Retirement Annuity Comparisons

[Hiro ZA]

Hi Guys

Is there anywhere that I can find a clean, consolidated breakdown of the various RA's that are available, with the average FEE and average Rate of Return ?

Struggling to try and compare them as they each have their own specific marketing blurb to cloud the issue. even the fee's are confusingly described.

 

[rorz0r]

Fees will differ depending on the underlying funds you pick, and then even those can varies depending on their underlying investments and the performance thereof. The commonly used basis of comparison is TER (or Total Expense Ratio). This provides you with an estimate at a fund level of the fees. Every fund will have an info sheet somewhere showing past performance but normally the emphasis will be on it's performance compared to it's benchmark.

 

[Hiro ZA]

Fees will differ depending on the underlying funds you pick, and then even those can varies depending on their underlying investments and the performance thereof. The commonly used basis of comparison is TER (or Total Expense Ratio). This provides you with an estimate at a fund level of the fees. Every fund will have an info sheet somewhere showing past performance but normally the emphasis will be on it's performance compared to it's benchmark.

cool the TER should help to benchmark the fund fees across the board, thanks. Is there a similar common element to compare performance?

in your opinion, which fund offers the best fee/TER to return ratio ? The ones i am looking at are :
Coronation
Allan Gray
Liberty
Sanlam

also having a glance and lesser known ones like 10x and Sygnia

 

[rorz0r]

cool the TER should help to benchmark the fund fees across the board, thanks. Is there a similar common element to compare performance?

in your opinion, which fund offers the best fee/TER to return ratio ? The ones i am looking at are :
Coronation
Allan Gray
Liberty
Sanlam

also having a glance and lesser known ones like 10x and Sygnia

I think there's a "level" you are missing here. The companies listed above sell RA products, but within your RA you can select your own composition of funds based on risk/return etc. Each one however will give you a different list of funds you're allowed to choose from though. eg. Liberty will give you a bunch of Stanlib funds but probably a few others from the likes of Momentum etc. Allan Gray will give you a bunch of Allan Gray funds and some others. Some of the funds you can choose are even Funds of Funds where the fund just invests in other funds. The TER is done at the fund level, however there may be additional fees above that for the RA.

So for example Liberty will take your monthly deposit of 1k, take off a R50 fee for themselves, invest R950 in Stanlib Value Fund A or something, then Stanlib will charge 2% but that fund grows by 20% so you make 18% in that year on that fund but it's 18% on your deposit of "R950" and Liberty makes the R50 * 12 in that year.

 

[Hiro ZA]

ahaa, thanks, that makes it a lot clearer so i need to find a company that offers a set of funds which look attractive

I think there's a "level" you are missing here. The companies listed above sell RA products, but within your RA you can select your own composition of funds based on risk/return etc. Each one however will give you a different list of funds you're allowed to choose from though. eg. Liberty will give you a bunch of Stanlib funds but probably a few others from the likes of Momentum etc. Allan Gray will give you a bunch of Allan Gray funds and some others. Some of the funds you can choose are even Funds of Funds where the fund just invests in other funds. The TER is done at the fund level, however there may be additional fees above that for the RA.

So for example Liberty will take your monthly deposit of 1k, take off a R50 fee for themselves, invest R950 in Stanlib Value Fund A or something, then Stanlib will charge 2% but that fund grows by 20% so you make 18% in that year on that fund but it's 18% on your deposit of "R950" and Liberty makes the R50 * 12 in that year.

 

[Verde]

See this article;
http://www.iol.co.za/business/perso...-active-passive-debate-1.1699959#.U8T7OPmSxpU

and the table it refers to:
file:///C:/Users/accountant/Downloads/ras_compared%20(1).pdf

 

[Hiro ZA]

See this article;
http://www.iol.co.za/business/perso...-active-passive-debate-1.1699959#.U8T7OPmSxpU

and the table it refers to:
file:///C:/Users/accountant/Downloads/ras_compared%20(1).pdf

awesome, thanks, but could you please PM me a googledrive or dropbox of web link to the PDF you mentioned above? It appears to be off a local drive

 

[CheekyC]

RAs are total waste of money. Rather invest

 

[Hiro ZA]

RAs are total waste of money. Rather invest

but the tax breaks are what makes it worthwhile

 

[supersunbird]

RAs are total waste of money. Rather invest

But it is investing... :wtf:

 

[supersunbird]

but the tax breaks are what makes it worthwhile

While I cant really answer you OP because I don't think something like that exists, as others have told you it depends on the underlying unit trust/s composition or in the case of 10X for example, they just have "one fund".

The only provision is that your RA must be Regulation 28 compliant on implementation as well as, if I understand correctly, on the annual anniversary of the implementation of the RA. If one chooses Regulation 28 compliant funds in the RA, there is not work to be done, but if you have various types of specific class unit trusts, you'd have to manage those a bit every few months.

Hope that is clear. Feel free to ask if anything is unclear.

You can use the below to check out details of unit trusts, beyond using their own websites fact sheets:
http://www.equinox.co.za/unittrusts/funds/
http://www.profiledata.co.za/brokersites/moneyweb/UTtool/search.html

 

[Freaksta]

Please also have a look at investing directly with syngia and 10x. I am personally with 10x and I am happy with the service and performance I have received so far!

 

[dunkyd]

In this day and age, have everything you own convertible into cash in a few days.

 

[Paul_S]

How do preservation funds like 10X work?
I know it's a once off transfer and you can't continue to contribnute to them but do they still invest in equity for growth and then scale back when you approach 65 or is it some low interest account where your money withers away due to inflation?

i.e. Is a preservation fund like an RA with a once off lump sum contribution?

 

[Verde]

awesome, thanks, but could you please PM me a googledrive or dropbox of web link to the PDF you mentioned above? It appears to be off a local drive

There is a link to it at the bottom of the article.

 

[supersunbird]

How do preservation funds like 10X work?
I know it's a once off transfer and you can't continue to contribnute to them but do they still invest in equity for growth and then scale back when you approach 65 or is it some low interest account where your money withers away due to inflation?

i.e. Is a preservation fund like an RA with a once off lump sum contribution?

Yes, and it allows one withdrawal in its life time.

And they will invest the same as whichever way the providers RAs are able to invest generally (10x has one fund that changes automatically as you approach retirement, but you can override that and request no change, or you can have a selection of unit trusts with other providers or however they do their RAs))

 

[Paul_S]

And they will invest the same as whichever way the providers RAs are able to invest generally (10x has one fund that changes automatically as you approach retirement, but you can override that and request no change, or you can have a selection of unit trusts with other providers or however they do their RAs))

Thanks.