august 2020 - momentum · a retirement fund would invest in more than 7 years from retirement will...

December 2020

http://www.momentuminv.co.za/

Momentum passive lifestage

portfolio range returns for December 2020

Lifestage progression

The portfolio range has a lifestage model, which allows a member of a retirement fund to switch from a more aggressive investment portfolio with longer

terms to retirement to more conservative and, ultimately, defensive portfolios as a member approaches retirement. The lifestage model uses a

combination of asset classes, managed by multiple investment managers with different investment strategies to achieve its objectives. The lifestage

philosophy uses ‘term to retirement’ as a proxy for the risk a member is able to adopt. This means, for example, the asset classes in which members of

a retirement fund would invest in more than 7 years from retirement will have a different emphasis from those closer to retirement. It stands to reason

that when a member of a retirement fund has a long-term investment horizon, the member should be invested in growth asset classes, which would

include a significant allocation to higher yielding asset classes and strategies also characterised by a higher level of risk (such as local equities and

property as well as global equities). Although these asset classes are volatile, they provide returns above inflation over the long term. However, as a

member moves to a medium-term investment horizon, the exposure to volatile asset classes should be gradually reduced to protect members in a

retirement fund from being exposed to unnecessary volatility.

Momentum’s purpose is to enhance the lifetime financial wellness of people, their communities and their businesses, building a reputation for innovation

and trustworthiness. In this way, we aim to become the preferred lifetime financial wellness partners to our clients. In keeping with the financial wellness

framework, we have developed an investment philosophy that maximises the probability of you achieving your unique investment goals. We call this

investment approach Momentum Investments’ outcome-based investing. In response to the ever-evolving investment landscape, we manage our

portfolios in such a way that they set their sights beyond mere benchmarks and instead focus on the things that matter the most to you – ensuring we

maximise the probability of you achieving your investment goals. This portfolio range is managed using the outcome-based investment philosophy.

Investment portfolio allocation Portfolio Building block Term to retirement

Momentum Passive Accumulator CPI + 4% More than seven years to retirement

Momentum Passive Builder CPI + 3% Five to seven years to retirement

Momentum Passive Consolidator CPI + 2% Three to five years to retirement

Momentum Passive Defender CPI + 2% Less than three years to retirement

Investment returns summary Portfolio returns1

One

year

Two

years

Three

years

Four

years

Five

years

Six

years

Seven

years

Momentum Passive Accumulator 0.94% 5.25% 1.00% 4.21% 3.45% 4.75% 5.68%

Benchmark -0.40% 4.72% 0.65% 3.93% 3.30% 4.66% 5.61%

Momentum Passive Builder 1.73% 5.19% 1.69% 4.53% 3.81% 4.99% 5.89%

Benchmark -1.06% 3.66% 0.68% 3.74% 3.29% 4.60% 5.54%

Momentum Passive Consolidator 4.02% 6.12% 3.29% 5.39% 4.90% 5.58% 6.34%

Benchmark 1.62% 4.74% 2.33% 4.66% 4.39% 5.18% 5.99%

Momentum Passive Defender 5.77% 7.08% 4.63% 5.90% 5.91% 5.98% 6.50%

Benchmark 3.86% 5.86% 3.68% 5.13% 5.27% 5.45% 6.04%

Key:

1 The inception date of these portfolios is 1 April 2015 and actual portfolio and benchmark returns have been used since then. Before 1 April 2015, investment returns are based on back-tested returns. The back-tested returns are calculated

using the actual building-block returns.

Momentum Passive Lifestage Portfolio Range

Momentum Passive Accumulator Portfolio

December 2020

Investment strategy Investment portfolio mandate

This investment portfolio is aimed at members of a retirement fund who are in the accumulation phase of investing. It has a long-term investment horizon and, therefore, the aim is to maintain an average exposure of 70% to growth asset classes (local and global equities and property). The allocations between asset classes, are actively managed, taking the market environment into account.

The long-term return objective of this portfolio is inflation plus 4% to 5% over six-year rolling periods. Different combinations of asset classes are considered and an optimum allocation is selected to achieve this objective with an acceptable degree of certainty. This portfolio is managed in accordance with the investment limitations set out in Regulation 28 of the Pension Funds Act.t.

