“We are living and working in volatile times,” said Prabashini Moodley, Managing Director of Old Mutual Corporate, as she kicked off the 2023 Old Mutual Corporate Investment Roadshow. Uncertainty has become the new normal, she added, emphasising that how you navigate this moment will shape your future retirement outcomes.  

Her advice – “Act now with the future in mind” – was in keeping with the event’s theme, Invest with Vision: Deliberately Shaping Tomorrow’s Investment Outcomes. 

Speakers at the annual Investment Roadshow event unpacked this theme, exploring the state of the economy, the regulatory environment and what it all means for retirement-fund members. 

What’s going on with the economy?

Building on Prabashini’s point, Izak Odendaal, Investment Strategist for Old Mutual Multi-Managers spoke about the market volatility and unexpected events of the past year. The US economy was expected to slow and China was expected to thrive; in both cases, the exact opposite happened.

Izak pointed out that, locally, private investments will play a vital role in addressing infrastructure bottlenecks and raising South Africa's medium-term growth outlook. He added that despite headwinds – including high unemployment, weak business confidence and continuing energy supply challenges – the local economy is not collapsing and growth opportunities do exist.

Despite the lingering effects of the COVID-19 pandemic, coupled with structural economic challenges, South African assets already discount a lot of bad news and offer investors value.

Is South Africa uninvestable? 

The Investment Roadshow speakers certainly didn’t think so. The general feeling was that while the local economy has its challenges, it also holds plenty of investment potential. Nosibusiso Ngqondoyi, Head of Local and Global Property and Hedge Funds at Old Mutual Multi-Managers, said that while there are risks involved in investing in South Africa, the yield and value on offer is compelling – a sentiment echoed by Sam Zozi, Senior Investment Specialist at Old Mutual Corporate.

When asked where he sees the rand in a year’s time, Hywel George, Director of Investments at Old Mutual Investments, said: “I see it stronger. South Africans have a great propensity to be negative about where we live. But we do have enormous strengths, and the private sector continues to do great things.”

Advances in life-stage investing

Dwayne Kloppers, Liability-Driven Investment Strategist for Old Mutual Investment Group, introduced Old Mutual’s new Retirement-Driven Investment (RDI) portfolios, which elevate traditional life-stage investing to a new level by carefully and automatically phasing a member’s savings from a growth portfolio into a more conservative portfolio at retirement.

The key differentiator, he explained, is that RDI’s glidepath assumption is specific to the two growth and defensive portfolios, and the “set and forget” approach to retirement investing is a thing of the past. The portfolios and life-staging glidepath will be managed on an ongoing basis. 

Passive funds aren’t all that passive

Index tracker funds may be grouped under the heading “passive” investment strategies and products, but fund managers are far from hands off on these products in their portfolios.

“Although index trackers are passive investments,” said Andrew Davison, Head of Client Business, “they still require active decisions by fund managers. The index in which fund managers choose to invest is important, as it determines the ultimate investment outcome. So, an important consideration is whether or not the index being tracked is appropriate for the desired outcome.”

How will the Two-Pot System shape investment strategies?

National Treasury’s proposed Two-Pot System for retirement savings was a hot topic of discussion. Should separate investment strategies be considered for the accessible Savings Component and the long-term Retirement Component?

“We believe that we should stay true to the nature of these investments, which is long-term for retirement,” said Martin Poole, Investment Consultant at Old Mutual Corporate Consultants.

He added that while retirement-fund members will be able to access 33% of their future retirement contributions from the Two-Pot System’s effective date of 1 March 2024, they should only do so in absolute emergencies. And in doing so, they should know that they are potentially undermining their future selves.