Why I don't trust RA's

Pegasus said:
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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The equity index funds also get rebalanced, they are not 100% accurately tracking the given index.

And a decision was made that it's the Top 40s shares, and not say the ALSI. Some Balanced Fund index funds (Sygnia) might indeed have a more active component in that a manager might adjust asset class percentages at times, but others not.

Correct about no index, I guess best is to compare against the biggest Balanced Fund.
 
Speedster said:
If it was me, if 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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Two RA’s are better since you can for example convert one to an living annuity and keep the other one as an RA.
 
supersunbird said:
The equity index funds also get rebalanced, they are not 100% accurately tracking the given index.

And a decision was made that it's the Top 40s shares, and not say the ALSI. Some Balanced Fund index funds (Sygnia) might indeed have a more active component in that a manager might adjust asset class percentages at times, but others not.

Correct about no index, I guess best is to compare against the biggest Balanced Fund.
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No, The equity index has to follow the index exactly. It only gets rebalanced when the exchange rebalances it. You will see a tracking error mentioned in the fund. That measures how far the fund is away from the index.

www.investopedia.com

ETF Tracking Errors: Protect Your Returns

Tracking errors tend to be small, but they can still adversely affect your returns. Learn how to protect against them.
www.investopedia.com www.investopedia.com


The decision you say that is made for an equity fund, is made by the investor. They decide which to buy into. The Asset Managers just manage the fund exactly according to the benchmark.

The asset manager always has to decide on the asset allocation. They do not leave the fund alone.
In the sygnia one for instance, their mandate may say 70% equities, 30% bonds, which they may rebalance quarterly. So when quarter end comes around, and equites are 60% and bonds 40%, they will sell off bonds and buy equities.
So at an asset allocation level, it is actively managed, whilst inside the equities and bonds, it is passively managed because an index is being tracked.

At Allan Gray there will be an Asset allocation group and they will decide what proportion of Equities and bonds there should be and they will change and rebalance whenever they want to.
 
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backstreetboy said:
Two RA’s are better since you can for example convert one to an living annuity and keep the other one as an RA.
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Never thought about it this way. However with the new 2 pot tiering system being rolled out can one not take a lump sum from your ra and invest it in either a living or life annuity?
 
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 I were in your shoes.... raise you work RA to the max. The cost of that product is 0.15%
 
3WA said:
“New” and “old” is the wrong distinction to make. “High-fee” and “low-fee” is the right way to discriminate, and this is squarely in the “high-fee” category.

RAs only work if you're in a low-fee product AND you're reinvesting the tax break.
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this is probably the best way to sum up RA's
If you arent reinvesting the tax break you get, with a low cost base at inception, fees will ultimately erode the returns into oblivion. Everyone has different views - mine is simple. Should only have an RA for the tax incentive that comes with it, depending on your income bracket etc. You can achieve greater things in better investment vehicles than "ye old RA"

ETN's, ETFs, unit trusts, Satrix, Sygnia, Fedgroup, impact investing, alternative investment holdings, hedge fund activity, offshore endowment policies (tax efficiency). For me an RA is literally on the bottom of the pile, the runt of the litter. Concept is good, but its a feeding trough for poor performance and high fees, with little to no way to access or actually out perform market.

Its a gimmick - heres an "echo bonus" or a profit share from PPS
PPS I love the concept but it works the same as eBucks and the banks. In order to truly capitalise on this you need to be covered in all aspects of their products for profit share. The echo bonus as actually nothing more than a portion of the fees that they have made all this time, its not reinvested gains. I hate RA's
 
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Greg C said:
this is probably the best way to sum up RA's
If you arent reinvesting the tax break you get, with a low cost base at inception, fees will ultimately erode the returns into oblivion. Everyone has different views - mine is simple. Should only have an RA for the tax incentive that comes with it, depending on your income bracket etc. You can achieve greater things in better investment vehicles than "ye old RA"

ETN's, ETFs, unit trusts, Satrix, Sygnia, Fedgroup, impact investing, alternative investment holdings, hedge fund activity, offshore endowment policies (tax efficiency). For me an RA is literally on the bottom of the pile, the runt of the litter. Concept is good, but its a feeding trough for poor performance and high fees, with little to no way to access or actually out perform market.