Benchmark allocation

Asset Class Allocation BenchmarkLocal equities 42.50% FTSE/JSE Capped Top 40 IndexLocal property 4.00% FTSE/JSE SA Listed Property IndexLocal bonds 15.00% FTSE/JSE All Bond IndexLocal cash 13.00% Short-term Fixed Interest Composite IndexGlobal 25.50% Composite benchmark

Investment returns

One Month

Three Months

OneYear

Three Years

Five Years

Since Inception

Portfolio 2.47% 5.49% 0.94% 1.00% 3.45% 9.62%Benchmark 2.88% 4.97% -0.40% 0.65% 3.30% 9.58%CPI + 4.0% p.a 7.18% 7.97% 8.62% 9.67%

Risk analysis

(Calculation based on five-year period) Portfolio Benchmark Volatility 11.8% 12.4%Maximum drawdown -18.6% -19.7%Worst month -12.6% -13.6%Best month 10.9% 11.9%

Portfolio Benchmark

Asset allocation

The asset management fees exclude performance fees where applicable, as well as investment-management fees recovered by the underlying investment managers within the portfolio.The inception date of this portfolio is 1 April 2015 and actual portfolio and benchmark returns have been used since then. From 1 February 2010, investment returns are based on a combination of actual and back-tested returns. The majority of the back-tested returns are based on actual building-block returns as most have lengthy track records.The termination period for the Momentum Passive Lifestage portfolios is three months given that the underlying asset class returns are in most cases guaranteed.

Comments

Investment portfolio informationInception DateInvestment Horizon

Risk Profile

April 2015Long term

One Month One Year WeightingLocal equity managerCapped Swix 5.49% 2.49% 52.3%Momentum Protected Equity -1.0%Local bond managerGOVI 2.50% 8.48% 11.8%Local inflation-linked bond managerIGOV 2.25% 3.84% 2.1%Local property managerMomentum SA Listed Property Tracker 13.61% -34.69% 0.9%Local cash managerALUWANI 0.33% 6.54% 4.4%Global equity managerMSCI World Equity Index USD -1.47% 20.97% 25.7%Global bond managerAMUNDI -3.33% 14.06% 1.6%Global property managerBlackrock Global Property -2.58% -5.65% 2.1%Total 100%

Investment manager allocation and returns

On 1 November 2020, the real return expectation for this portfolio was revised from inflation plus 6% to a range of inflation plus 4% to 5%.Changes were made to the strategic asset allocations on 31 October 2020.

No performance number is shown for the equity hedges, as these mark to market on a daily basis. The displayed weight shown within the fund can be interpreted as that hedge's contribution to the fund's market value.

Notes


Momentum Passive Builder Portfolio

December 2020


This investment portfolio is aimed at members of a retirement fund who are beginning to exit the accumulation phase of investing. It has a medium- to long-term investment horizon and, therefore, the aim is to maintain an average exposure of 55% to growth asset classes (local and global equities and property). The remaining exposure is to asset classes that should preserve the purchasing power of the capital accumulated. The allocations between asset classes, are actively managed, taking the market environment into account.

The long-term return objective of this portfolio is inflation plus 3% to 4% over five-year rolling periods. Different combinations of asset classes are considered and an optimum allocation is selected to achieve this objective with an acceptable degree of certainty. This portfolio is managed in accordance with the investment limitations set out in Regulation 28 of the Pension Funds Act.



Investment returns

One Month

Three Months

OneYear

Three Years

Five Years

Since Inception

Portfolio 2.31% 5.38% 1.73% 1.69% 3.81% 9.51%Benchmark 2.43% 4.32% -1.06% 0.68% 3.29% 9.34%CPI + 3.0% p.a 6.18% 6.97% 7.62% 8.67%

Risk analysis


Portfolio Benchmark

Asset allocation


Comments


Risk Profile

April 2015Medium to long term




No performance number is shown for the equity hedges, as these mark to market on a daily basis. The displayed weight shown within the fund can be interpreted as that hedge's contribution to the fund's market value.

Notes


Momentum Passive Consolidator Portfolio

December 2020


This investment portfolio is aimed at members of a retirement fund who are in the consolidation phase of investing. It has a medium-term investment horizon and, therefore, the aim is to maintain an average exposure of 40% to growth asset classes (local and global equities and property). The remaining exposure is to asset classes that should preserve the purchasing power of the capital accumulated. The allocations between asset classes, are actively managed, taking the market environment into account

The long-term return objective of this portfolio is inflation plus 2% to 3% a year over four year rolling periods. All combinations of asset classes are considered and an optimum allocation is selected to achieve this objective with an acceptable degree of certainty. The risk of exposure to losses in the short term is managed by diversification to a number of asset classes. This portfolio is managed in accordance with the investment limitations set out in Regulation 28 of the Pension Funds Act.



Investment returns

One Month

Three Months

OneYear

Three Years

Five Years

Since Inception

Portfolio 2.12% 4.91% 4.02% 3.29% 4.90% 9.37%Benchmark 1.81% 3.69% 1.62% 2.33% 4.39% 9.20%CPI + 2.0% p.a 5.18% 5.97% 6.62% 7.66%

Risk analysis


Portfolio Benchmark

Asset allocation


Comments


Risk Profile

April 2015Medium term




No performance number is shown for the equity hedges, as these mark to market on adaily basis. The displayed weight shown within the fund can be interpreted as thathedge's contribution to the fund's market value.

