CONFIDENT INVESTMENT AROUND RETIREMENT

Transcription

1 CONFIDENT INVESTMENT AROUND RETIREMENT Protect your clients against market volatility, especially in the crucial years leading up to, or the early years after their retirement. THINK WORLD CLASS GLACIER BY SANLAM RETIREMENT INVESTMENT - MARCH 2018

2 THE MONTHLY BONUS FUND BY SANLAM The Monthly Bonus Fund protects investors against short-term market volatility by smoothing out investment returns and providing guarantees on payments. HOW IT WORKS The returns of the underlying investments in the Monthly Bonus Fund are distributed to investors through monthly bonus declarations. These bonuses reduce the volatility (fluctuation) of returns over time and cannot be negative. How is it done? A portion of the returns are held in reserve during periods of strong fund performance, and distributed during periods of poor performance. By doing this, investors don t experience the ups and downs they might experience in regular marketlinked portfolios. It is important for clients to understand that smoothing does not reduce or increase returns generated by the underlying investments; it merely changes the timing of when these returns are released. Over time, the bonuses should produce a similar return to the underlying investments in the fund (after deduction of the guarantee costs). WHO SHOULD INVEST? The Monthly Bonus Fund is suitable for investors who want: to lower investment risk without giving up return potential to earn competitive real returns in the form of monthly bonuses more certainty about the benefits they will receive at retirement to avoid the impact of volatile markets and negative investment returns while drawing a retirement income to remain invested for three to five years and not regularly switch between underlying investments Positive real returns Monthly bonuses cannot be negative, and have historically performed in line with inflation + 4%. Smooth return profile Reduce market volatility without giving up the potential to earn competitive real returns. Guarantee on payments Protect the value of your clients retirement benefits, regardless of market conditions. GLACIER BY SANLAM RETIREMENT INVESTMENT - MARCH

3 WHEN TO CONSIDER THE MONTHLY BONUS FUND Market volatility can pose a significant risk for investors just before or just after retirement, when their retirement capital is at its most vulnerable to the impact of market downturns. Final years of accumulation of retirement savings First years of drawing an income from retirement savings The final years before retirement is when a retirement portfolio is at its largest and benefits the most from investment growth. It is also when it is most sensitive to the impact of negative investment returns. Should there be a downturn in the market and not enough time for the investment to recover before retirement, the investor may be forced to realise the loss. This can significantly deteriorate their retirement capital. Using the Monthly Bonus Fund as part of a pre-retirement portfolio can help protect retirement capital in those final years leading up to retirement. Suffering a loss of retirement capital early in retirement can have a detrimental impact on an investor s future capital and potential to sustain their retirement income. When drawing a retirement income after suffering a capital loss, an investor essentially locks in this loss and reduces the amount of capital that is left to grow. Using the Monthly Bonus Fund as part of a retirement income portfolio, can help protect retirement capital against the risk of early losses. Benefits of a smoothed return profile Excess growth held back, in reserve Reserve Excess growth in reserve released Monthly Bonus Fund RETIREMENT CAPITAL Typical Balanced Portfolio SAVING FOR RETIREMENT RETIREMENT INCOME FROM RETIREMENT SAVINGS Protect the value of your clients retirement benefits, regardless of market conditions THE GUARANTEE The Monthly Bonus Fund has two prices, being the book value and the market value. The book value is the fund price that is guaranteed regardless of market conditions. It grows in line with declared bonuses and it is not as volatile as the prices of the underlying assets, which fluctuate according to market conditions. The market value is the amount obtainable by selling the underlying assets in the market. The book value is guaranteed for the following payments: income payments, fee recoveries and repurchase or transfer transactions at retirement or death. Other exits from the Monthly Bonus Fund such as switching out of the fund, or repurchases from the fund will occur at market value, which may be lower than the book value. THE FUNDING LEVEL The book value can be greater or smaller than the market value, or equal to it. The ratio of the market value to book value is known as the funding level of the portfolio. If the funding level is greater than 100%, the portfolio is fully funded. This means that the market value is greater than the book value. If the funding level is less than 100%, the portfolio is underfunded. This means that the market value is less than the book value. The funding level is disclosed on the Monthly Bonus Fund fact sheet. GLACIER BY SANLAM RETIREMENT INVESTMENT - MARCH

4 Underlying portfolio The underlying portfolio of the Monthly Bonus Fund has exposure to diverse assets like domestic equities, bonds and property, as well as international assets. While the fund essentially invests in a balanced investment portfolio, it has less exposure to risky assets than a typical balanced fund. The fund is Regulation 28 compliant. The portfolio is actively managed by Sanlam Investment Management (SIM), while an investment committee - headed up by Sanlam s statutory actuary - oversees the investments. Strong guarantee and governance structure The Monthly Bonus Fund was launched in 1998 and is backed by the considerable financial strength of Sanlam Life, who provides the guarantee, ensuring peace of mind for investors. The Sanlam Life Board has put a strong governance structure in place to ensure sound management of the Monthly Bonus Fund. Availability The Monthly Bonus Fund is available on the following Glacier platform solutions: The Personal Portfolios Retirement Annuity The Personal Portfolios Preservation Funds The Glacier Investment-linked Living Annuity The Glacier Investment-linked Lifetime Income Plan Fees and charges are payable The following annual management fees apply to the Monthly Bonus Fund: Portfolio management fee 0.425% Guarantee premium 1.60% Performance fee (capped) 0.30% VAT is not applicable. The strong governance structure and proven management philosophy resulted in an excellent bonus history. The fund showed its worth during the 2008 Global Financial Crisis, expertly navigating the difficult market conditions and recovering from the downturn in a short period of time. GLACIER BY SANLAM RETIREMENT INVESTMENT - MARCH

5 This document is intended for use by financial intermediaries. The information in this document is provided for information purposes only and should not be construed as the rendering of advice to clients. Although we have taken reasonable steps to ensure the accuracy of the information, neither Sanlam nor any of its subsidiaries accept any liability whatsoever for any direct, indirect or consequential loss arising from the use of, or reliance in any manner on the information provided in this document. Glacier Financial Solutions (Pty) Ltd. A member of the Sanlam Group Private Bag X5 Tyger Valley client.services@glacier.co.za Tel / Fax Web GlacierBySanlam Reg No 1999/025360/07 Licensed Financial Services Provider Sanlam Life Insurance Ltd. life@sanlam.co.za Tel / Fax Reg No 1998/021121/06 Licensed Financial Services Provider