basis, there was very little to be excited about. We do, however, expect this to change over the coming months, as rate hikes are anticipated. Cash should form part of a diversified portfolio and even in an increasing interest rate cycle, should not be used in isolation. Relative to our valuations, global equity, although trading at a slight premium of 19.3%, therefore remains the most attractive asset class.

The art of investing offshore As professional investment managers, we are comfortable with determining the intrinsic value or risk associated with each asset class. But the days when valuations provided the main insight into potential value or risk are long gone. Today, investors understand that investment potential is also determined by management, macroeconomic conditions and the political landscape. In essence, the environment in which earnings must be generated plays an increasingly important role in how we assess investment potential and risk.


A WORD FROM OUR CIO

Market review Market indicators Index Local equities

Local bonds

Local cash

International equities

Quarter-end value

1 month

3 months

6 months

1 year

3 years

5 years

ALSI

52 733.12

0.27%

-1.63%

8.43%

8.63%

11.00%

14.66%

Industrials

79 456.69

1.92%

-2.05%

7.16%

12.75%

15.76%

22.41%

Resources

17 658.81

-0.85%

0.89%

15.69%

-5.39%

-10.05%

-5.66%

Financials

40 303.92

-3.23%

-2.57%

6.15%

-3.93%

14.98%

18.34%

Listed Property

634.78

-4.89%

-0.65%

7.05%

3.49%

16.63%

17.10%

ALBI

516.22

-1.77%

4.48%

7.61%

4.46%

7.14%

6.94%

ALBI 1-3 Years

400.19

0.06%

2.38%

5.06%

7.24%

6.70%

6.41%

ALBI 3-7 Years

492.92

-0.64%

3.85%

6.94%

7.32%

7.55%

7.12%

ALBI 7-12 Years

566.85

-1.67%

4.55%

7.20%

4.88%

6.76%

7.10%

ALBI 12+ Years

563.97

-2.19%

5.37%

8.78%

3.25%

7.61%

6.97%

GOVI

514.63

-1.61%

4.40%

7.44%

4.88%

7.08%

6.83%

OTHI

525.75

-2.22%

4.63%

7.97%

3.24%

7.55%

7.58%

STeFI 3 Month

339.53

0.60%

1.77%

3.50%

6.70%

6.01%

5.71%

Volatility Index

13.42

13.06%

-5.43%

-34.70%

-52.80%

-7.60%

-15.75%

S&P 500

2 170.95

0.14%

4.10%

13.60%

12.55%

12.30%

14.69%

Euro Stoxx

3 023.13

1.15%

-0.83%

5.07%

-4.79%

6.44%

8.85%

Nikkei

16 887.40

1.92%

-2.02%

5.37%

-10.60%

8.05%

13.53%

Hang Seng

22 976.88

4.96%

10.39%

20.22%

6.03%

1.88%

2.27%

973.72

2.22%

3.12%

11.59%

4.09%

10.14%

13.50%

MSCI World

1 719.52

-0.13%

2.68%

11.14%

4.50%

5.59%

8.39%

MSCI World ex US

1 686.99

-0.17%

1.27%

8.86%

-2.27%

-0.43%

1.56%

FTSE 100

6 781.51

0.85%

8.84%

11.23%

8.54%

1.92%

5.14%

Dax

Performance reported in base currency, using total return Sources: I-Net, PSG Wealth investment division As at 31 August 2016


A WORD FROM OUR CIO

Businesses and their earnings must be sustainable

The science behind finding value in global equities

When we analyse global stocks, we look at the sustainability of the business and its earnings. Businesses should generate a lot of cash, with strong corporate profits and a lean balance sheet with little debt. This enables the business to absorb macroeconomic shocks. Only once we have a sense of comfort about this will we start considering valuations and other quantitative measures. Having sight of the bigger picture enables us to make sound investment decisions. We also focus on selecting fund managers who actively analyse shares according to these criteria.

The S&P 500 generated a return of 13.60% over the past six months, which brings the five-year historic annualised return for the S&P 500 to 14.69% in dollar terms. The FTSE 100 generated returns of 8.84% for the past three months and 11.23% for the past six months – in other words, it continued to generate positive returns despite the unexpected Brexit vote in June. The US has, however, been the primary driver of global stockmarket returns, as the S&P 500 was the only major global index that grew by more than 10% over the past year.