Its a gimmick - heres an "echo bonus" or a profit share from PPS
PPS I love the concept but it works the same as eBucks and the banks. In order to truly capitalise on this you need to be covered in all aspects of their products for profit share. The echo bonus as actually nothing more than a portion of the fees that they have made all this time, its not reinvested gains. I hate RA's
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You comments seem to relate to life insurance provider RAs... a pox upon them!
 
I went with Coronation, but Alan Gray is also good. I have been scoring 17% per annum with Coronation.

Some of Old Mutual's funds have also been doing well. About 11.5% per annum or more.

Liberty cheese me off, as they taxed my dad's RA big time after he died. Was not impressed.
 
I transferred my RA from 10X to Ninety One (formerly Investec Asset Management). Best decision yet. Immediately after my section 14 was processed I was able to construct my RA as I like it. Their platform is so easy to use, you are able to do switches, add additional lump sums etc. Very user friendly. I also have a TFSA with them. Would definitely recommend.
 
IamMe said:
I transferred my RA from 10X to Ninety One (formerly Investec Asset Management). Best decision yet. Immediately after my section 14 was processed I was able to construct my RA as I like it. Their platform is so easy to use, you are able to do switches, add additional lump sums etc. Very user friendly. I also have a TFSA with them. Would definitely recommend.
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Lol at double the TIC. No thanks.
 
IamMe said:
I transferred my RA from 10X to Ninety One (formerly Investec Asset Management). Best decision yet. Immediately after my section 14 was processed I was able to construct my RA as I like it.
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Out of curiousity, how did you structure it? I've been thinking about what the coolest reg 28 structure would look like. Maybe 45% international equities and 55% SA government bonds (and if SA defaults, you give up on material things and go live on a beach and eat fish).
 
If only it was possible to move funds in a paid up RA to my pension fund. One can but dream.
 
Bliksis said:
If only it was possible to move funds in a paid up RA to my pension fund. One can but dream.
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The fact you say “paid up” RA means you are referring to the old insurance product bullshit and not an investment.

There should be no reason an RA becomes paid up. Move it somewhere else where it can keep growing instead. Just create a new modern RA.

No need for one thing to become another thing, it just needs to keep on going and investing. 10% across two funds or 10% across 1 fund is the same.

1% in fees vs 5% in fees on another product…that right there is the difference.

Legally you can’t mix a RA, Pension and Provident Fund as they have different rules attached at retirement.
 
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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Do you have a the discipline to keep it separate in your home loan?

What’s the interest rate like? Good chance the tax benefits of the RA and its performance will bear the home loan over the longer term but it depends.

Topping up the existing one would depending on which one it is.
 
SauRoNZA said:
The fact you say “paid up” RA means you are referring to the old insurance product bullshit and not an investment.

There should be no reason an RA becomes paid up. Move it somewhere else where it can keep growing instead. Just create a new modern RA.

No need for one thing to become another thing, it just needs to keep on going and investing. 10% across two funds or 10% across 1 fund is the same.

1% in fees vs 5% in fees on another product…that right there is the difference.

Legally you can’t mix a RA, Pension and Provident Fund as they have different rules attached at retirement.
Click to expand...
I have not contributed a cent to this RA in years. I'm contributing almost R18k a month to a pension fund. Not wasting more money on the RA. I suppose I'll wait until I'm 55 and see what happens. It has shown more growth than I thought though.
 
SauRoNZA said:
The fact you say “paid up” RA means you are referring to the old insurance product bullshit and not an investment.

There should be no reason an RA becomes paid up. Move it somewhere else where it can keep growing instead. Just create a new modern RA.

No need for one thing to become another thing, it just needs to keep on going and investing. 10% across two funds or 10% across 1 fund is the same.

1% in fees vs 5% in fees on another product…that right there is the difference.

Legally you can’t mix a RA, Pension and Provident Fund as they have different rules attached at retirement.
Click to expand...

Thats exactly what I did.

In 2016 my liberty saga, made it paid up, section 14 to allan gray, and started a new one with sygnia.

I am actually with my paid up version. Not touching it.

Will do recon at 55 what is mergeable with a preserved fund, paid up RA and active RA. Think by then the rules should have changed again
 
Something to mention. Certain providers cant take old RA’s via section 14’s, and continue with a debit order. Others can again
 
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