Investment Options

_______________________________________________________________________

What must I do to switch?

Complete the option form and send it to sanlameb@sanlam.co.za 
The Fund administrator (SEB) will confirm the transfer with you within 10 working days. 

Call Centre: 0861 223 646
Toll-free number: 0800 118 334

_______________________________________________________________________

Life Stage Model (LSM)

The MGF adopted an Investment Policy Statement in terms of which the investment objective is to generate sufficient returns, based on 40 years membership, in order to enable a member to buy a pension equal to 75% of pensionable salary at retirement. To reach this objective a long-term investment approach is taken, resulting in four life stage portfolios, namely the Aggressive, Moderate, Conservative and Protective Portfolio. All assets of the Fund are invested in the standard asset classes namely equities (shares), fixed income, cash and properties. The combination of asset classes within each portfolio will differ according to the performance objective of the specific portfolio.

Note: Automatic transfer between the life stages (LSM default)

Members are automatically transferred without prior notice, from one life stage to the next as they reach the relevant age. This transfer is however not done at once when reaching the relevant age, as the investment markets may be very low on such one specific day with negative results for a member migrating from the more aggressive to the more conservative next phase portfolio.

To prevent such single day event, members are switched from one life stage to the next in four quarterly batches during the financial year. The first switch is done during July, taking into account age next birthday as at 31 July.

However, new members being of the relevant age to be switched automatically when joining the Fund will not be phased in but will be allocated fully to the next LSM portfolio.

The characteristics of the four life stage portfolios are as follows:

Life Stage 1: Aggressive Portfolio (AP)

• This portfolio is for members younger than 55 years of age. 
  This is an aggressive investment portfolio. More money is invested in equities (shares) and less in fixed income investments and property. A greater return can therefore be expected but at an equally higher risk. A member, however, who is a long way from retirement, can tolerate such higher risk, as there is enough time to recover possible losses and create wealth.

Life Stage 2: Moderate Portfolio (MP)

• This portfolio is for members 55 to 60 years of age. 
  A more moderate investment approach is followed. Less money is invested in equities (shares) and more in fixed income investments and property. The return may be less, but the risk is also lower. It is suitable for older members closer to retirement who should not be exposed to the higher risks of the Aggressive Portfolio.

Life Stage 3: Conservative Portfolio (CP)

• This portfolio is for members 61 to 63 years of age. 
  These members cannot be exposed to much risk and therefore their money will be invested in fixed income investments, cash, structured products, hedge funds and absolute return products with no direct exposure to equities (shares) in order to protect their capital. It should be noted that structured products, hedge funds and absolute return products do have exposure to equities albeit hedged to a certain extent.

Life Stage 4: Protected Portfolio (CP)

• This portfolio is for members older than 63 years of age.
  Members should not be exposed to investment risks during their last two years. The PP is invested in money market investments with almost no risk of capital loss, but usually with low returns. The PP has no exposure to equities.

The Exit Portfolio (EP)

An Exit Portfolio, invested in cash, is used to protect the members’ Fund Credits upon termination of membership until payment of benefits. As soon as a Termination of Membership form (MGF Exit Form) is received for a member, the Fund Credit of such member is transferred to the Exit Portfolio. This does not form part of the member investment choices.

______________________________________________________________________________________________

Member investment choices

The Fund Credits of members are automatically invested in the relevant life stage portfolio according to age. However, members may, subject to certain conditions, exercise a written choice if they wish to invest differently.

Investment according to the life stage portfolios is an integrated investment model in accordance with the IPS (Investment Policy Statement). The probability is good to obtain the targeted return over a long term. Members should therefore be very cautious to chase short-term returns by electing contrary to the life stage portfolios, with possible disastrous results. Younger members should be careful not to be over conservative and forfeit returns in the long run.

For those members who are comfortable enough to make their own investment choices, the AP, CP, MP and PP Portfolios are available. You can split your money between any portfolios in any percentages adding up to 100%. You will remain invested in the portfolio(s) of your choice until you instruct the Fund to make a switch.

If you do choose to split your contributions between the different returns of each investment portfolio, this will cause a drift from the chosen percentages split. Members’ Fund Credits will not automatically be rebalanced to the original chosen percentage split between the portfolios. A new option form must be submitted if you want to rebalance.

Member investment choices may be done at any time in respect of the fund credit and monthly contributions across the AP, MP, CP and PP, subject to certain conditions obtainable on request. One choice per year is free of charge, and thereafter you will pay a switching fee. A member investment choice is usually implemented within three to five business days from receipt.