2017 presented the proverbial rollercoaster ride of investment experience from downgrades to Trump to accounting irregularities to CR17. It was a year that had it all and so much more. It was also the year that the revamped Sanlam Lifestage Accumulation Portfolio delivered exactly what it was designed to do – incremental outperformance without a bias to any particular investment style.
The Sanlam Lifestage Accumulation portfolio achieved 15.43% return for 2017… better than the performance of the investment defaults of the other major commercial umbrella funds!
Product owner, Danie van Zyl, attributes this fantastic result to the changes that were made to the Sanlam Lifestage Accumulation Portfolio during 2016. “We were not satisfied with our performance to that point and undertook a serious review of our strategy, which resulted in major changes to the structure of the portfolio”, say van Zyl. Such changes included utilising a core-satellite model, using passive building blocks for certain asset classes where markets were proven to be fairly efficient and by applying active management and structures to enhance yield from sectors where such strategies have been shown to be effective. Commenting on this hybrid structure van Zyl added “From our interaction with both consultants and trustees, most retirement funds have already moved away from the binary view that a default investment strategy should be either active or passive.”
He continued, “We diversified our strategy across investment styles and managers so that we don’t take a bet towards any particular investment style or manager. Our view is that long term wealth creation should not be based on large bets but rather built upon disciplined risk management”.
The approach of robustly managing risks is further reflected in the administrative design of the Sanlam Lifestage strategy where members are transitioned between the Accumulation Portfolio and their selected Preservation Phase portfolio by 50 monthly switches. “This staggered approach reduces members’ risk exposure to large market moves. Most other providers perform chunky switches once a year, which presents the very real risk that losses are locked in when moving between portfolios. Our approach smooths the transition to mitigate this risk in a responsible manner” adds van Zyl. “Speaking of the Preservation Phase, we are one of the (if not the only) provider that allows for 3 Preservation Phase portfolios so that the member is able to select an end stage portfolio that best matches their likely choice of annuity. In doing so, we provide the platform to mitigate mismatch risk between one’s retirement wealth and the eventual cost of an annuity.”
In applying the Wealthsmith™ ethos of doing the right things in the right way, the trustees of the Sanlam Umbrella Fund commissioned the services of an independent investment consultant to review the revamped Sanlam Lifestage Accumulation Portfolio. The independent consultant agreed with the changes and provided their stamp of approval. This degree of independent oversight is rare in the commercial umbrella fund space and demonstrates the trustee’s commitment to robust governance and decision making.
Dawie de Villiers, CEO of Sanlam Employee Benefits, concluded that, “I am proud of what my team has achieved here especially given the volatile circumstances that our economy faced in 2017. They applied their minds and crafted a portfolio that is truly special. To the extent that it won a Best in Class Trophy at the Institute of Retirement Funds Africa awards ceremony for investment practices.
Beating our peers over 2017 is the cherry on top!”
For more information on the Sanlam Lifestage strategy, please visit: Sanlam Lifestage