Why I don't trust RA's

Cheens said:
@Cius Can you please DM me how you managed to move the lump sum as i am in a similar boat with my RA that's currently with Discovery but not performing at all over the past 13 years. Also just chatted to a financial advisor from Std Bank to look at re-investing my RA or moving it. Will appreciate the advise.
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I asked my financial advisor on switch options. He recommended some aggressive managed fund (they are always high fee). I told him I don't trust managed funds and would prefer a low cost index tracker option and no ongoing fees from his side with me being happy to pay him per hour for his time rather. He then proposed a combination of low cost index tracking funds (SATRIX top 40 and a money market index fund) that would still be section 28 compliant and sent me the switch form. Sent them in this morning. He was very helpful and willing to find something that worked for me. If you would like his details PM me.
 
Tomtomtom said:
For AG: "Most popular Reg 28 (balanced) passive fund: Nedgroup Investments Core Diversified Fund"

But probably 95% of people on Allan Gray will not be choosing a non-AG fund in their RA.
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Yeah, most will go to AG specifically because it is active. Money is currently pumping in to their balanced fund - I saw something to the tune of R1.7bn in the first quarter of 2023.
 
Cius said:
and no ongoing fees from his side with me being happy to pay him per hour for his time rather.
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Nice, this is all it takes. They have been making out like bandits so I'm not surprised they quietly roll over when a client gives them a bit of an ultimatum.
 
The only thing I hate about certain providers (and in my case, AG), you can move a RA (and then its paid up, and cant add 1 more cent).

The same procedure, with Sygnia, you can do it
 
zerocool2009 said:
The only thing I hate about certain providers (and in my case, AG), you can move a RA (and then its paid up, and cant add 1 more cent).
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Are you referring to RAs you transfer in to AG? Does it apply to all funds or just ones that aren't in their list?
 
I must share this, think I mentioned it in other threads. My work decided to take RA's out as a work perk for staff.

They got Momentum involved. The broker charged us 9% per year. I almost had a heart attack.

Informing management what kills investments (its purely fees), as that is set in stone.

We went with Sygnia. Think that broker was a bit upset at Momentum's side!
 
Tomtomtom said:
Are you referring to RAs you transfer in to AG? Does it apply to all funds or just ones that aren't in their list?
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Correct. I did a section 14 from Liberty (lol) in 2016 into AG. I moved all the cash, and selected the funds I wanted to buy into.

I only got confirmation later that its not topupable. I made my peace with it, and started a Sygnia RA
 
Tomtomtom said:
For AG: "Most popular Reg 28 (balanced) passive fund: Nedgroup Investments Core Diversified Fund"

But probably 95% of people on Allan Gray will not be choosing a non-AG fund in their RA.
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I am 50/50 with AG balanced and M&G balanced.
 
SureThing said:
Just a cautionary note investing with offshore investment houses is not the answer. Our local asset managers have the same capability. Fees may be the attraction, but the only positive retun you will receive is the depeciation of rand. S&P 500 is underperforming, and unless you were already invested 10 years back, you will not receive the returns you hoped for. Bottom line, diversification strategy is the way to go... no one can predict the future.
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Underperforming against what? It's up 17% for the year and beating world ETFs like VT, VEU (more diversification) in every single time frame.
 
OPs problem is not RAs, it's choosing an expensive RA and then added on top of that advisor fees.

Even AG can be problematic if paying AG platform fees. I went Coronation rather.

IRR rate of my 10 year old Coronation RA is 7.4% p.a.

I should have put more of the fund into Resource, cause that has had a IRR of 26.1% p.a.
 
supersunbird said:
OPs problem is not RAs, it's choosing an expensive RA and then added on top of that advisor fees.

Even AG can be problematic if paying AG platform fees. I went Coronation rather.

IRR rate of my 10 year old Coronation RA is 7.4% p.a.

I should have put more of the fund into Resource, cause that has had a IRR of 26.1% p.a.
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This is pretty informative.
 

Attachments

I have a quick question, and I'm not well versed with RAs and such (young person lol) but any thoughts on Alexander Forbes?

Because I see the recommendations are for Sygnia, 10X, AG.
 
