Insights, Updates and News

Letter to investors - April 2014

By Nic Andrew, Head of Nedgroup Investments

Dear valued investor

2013 was a special year for Nedgroup Investments as it marked the 10th anniversary since the introduction of our Best of Breed concept. Our key objective over the past 10 years has remained the same: to help you achieve your investment goals by ensuring that the funds we manage on your behalf perform well over the long term.

We were delighted to have recently been placed third overall in the “Domestic Management Company of the Year” category of the annual Raging Bull awards. The award takes cognisance of our entire domestic unit trust range and measures it on risk-adjusted returns over three and five years. It is therefore a reasonable reflection of the results that our range has delivered for investors. We are particularly proud that this is the fifth consecutive year that we have been placed in the top three companies in the industry, and it is the seventh time we have been in the top three over the past decade.

Another recent highlight was that FPA, manager of the Nedgroup Investments Global Flexible Fund, was named Morningstar US Asset Allocation Fund Manager of the Year. Their appointment as a Best of Breed manager in June 2013 has further strengthened our global offering.

These awards are a real testimony to our Best of Breed philosophy where we partner with independent managers who we believe have a sustainable edge. We have been consistently applying and refining the process for the past decade. Well done to our investment team and all the managers involved who have done a great job for our investors.

As the South African and international equity markets continue to reach new highs, we caution clients that many of our managers are identifying fewer attractive opportunities. Should the momentum in markets continue we anticipate that some of our unit trust portfolios would, despite delivering positive absolute performance, lag their competitors. As always, we measure our unit trust portfolios over full market-cycles and encourage you to do the same.

One of the greatest tragedies in the investment industry is the gap between the returns that funds deliver compared to the returns the average investor actually receives. The variance is as a result of the timing of purchases and sales into and out of funds. Unfortunately, this buying and selling often happens at inappropriate times, and it is usually because of the emotions of those involved. It is up to all investors, as well as financial advisers and investment managers, to reduce this “behaviour tax”. One of the most effective tools is regular and honest communication to ensure reasonable expectations. The articles in these newsletters attempt to assist in this process.

As the world becomes increasingly digital (apparently there are now more mobile devices than toothbrushes!), we have invested significantly to improve your client experience. We have made material enhancements to our website and launched a mobile app – the first by a unit trust company in South Africa. These are two of the easiest and quickest ways for you to check your balances, asset allocation or request a statement. I urge you to register online and begin to benefit. We have made every effort to make the registration process as painless as possible.

Thank you for the positive feedback and recommendations you have provided regarding these enhancements. Please continue to let us know how we could improve your digital experience and watch this space for a number of exciting developments planned for 2014.

Happy long-term investing

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