There is a wider opportunity set offshore

Combined with the weakness in the rand over the same period, this has resulted in phenomenal returns for investors who diversified offshore.

We prefer global stocks to domestic shares because generally offshore shares provide more opportunities. There is a greater probability of us finding a good business at an attractive price. Part of the art of investing in offshore equities is the ability to stay the course and not be tempted to chop and change your decisions. This art form has, however, always been informed by our science or quantitative analysis.

Wage growth/consumer spending/corporate earnings wheel

Wage growth

Corporate earnings

Consumer spending



A WORD FROM OUR CIO

Tactical asset allocation preferences

EMERGING

DEVELOPED

South Africa

Global

Strategic asset allocation Tactical asset allocation Changes this month Overweight: Tactical recommendation to hold more of the asset class than specified in the strategic asset allocation

Neutral: Tactical recommendation to hold the asset class in line with its weight in the strategic asset allocation

Underweight: Tactical recommendation to hold less of the asset class than specified in the strategic asset allocation



A WORD FROM OUR CIO

Multi-nationals provide geographical and currency diversification

Low wage growth in the US is a concern but corporates are healthy

In addition to promising long-term returns, global equities also provide global exposure and therefore diversification. South Africa contributes 1% to global GDP and a similar percentage of corporate earnings. Yet most investors focus only on local investment opportunities. By investing in multi-national companies, investors can reap the rewards of global economic growth, without making any regional specific allocations. In addition, investing in a business that is geographically diversified usually diminishes specific foreign exchange rate risks.

A potential headwind to investing in global equities is the stagnant growth in US wages. Although data shows that more Americans are being employed, this has not led to the expected increase in consumer spending. The reason is that the wages received by most of these workers are not sufficient to enable excessive spending to support faster economic growth.

We prefer investing in multi-nationals: • with strong balance sheets who adjust their investments to emerging and developed markets as their business strategy informs • who are diversified geographically as well as across various industries

There are ways in which to manage the impact of rand volatility The biggest near-term risk for South African investors is volatility in the rand. However, there are ways in which professional investment managers can manage this risk effectively. Our investment managers, for example, have the required access and expertise to use currency-hedge instruments to manage the rand’s volatility. Having said that, the rand is now trading at a discount of greater than three standard deviations to purchasing power parity (PPP). We can make two key observations from this: • The rand is trading well above the long-term PPP benchmark, which appears to be excessive. Although a sovereign debt downgrade would result in additional short-term volatility, we are focused on the long-term outlook. • The margin at which the rand is currently trading indicates that further weakness is unlikely. In fact, the rand may even strengthen from these levels.

However, the balance sheets of corporates in the US are healthy. We expect the wage growth/consumer spending/corporate earnings wheel to start spinning once corporates start to use their higher-than-normal cash positions to hire more employees or to invest in their businesses. This could lead to more money in workers’ pockets, increased spending and better economic growth, which leads to corporate earnings growth.

We are overweight developed market equities In tough economic conditions we prefer to be overweight in defensive shares that offer some protection in volatile market conditions. We do, however, consider cyclical shares when underlying valuations are sound.

Global equities remain the most attractive long-term asset class Although global equities are trading at a premium, this asset class remains the most attractive asset class for long-term investors. The underlying valuations are still less stressed than most of the other asset classes and there are many quality firms to choose from.


INDUSTRY VIEWS Grow client wealth and improve business efficiency

Lizé Visser Executive Director Sales and Client-centricity PSG Wealth

How is your advice process structured to both facilitate a conversation with your clients to meet their needs, and comply with regulatory requirements? This article explores how the unbiased range of investments products and underlying investment instruments on our investment platform can help you provide quality advice, irrespective of your business model post RDR.

We are committed to helping you deal with increasing regulatory requirements

Product wrappers are increasingly parity products

To get exposure to the growth potential of shares and other investment instruments, diversify against the risk of loss, choose a product to meet client needs and meet regulatory requirements is no mean feat. In fact, that long sentence alone, without the work that this implies, is a tiring thought. We are therefore committed to applying our minds as a product provider, platform provider and fund provider to how we can help you grow client wealth and improve your business efficiency in a way that suits your business model.

