G-TRACK

AIM FOR THE INDEX AND PREVENT A DISASTER
This month we are going to bust a myth! Some argue that index based funds only outperform during certain periods. While it is impossible to know where our market is going to be one year from now, it is very possible to make sure that you do not deliberately destroy value. Whether it is a bull- or bear market, you can be assured that you won’t be the one kicking cash out of your retirement bucket after reading this article.

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Spending on asset managers

South African financial markets are way behind the curve when it gets to fees and how we pay investment professionals. In one subset of the industry we often believe fund managers when they proclaim that in order to produce outstanding long term performance it makes sense to pay a higher cost for research and investigation. In other words, higher fees equal higher total returns. We should find a graph as indicated below should this argument be true. Funds with a higher TER (total expense ratio – a measure of how much investors pay for being invested in the fund) will produce higher returns.

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Divided Income Funds

It seems investors and advisers alike have forgotten the benefit of tax exempt returns on the lower side of the yield curve. Cash-type instruments are once again moving to the forefront and justifiably so, with market conditions that question the continual sustainability of weekly record highs within the All Share Index. Slow to almost recessionary economic growth, a struggling currency, rising inflation coupled with soaring unemployment and continuous threats by the Reserve Bank Governor of forced rate hikes, due to inflation being above the target range, all signal danger. But where to go in the vast world that is the conservative investment?

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Market Matters

The world’s first stock market index was created in 1896, exactly 120 years ago. The Dow Jones Industrial
Average was created to give the investing public some indication of what the US stock market returned
over a specific time period. Today when you listen to the news in South Africa, you will notice that reporters
talk about the market being up or down a certain amount brought about by accumulating performances
from various sectors. The market is generally a broad index representing most listed entities and in our
case we refer to the JSE All Share Index Total Return (J203T) as calculated by FTSE / JSE: a joint venture
between the Johannesburg Stock Exchange (JSE) and the FTSE Group (FTSE), a world leader in the
creation and management of indices. There is also the S&P South Africa Composite Index which by
definition is constructed in a very similar way, but for simplicity sake we will only refer to the J203T during
the course of this article.

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Exploring Gryphon's Multi-Asset Funds

CNBC Africa's Lindsay Williams speaks to Reuben Beelders, Portfolio Manager at Gryphon Asset Management about the Gryphon Multi-Asset Funds. They explore Gryphon's Flexible Fund of Funds as well as Gryphon's Prudential Fund of Funds, the primary objective of the funds is to generate real wealth for investors, at the lowest possible cost, with due cognisance of risk in particular secular down side risk.

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