Notes


Momentum Passive Defender Portfolio

December 2020


This investment portfolio is aimed at members of a retirement fund who are close to retirement. It has a short- to medium-term investment horizon and, therefore, the aim is to maintain an average exposure of 60% to asset classes that should preserve the purchasing power of the capital accumulated. A large emphasis is placed on capital preservation in the shorter term, which is achieved through diversification to defensive strategies and uncorrelated return profiles. The allocations between asset classes, are actively managed, taking the market environment into account

The long-term return objective of this portfolio is inflation plus 2% to 3% over three-year rolling periods. All combinations of asset classes are considered and an optimum allocation is selected to achieve this objective with an acceptable degree of certainty. This portfolio is managed in accordance with the investment limitations set out in Regulation 28 of the Pension Funds Act.



Investment returns

One Month

Three Months

OneYear

Three Years

Five Years

Since Inception

Portfolio 1.65% 4.04% 5.77% 4.63% 5.91% 8.69%Benchmark 1.81% 4.55% 3.86% 3.68% 5.27% 8.47%CPI + 2.0% p.a 5.18% 5.97% 6.62% 7.66%

Risk analysis


Portfolio Benchmark

Asset allocation

The asset management fees exclude performance fees where applicable, as well as investment-management fees recovered by the underlying investment managers within the portfolio.The inception date of this portfolio is 1 April 2015 and actual portfolio and benchmark returns have been used since then. From 1 February 2010, investment returns are based on a combination of actual and back-tested returns. The majority of the backtested returns are based on actual building-block returns as most have lengthy trackrecords.The termination period for the Momentum Passive Lifestage portfolios is three monthsgiven that the underlying asset class returns are in most cases guaranteed.

Comments


Risk Profile

April 2015Short term



On 1 November 2020, the real return expectation for this portfolio was revised frominflation plus 4% to a range of inflation plus 2% to 3%.Changes were made to the strategic asset allocations on 31 October 2020.

No performance number is shown for the equity hedges, as these mark to market on adaily basis. The displayed weight shown within the fund can be interpreted as that hedge's contribution to the fund's market value.

Notes

268 West Avenue Centurion 0157 PO Box 7400 Centurion 0046Telephone ++27 (0)86 065 7585 Facsimile +27 (0)12 675 3970

[email protected] www.momentum.co.za/FundsAtWork

Disclaimer:This document was prepared by Momentum Outcome-based Solutions (Pty) Ltd, which is an authorised financial services provider (FSP19840) in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002 (FAIS Act), as may be amended and/or replaced from time to time and a part of Momentum Metropolitan Holdings Limited, rated B-BBEE level 1.

The information used to prepare this document includes information from third-party sources and is for information purposes only. This document does not constitute any form of advice and should not be used as a basis to make investment decisions or as an offer or a solicitation to purchase any specific product. Given that past returns may not be indicative of future returns and the value of investments will fluctuate over time, independent professional advice should always be sought before making an investment decision. Fluctuations in exchange rates may cause the value of international investments, if included in the mandate, to go up or down. Investors should be aware that investing in a financial product entails a level of risk that depends on the nature of the investment. The merits of any investment should be considered together with the investor�s specific risk profile and investment objectives. Although reasonable steps have been taken to ensure the validity and accuracy of the information in this document, Momentum Metropolitan Life Limited does not guarantee the accuracy, content, completeness, legality or reliability of the information contained in this document and no warranties and/or representations of any kind, expressed or implied, are given to the nature, standard, accuracy or otherwise of the information provided nor to the suitability or otherwise of the information to your particular circumstances. Under no circumstances shall Momentum Metropolitan Life Limited, its affiliates, directors, officers, employees, representatives or agents (the "Momentum Parties") have any liability to any persons or entities receiving the information made available in this document for any claim, damages, loss or expense, whether caused by Momentum Metropolitan Life Limited or the Momentum Parties' negligence or otherwise, including, without limitation, any direct, indirect, special, incidental, punitive or consequential cost, loss or damages, whether in contract or in delict, arising out of or in connection with information made available in this document, whether relating to any actions, transactions, omissions resulting from this information, or relating to any legal proceedings brought against you as a result of this information, and you agree to indemnify Momentum Metropolitan Life Limited and the Momentum Parties accordingly. Investment returns for periods exceeding one year are annualised. The information contained in this document may not be used, published or redistributed without the prior written consent of Momentum Metropolitan Life Limited. Under no circumstances will Momentum Metropolitan Life Limited be liable for any cost, loss or damages arising out of the unauthorised dissemination of this document or the information contained herein, and you agree to indemnify Momentum Metropolitan Life Limited and the Momentum Parties accordingly. For investments in collective investments schemes (CIS), please refer to the minimum disclosure document (MDD), which is available from the respective CIS manager. The MDD contains important information relating to investment in the respective CIS.

Sources: Momentum Investments, Morningstar, Iress, msci.com, yieldbook.com, ft.com

Momentum FundsAtWork

august 2020 - momentum · a retirement fund would invest in more than 7 years from retirement will...

Documents