Arguably (and increasingly), beyond specific minimums and fee differentials, the thing that tends to differentiate product wrappers is the range of underlying investments to which you have access. Many new generation product wrappers are increasingly becoming ‘parity’ products.

The definition of ‘independence’ will affect advisers In the UK RDR, the regulator defined advice as being ‘independent’ or ‘restricted’. The UK has continued to follow the line of ‘whole of market’ to define independence (implying the need to research and take the entire market’s products into account when providing advice). Anyone not offering ‘whole of market’ is therefore providing advice that is ‘restricted’ and is required to explain the nature of the restriction to their clients.

‘Independence’ in a South African context is still to be defined Some hold the view that unbiased advice is less about ‘whole of market’. They believe that independence is much more about the extent to which your decision-making process enables you to advise your clients objectively (‘without control or influence by a third party’). As consumers ourselves, we understand the value of an objective view in all the buying decisions we make. Financial services are no different.

How does our platform help you provide quality advice? With your advice, investors need to consciously make two decisions: 1. product wrapper choice (informed by need, time horizon to be able to access money and investment objective) 2. underlying investment choice

What do we mean by this? From a consumer point of view, and beyond the brand benefits, service and communication that a platform provides, a unit trust wrapper is a unit trust wrapper nowadays. On a product level for example, there is very little difference between the PSG Wealth Voluntary Investment Plan and many of the unit trust wrappers offered by other providers. Rather, the major difference between unit trust wrappers offered by different providers lies in the range of underlying investments to which you and your clients have access. The only thing that really matters (apart from small product-specific nuances) is the choice of product provider. Who will be around in the future? Who is committed to building robust capital adequacy and risk management processes? Who will be future-fit? And who is investing in their brand and building trust with consumers for tomorrow?

Can you use one platform and set of products and still provide quality advice? In short, yes. We believe that based on the range of choice available on the platform, and if third party funds are available on the same basis as our own funds, you can provide quality advice. It remains to be seen what conditions, if any, the regulator attaches in future to the use of a single platform to provide independent or unbiased advice. But in the interim, it may help to conduct a platform review and due diligence to formally match your business and client requirements to your platform of choice.


INDUSTRY VIEWS

Individual client suitability, objectivity and avoiding conflict of interest Our platform provides unrestricted access to a range of products. We also provide a range of ways to filter and search for an unrestricted range of PSG and third party funds with transparent cost disclosure across all products and funds. This enhances your ability to conduct the research and due diligence processes that you require to demonstrate suitability, objectivity and quality. You can easily: 1. access objective information about funds 2. use our filters and search tools to enhance your ability to research and conduct your due diligence processes 3. benefit from our internal product due diligence process to ensure that you have quality products available to meet a range of client needs (and to ensure that you meet your own client suitability criteria) At PSG Wealth, we are focused on providing you with the tools, products and funds to give your clients great advice. This means enhancing your ability to provide client-focused advice without compromising on business efficiency.

What about the trend to outsource investment decisions? If an advisory firm outsources some processes, they will have more time available to spend with their clients or refining the service they offer. By outsourcing, the adviser is acting as a facilitator of services. The result may be a strengthening of the relationship and the trust between the client and adviser, as

the perception of adviser and client working together in the best interests of the client will match the reality. Outsourcing of any nature inevitably has an impact on the risk associated with the adviser business. While the responsibility for choosing the correct third party still lies with the adviser, the standards of the service provided lies with the outsourced firm, effectively removing this risk from the advisory business. Only you know if you are best placed to select, monitor and manage clients’ portfolios, which is a resource hungry activity that requires specialist skills. Many adviser businesses continue to outsource some or all of this decision-making to a third party. Multi-managers and discretionary management are currently the outsourcing solutions of choice. We anticipate that the trend towards outsourcing investment processes will continue as RDR implementation approaches.

Irrespective of your model, there are pros and cons Operating a truly independent service does have certain advantages. There is the opportunity to add value to the firm’s brand by being able to promote a premium, top-of-the-range service. We acknowledge that it is difficult for any adviser firm to ‘give up’ what they have worked to create in terms of their independent brand; a brand that they may have been defending and promoting for decades. But it is a tough decision to decide how to position oneself to leverage more centralised corporate brand spend, risk management, compliance, investment processes and the personal advisory relationships that are at the heart of an advisory practice.