Cius said:
I asked my financial advisor on switch options. He recommended some aggressive managed fund (they are always high fee). I told him I don't trust managed funds and would prefer a low cost index tracker option and no ongoing fees from his side with me being happy to pay him per hour for his time rather. He then proposed a combination of low cost index tracking funds (SATRIX top 40 and a money market index fund) that would still be section 28 compliant and sent me the switch form. Sent them in this morning. He was very helpful and willing to find something that worked for me. If you would like his details PM me.
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Even with putting index funds in a Balanced fund, it is still “Managed”. Someone does the Asset allocation, I.e. what % goes into equities, bonds etc.

More Alpha is generated from Asset allocation than from stock picking. So I rather go with an asset manager for balanced funds. For equities only I go index funds.
 
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Cius said:
A cautionary tale I wanted to share.

So my dad had an RA that performed horribly for him. He was always negative towards them but I decided to get one anyways as apparently the rules had changed and the new RA's where "better". So for the past 16 years I have been putting money aside into an RA and not really paying that much attention to it. The RA in question was with PPS, one of the better providers (I thought) in that they at least give profits back to members. A mutual society rather than a for profit outfit.

This year I finally had a proper look at my RA and it was dismal. Total value after all this time was 273K. I just did the math on my total contributions in rand value totaled about 165K. So about 65% cumulative growth for all the years I have been with them. Turns out the high fees of the RA plus financial advisor fees ate almost all my growth. Total costs where over 4% where my pension fund for instance is 1.5% and its growth returns were far better too.

Comparing my pension fund which has been going 2 years less than the RA my net worth is 100% more than my total contributions into it as compared to the RA that is 65% more than my contributions. That is the difference between good and bad fees, and proper returns.

So while the contributions where tax deductible somewhat reducing the cost of that money put in, that RA was never contributing meaningfully to my retirement. I have now switched the remaining lump sum into a SATRIX product with low fees with 25% in a money market index to keep it section 28 compliant and my advisor kindly removed any ongoing fees from his side. The RA contribution i can now rather add to my work pension fund where it will do far better, or perhaps invest myself so its money I can take offshore if needed.

Just wanted to share. RA's have a dirty name for me now. Make sure you are putting your money into something with very low fees, and good returns, as most of the RA industry has mediocre returns and high fee's eating all your growth.
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Should have gone with sygnia. Think the EAC is around 0.4%
 
Pegasus said:
Even with putting index funds in a Balanced fund, it is still “Managed”. Someone does the Asset allocatio, I.e. what % goes into equities, bonds etc.

More Alpha is generated from Asset allocation than from stock picking. So I rather go with an asset manager for balanced funds. For equities only I go index funds.
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Using that logic almost ALL equity funds are managed too just like a balanced index fund, because someone decided something about the shares to be included in the beginning.
 
So if you had an extra R1000 to spend..would you invest in another RA or top up the existing one or pay it into your bond on a monthly basis
 
supersunbird said:
Using that logic almost ALL equity funds are managed too just like a balanced index fund, because someone decided something about the shares to be included in the beginning.
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No, You mirror the imdex exactly in an equity index fund, e.g, the JSE top 40. The fund manager isn’t deciding what goes in there. An equity fund is a single asset class, so 100% equities.

A balanced fund is multi asset class, so someone has to decide what proportion of that 100% will be equities etc, and then rebalance as needed.


www.investopedia.com

What Is Asset Allocation, and Why Is It Important?

Asset allocation is the process of deciding where to put money to work in the market. It addresses your goals, your risk tolerance, and your investment horizon.
www.investopedia.com www.investopedia.com

There is no official benchmark to track for Balanced funds, Asset managers have to construct their own benchmark.
Foe equities there are plenty of benchmarks to choose from.
 
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STORMERSFAN said:
So if you had an extra R1000 to spend..would you invest in another RA or top up the existing one or pay it into your bond on a monthly basis
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If it was me, I'd stick it in the bond. One thing I wouldn't do is open a second RA. Most RAs get slightly cheaper (percentage wise) the larger your investment so keeping it all together makes more sense.
 
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