Dear Pension Fund Member
As a member of the University of Johannesburg Pension Fund you can select the investment portfolio into which your fund credit is invested. The performance of your investment is important in assisting you to achieve your retirement goals (please refer to Understanding your Pension Fund Benefit 1 as sent out earlier this year – attached for ease of reference). Also attached, please find our member investment choice brochure reflecting which portfolios are available to you.
In order to understand our investment portfolios, we also need to understand how these portfolios are measured. The Board of Trustees use three types of benchmarks:
1. Asset market indices directly measure the performance of the various asset classes the Fund’s asset managers may invest in, be it equity, bonds, cash or listed property both locally or offshore. The Fund’s asset manager may invest in a combination of these asset classes or in one particular asset class, as is the case with the Money Market portfolio which invests solely in cash and cash-like investments. To measure the performance of the Fund’s portfolios relative to the asset classes an asset manager may invest in, the Fund makes use of a passive benchmark which serves as a reference portfolio comprising the asset classes, and in proportions related to the investment goal of the portfolio, an asset manager may invest in.
2. Peer-relative benchmarks serve as a comparative tool to understand how the Fund’s portfolios are performing relative to other, non-Fund related, portfolios and asset managers in the market who seek to achieve the same or very similar investment goals. An example of a Peer-relative benchmark is the Alexander Forbes Global Large Manager Watch Average (GLMW Average) which reflects the average investment return of 11 asset managers who all seek to achieve a similar investment goal over time. It is an appropriate measure for the Wealth Creation portfolio as the 3 asset managers which make up this portfolio form part of the GLMW Average survey.
3. The final type of measure is an inflation-linked target. Each portfolio carries its own CPI+X% target which is related to how aggressive the portfolio is in seeking investment returns and growth of a member’s capital. The Wealth Creation portfolio is the most aggressive portfolio. It is invested the largest proportion of equity investments relative to other portfolios. The Money Market portfolio is the least aggressive as it seeks to protect and conserve a member’s capital. The difference in investment goals of the these two portfolios is captured in differing inflation-linked targets; the former carries a CPI+6% target while the latter a CPI+1.5% target.
Attached, please find the quarterly investment report containing more information regarding the fund’s investment portfolio performance.
The Trustees takes this opportunity to remind you that it is your responsibility to select an appropriate investment portfolio. As such, please discuss your options with your financial advisor.
As always – should you have any queries regarding your pension fund, please do not hesitate to contact me.
Kind regards,
Evette
Member investment choice – Information brochure 2018