INVESTING AND TRADING The value of advice when trading shares Shaun van den Berg Head of Client Education PSG Wealth

A solid investment foundation is crucial to achieving long-term success. In the words of author Stephen R. Covey: ‘If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster’. We apply a number of timeless investment principles to ensure that we are helping you to grow your clients’ wealth. These aren’t new to you, but we hope that this handy reminder will be useful to share with your clients, especially if they display an interest in trading shares or other instruments.

Diversification reduces risk When it comes to risk, Warren Buffet is famous for saying, ‘Rule number one: never lose money. Rule number two: never forget rule number one’. When it comes to helping clients build a share portfolio and managing the risk of loss, diversification is important. Investing in at least eight to twelve shares across three to five different sectors can help reduce risk. Correlation is important as well. If you choose to spread an investment, it pays to spread this across various sectors with low correlation to each other.

A diversified portfolio is still subject to market risk While minimising risk is important, anyone who is investing in shares should want to achieve better investment returns than the market average. No matter how diversified a share portfolio is, you can never eliminate risk completely. You may avoid the risks associated with individual shares (‘unsystematic risk’) by diversifying a portfolio, but there is still a risk of an overall market correction (‘systematic risk’) that can affect most shares.

A diversified portfolio may dilute investment returns If you are invested across five sectors, and one performs exceptionally well, your gains will be diluted compared to if you were invested in that one sector alone. The more extensively diversified a share portfolio, the greater the likelihood that its performance will therefore, at best, reflect the performance of the overall market. It is a continuous process to manage the balance between concentration in certain shares and sectors, and the diversification of your portfolio.

Decide on an appropriate investment strategy An investment strategy can provide a way to select shares to include in a portfolio. Below is a summary of common investment strategies, which can be used individually, or in combination with one another. • Income investing aims to generate income by investing in shares that pay relatively high and regular dividends. • Value investing involves looking for shares that are undervalued, and buying them for less than what they are worth. • Growth investing focuses mainly on companies that show signs of above-average growth. • GARP (growth at a reasonable price) investing is a sound strategy due to it combining both the value and growth strategies, offering the best of both worlds. It involves investing in companies that are somewhat undervalued but still have solid sustainable growth potential.

Professional advice can minimise costly mistakes Irrespective of whether you manage a share portfolio for certain clients on a discretionary or non-discretionary basis, it pays to help clients become more informed about investment basics. These basics can help them avoid making costly mistakes. We hope that this summary provides you with a useful tool to use in your discussions with clients. It may act as a catalyst to help them understand the complexities inherent in trading shares; and warn them about the dangers of going it alone when it comes to trading the range of other complex instruments available through our platform.

Guard against over-diversification One of the advantages of a more concentrated share portfolio is that while it does increase risk, it also increases potential reward. Share portfolios that deliver the highest returns are typically not widely diversified, but rather have investments concentrated in a few carefully selected industries or market sectors that outperform the overall market substantially. A more concentrated portfolio also enables investors to focus on a manageable number of quality shares.


ESTATE MATTERS Are your clients’ wills up to date? Willie Fourie Head of Estate and Trust Services PSG Wealth

A will is easy to prepare and ensures that your money, possessions and property go to the right people when you die. From a financial planning point of view, discussing the need for a will with your clients or reviewing their current will can provide you with valuable insights about their assets, values, priorities and dependants. It also exposes any additional need for life cover and creates opportunities for you to add value to your clients by helping them structure their wealth.

Raise awareness about the importance of having a will Passing away without a will can have devastating consequences for your clients, especially if their loved ones are minors. It’s therefore crucial that clients understand what will happen to their assets if they pass away without a valid, up-to-date will. To raise awareness with them, it may help to formalise this as part of your review process with existing clients and when advising new clients. It is also vital to formalise the process to review their will if they confirm any change in circumstance.

Keep it simple and seamless Clients may delay setting up a will because they don’t understand the process. For example, many people think that drafting a will is a time-consuming and expensive exercise. In discussing wills with your clients, you can explain to them that a will does not have to be complicated to be effective, and that – depending of course on their personal circumstances – it could only cost about as much as a visit to their local family restaurant. Correcting perceptions can be the first step in encouraging your clients to draft and update their wills.

We believe that it should be compulsory to draft and maintain a will, especially where the needs of minors are at stake. In the case of employer pension funds, the trustees ensure that investors’ savings are controlled and managed for the dependants’ benefit. Unfortunately, there isn’t a control mechanism like this in place for discretionary assets owned by individuals.

