Most South Africans do not have a stable, adequate and consistent flow of income throughout their lives. This means most are unlikely to retire comfortably, compounding successive “sandwich generations” of people providing for both children and parents. Part of this problem is compounded by members’ retirement savings not being optimally invested. So, how can we help solve the nation’s income security problem with a solution that withstands periods of extreme market volatility?

Supporting employees on their savings journeys comes with a significant responsibility: helping them make decisions to grow their assets and protect their long-term financial wellbeing. During periods of volatility, emotions can run high, prompting members to switch funds or cash out investments at precisely the wrong time.

We need a solution that makes the journey toward retirement feel less precarious. A solution that aims for higher returns, but lowers the risk usually associated with those returns, consistently, and for everyone. We need a safer road when the world feels uncertain – as it does in 2026.

Marvin Nair, Investment Solutions Executive at Old Mutual Corporate, says that, right now, we’re in one of the strangest market environments he has seen. “You almost just need to mention AI in relation to a company and suddenly the stock takes off.” It’s this kind of AI sensationalism and reactions to political sentiment that seems to be moving the market, rather than the fundamentals.

Navigating markets moved by emotion

Here, Marvin gives some examples of what seems to be moving the market at the moment:

• AI: Even the players powering and storing it are “winning”. For example, Dell – formerly perceived as a PC dinosaur – has seen its stocks soar after its AI server revenue surged. And Nokia – once a paper mill – is also quietly conquering; it’s now one of the strongest- performing AI infrastructure stocks of the year.

• Shifts in sentiment: Erratic sentiment shifts seem to be the norm. Google search trends suggest interest in Bitcoin is dropping, in an unforeseen 2026 twist. Meanwhile, NVIDIA outperformed in terms of earnings and revenue, but its share price tumbled as investors questioned whether its trajectory could be sustained given fierce competition.

• Politicians: For example, Boeing shares flew south following Trump’s comment on China’s plane order in May.

Gumani Tshikovhi, Client Director at Old Mutual Corporate, elaborates, “At the end of 2025, everything looked glossy for a fantastic 2026. However, since February, nobody has all the answers. Every economist has turned politician, and much of the conversation is around Trump, what’s happening with Iran, and all these geopolitical developments. That’s what is driving the markets – not necessarily the fundamentals.

“And that’s where emotions and reactions can start eroding investor capital. People are looking for quick fixes. They’re trying to time the market, read between the lines of political statements and determine what’s next. In this environment, long-term investing is critical. Our fund’s structure stays focused on that; we don’t make quick tactical calls each time the market moves. We entered 2026 with a clear view of our asset allocation and investment strategy. We have enough diversification and dry powder to maintain our position. Now is the time to stay invested rather than react to headlines.”

Seeking stability when everything feels off-kilter

When it comes to retirement savings – often South Africans’ only form of savings at all – certainty is what helps people sleep well at night. Returns are only as good as their reliability.

That’s where smoothing has the proven performance edge across peak periods of volatility. In fact, since its inception on 1 April 2007 to 30 April 2026, the AGP Smooth portfolio has delivered a gross annualised return of 11.36% p.a., outperforming the Alexander Forbes Global Large Manager Watch median balanced fund return of 10.66% p.a. over the same period. This demonstrates that AGP has not only provided a smoother investment journey for members, but has also generated competitive long-term returns relative to the broader balanced fund universe. That’s close to two decades, across rocky chapters like the Global Financial Crisis and Russia-Ukraine war. Marvin adds that, critically, reliability is twinned with growth, “AGP currently has 88% allocated to growth assets, compared to 75-80% for a typical balanced fund, with about 15% of this invested in alternatives.” This matters

By investing about 10% (actual) in local alternatives – infrastructure, education, renewable energy, and more – AGP is helping to build a country that members want to retire into. Gumani adds, “Our real differentiator is our exposure to alternatives, which provide both returns and impact. Alternatives can provide returns that are less correlated to traditional asset classes. This has been valuable in the decade leading up to the recent AI-driven equity market rally, where equity returns were fairly subdued and alternatives were shooting the lights out. They have a crucial role in diversification and enhancing long-term risk-adjusted returns.”

Members are ultimately looking for outcomes. They need to earn a certain real return to meet their retirement and long-term savings goals. To achieve that, we need to give them exposure to asset classes most likely to generate growth over time. The challenge is that these assets are inherently volatile – and people feel losses more acutely than gains.

Losses outweigh gains, every time

That’s another factor that counts. People’s natural loss aversion is not unfounded. Rule number one is to never lose money; if you have R1 and lose 50% of your asset, you will need to grow the remaining 50c by 100% to get back to your original R1. Reacting to the market often has long-term costs. During downturns, trustees could face pressure to shift investment strategies. Members may switch funds and lock in losses. However, smoothing helps to protect members from that loss experience, reducing negative returns and keeping decisions anchored in long-term objectives. This is also where guarantees can play a major role in giving greater peace of mind that there is a defined outcome, irrespective of market movements.

The big takeaway

Marvin adds, “Smoothing - with the scale of the largest smoothed bonus policyholder pool - enables us to give members access to growth in a more stable way that moderates the impact of short-term swings. It doesn’t remove volatility in the underlying growth assets but it does significantly reduce investors’ experience of volatility by distributing returns in a smoother fashion.” Strong returns are partly held back in reserves to cushion weaker returns over time. While a typical balanced fund reflects market moves more immediately in unit values, smoothing means a steadier experience, with accumulated reserves released through bonuses, giving members sustained stability in a structured way.  Solving South Africa’s income security crisis means finding a solution that withstands market fluctuations. We want to grow what people have, but growth assets are volatile. By spreading returns more evenly, smoothing dampens the impact of drawdown periods. It means lower risk, with higher returns, more consistently, for everyone.