We have the skills and accreditation to help The Fiduciary Institute of Southern Africa (FISA) has become the representative mouthpiece for the fiduciary industry in recent years. In future, fiduciary practitioners will be required to be members of FISA and to hold the Fiduciary Practitioner of South Africa (FPSA) designation to ensure sound advice. All PSG Wealth fiduciary practitioners are members of FISA. They can provide expert fiduciary advice and support on all aspects of estate planning, including drafting wills, trusts and deceased estate administration.

Be specific about the benefits of a will In addition to the common misconceptions, many people are also not aware of the specific benefits of having a will drafted by a professional fiduciary practitioner. A professionally drafted will can: • Reduce estate duty and other taxes payable. The long-term saving far outweighs the once-off expense of drafting the will. • Provide your clients with peace of mind. You can ensure that their instructions about how they wish their assets to be distributed will be fulfilled. • Create a testamentary trust to protect any children’s inheritance, so that it is managed in a responsible way. Although it’s not ideal to make clients feel uneasy, there are many examples of squandered wealth to illustrate the impact of not doing so.


QUARTERLY INSIGHT The benefits of our trading platform Grant Meintjes Head of PSG Securities PSG Wealth

In this article we showcase and explain the benefits of using our platform to trade online. This includes access to a choice of instruments, the flexibility to invest locally and internationally, stock-specific research and a range of support services and tools. Our online chat and tutorial support, fundamental analysis, charting tools and predefined suggestions aim to help you select investments to meet your clients’ objectives.

Shares offer the best return prospects over the long term History shows that, over the long term, shares deliver better returns compared to other asset classes such as bonds or cash, despite shares holding a higher investment risk. For example, over the last 10 years, the FTSE/JSE All Share Index (ALSI) returned 13.34% compared to the 7.5% return from the money market. To optimise returns over the long term, it is important to have a sufficient exposure to shares in a portfolio. The platform can assist irrespective of whether your clients need an actively managed equity fund, index tracking portfolio or a share portfolio.

We continue to enhance our securities offering PSG Wealth is uniquely positioned to help you service your clients across the spectrum of financial needs from the young saver through to the sophisticated executive. Within these archetypes, there are clients who may wish to delegate their financial decisions to you entirely as well as those who may wish to be active themselves for a certain portion of their portfolio, simply because they enjoy trading.

Advice is crucial, as is educational support about trading We believe advice is at the core of any financial plan and investment strategy. However, those clients that choose to transact themselves will be better off if we give them the tools and services that empower them to do so. This is why we provide access to a number of helpful tools and services to support the trade of securities online or through our trading desk via telephone. The telephonic service is provided at no charge – a unique industry advantage.

You can trade locally and internationally with one login Our platform gives clients access to shares, exchange traded products, hedge funds and derivative instruments on major markets both locally and abroad. Direct market access is provided to all local products along with access to 35 international markets. Clients may access offshore accounts

by making use of their offshore investment or discretionary allowance or the PSG institutional asset swap facility. You and your clients can access the local and international markets via the same platform and login.

We offer tools to facilitate stock selection Depending on one’s level of investment expertise and experience, selecting the appropriate shares to include in a portfolio can be challenging. The important thing is to make informed decisions based on a rational evaluation of the stock’s long-term prospects. Our platform gives you access to a range of tools and services that include the following: Predefined suggestions to match requirements As with any investment, you should have a clear investment objective when you start building a share portfolio. Once you have defined this, the platform can help you identify shares that meet your or your client’s requirements. Some of the predefined suggestions available include the ‘top 10 buys’ for large and small caps respectively, undervalued quality shares and investing for dividends. Company analysis from our research team If you or your clients are interested in a specific share, you can access our investment division’s company analysis on the share. This includes key financial data that can help inform your investment decision, such as the share price, dividend yield, and our recommendations. This, combined with our technical charting functionality can provide a helpful aid to help you assess opportunities. Convenient access to international opportunities Owning shares in foreign markets enables you to diversify portfolios and to participate in exciting growth opportunities. The increase in the amount South Africans are able to take in recent years, has pushed up the demand for international trading opportunities. The volatility and weakening of the rand over the past few months also sparked an increase in offshore investing. As a result, international trading has become much more accessible. You can invest in sought-after international companies such as Apple, Pfizer and Google though our platform. The offering includes ordinary shares, exchange traded funds and American depositary receipts.


QUARTERLY INSIGHT

Currency conversions for investments of R1 million or less You don’t need clearance from SARS on the first R1 million you invest offshore. In this case, our offshore securities team can help clients convert rands into the base currency of the offshore investment account, whether it is British pounds, US dollars or euros. More frequent investment insights Our stock research was previously outsourced to Independent Fundamental Research (IFR). We have created our own in-house investment research team that now operates under the PSG Wealth banner and reports to our Chief Information Officer, Adriaan Pask. The investment division provides fundamental research reports on stocks and also operates in the unit trust universe. Having an in-house team has enabled us to broaden our distribution of investment publications and, in so doing, help you to position your thought leadership with select clients. We now distribute daily, weekly, monthly and quarterly investment publications. This has proven an excellent value add, especially during periods of volatility such as that which followed the recent Brexit vote.

A reminder that the myPSG app provides a range of functionality 1. All PSG clients have access to the myPSG app which provides a dashboard view of a client’s position on all PSG products. It also enables clients to load any non-PSG advised products on the system so that they have one holistic view of their entire financial planning and investment portfolio. 2. You can generate customised financial reports for investment planning, life and risk planning, and provides access to tools such as a net tax calculator, gross tax calculator, maturity calculator and risk profiler. 3. The myPSG app also provides a handy way to stay on top of recent PSG investment commentary and direct links to PSG news feeds.

Explore a world of opportunities to grow wealth Please click here to find out more about the services and tools you and your clients can access through our online platform.


Disclaimer PSG Wealth is a brand underneath PSG Konsult Ltd, which consists of the following legal entities: PSG Multi-Management (Pty) Ltd, PSG Securities Ltd, PSG Fixed Income and Commodities (Pty) Ltd, PSG Scriptfin (Pty) Ltd, PSG Invest (Pty) Ltd, PSG Life Ltd, PSG Employee Benefits Ltd, PSG Trust (Pty) Ltd, and PSG Wealth Financial Planning (Pty) Ltd. Affiliates of the PSG Konsult Group are authorised financial services providers. The opinions expressed in this document are the opinions of the writer and not necessarily those of PSG Konsult Group and do not constitute advice. Although the utmost care has been taken in the research and preparation of this document, no responsibility can be taken for actions taken on information in this document. Should you require further information, please consult an adviser for a personalised opinion. Collective Investment Schemes in Securities (CIS) are generally medium- to long-term investments. The value of participatory interests (units) may go down as well as up and past performance is not a guide to future performance. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A fund of funds is a portfolio that invests in portfolios of collective investment schemes, which levy their own charges, which could result in a higher fee structure for these portfolios. Fluctuations or movements in the exchange rates may cause the value of underlying international investments to go up or down. A schedule of fees and charges and maximum commissions is available on request from PSG Collective Investments (RF) Limited. Commission and incentives may be paid and if so, are included in the overall costs. Forward pricing is used. The portfolios may be capped at any time in order for them to be managed in accordance with their mandate. Different classes of participatory interest can apply to these portfolios and are subject to different fees and charges. Figures quoted are from I-Net, Stats SA, SARB, © 2016 Morningstar, Inc. All Rights Reserved for a lump sum using NAV-NAV prices net of fees, includes income and assumes reinvestment of income. PSG Collective Investments (RF) Limited is a member of the Association for Savings and Investment South Africa (ASISA) through its holdings company PSG Konsult Limited. Conflict of Interest Disclosure: The fund may from time to time invest in a portfolio managed by a related party. PSG Collective Investments (RF) Limited or the Fund Manager may negotiate a discount on the fees charged by the underlying portfolio. All discounts negotiated are reinvested in the fund for the benefit of the investor. Neither PSG Collective Investments (RF) Limited nor the Fund Manager retain any portion of such discount for their own accounts. PSG Multi-Management (Pty) Ltd (FSP No. 44306), PSG Asset Management (Pty) Ltd (FSP No. 29524) and PSG Collective Investments (RF) Limited are subsidiaries of PSG Group Limited. The Fund Manager may use the brokerage services of a related party, PSG Securities Ltd.

