scholarly journals A comparison of retirement saving using discretionary investment and Regulation 28

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Gizelle D. Willows ◽  
Thomas Burgers ◽  
Darron West
Keyword(s):  
South Africa ◽  
South African ◽  
Asset Allocation ◽  
Pension Funds ◽  
Investment Risk ◽  
Retirement Savings ◽  
Primary Reason ◽  
Risk And Return ◽  
Retirement Saving ◽  
Retirement Fund

Background: There is growing uncertainty in global society with regard to how retirement savings should be approached. The primary reason for this is that most societies do not save enough and their citizens run out of money during retirement. Aim: This study investigates whether the limitations imposed by Regulation 28 of the Pension Funds Act of South Africa encourage optimal asset allocation and reduce investment risk for retirement savings when contrasted with discretionary investment. Setting: The study looks at hypothetical individuals who are subject to tax and retirement consequences as administered by South African legislation. Methods: A quantitative risk and return analysis was performed while considering two hypothetical investors who are identical in all aspects other than their choice of investments. Results: The findings indicate that Regulation 28 is effective in reducing the investment risk of retirement savings; however, it may also force the investor to sacrifice wealth. Conclusion: Depending on the tax bracket in which the investor sits, discretionary investment may be preferential to investing in a retirement fund under the mandate of Regulation 28.

Extending Death Benefits to Cohabitants under Section 37C of the South African Pension Funds Act: Hlathi v University of Fort Hare Retirement Fund

2012 ◽  
Vol 56 (2) ◽  
pp. 296-306
Author(s):  
Ntombizozuko Dyani
Keyword(s):  
South Africa ◽  
South African ◽  
Legal Protection ◽  
Pension Funds ◽  
Bill Of Rights ◽  
The South ◽  
Retirement Fund ◽  
University Of Fort Hare

AbstractCohabitation is left largely unregulated in South Africa, which means that many cohabitants are left destitute or financially worse off when their cohabiting partners die. The Pension Funds Act 24 of 1956, in particular section 37C, is one of the few pieces of legislation that afford legal protection to cohabitants who are left financially worse off due to the death of their partners. However, three previous pension funds adjudicators gave different views as to how to interpret this provision. This note seeks to compare three decisions by three different adjudicators and concludes that the latest decision in Hlathi is the most preferred, because it interprets section 37C progressively, taking into account the spirit, purport and objects of the Bill of Rights.

scholarly journals Mitigating the South African retirement-income shortfall crisis

2018 ◽  
Vol 11 (1) ◽  
Author(s):  
Adriaan E. Pask ◽  
Johan Marx
Keyword(s):  
South African ◽  
Asset Allocation ◽  
Pension Funds ◽  
Retirement Income ◽  
Ceteris Paribus ◽  
National Budget ◽  
Investment Returns ◽  
Retirement Fund ◽  
Retirement Wealth ◽  
Income Shortfall

Orientation: National Treasury acknowledges that 90% of all South African retirees will not have adequate financial resources in order to sustain themselves.Research purpose: This study aimed to address the retirement income shortfall by assessing possible changes to prudential retirement fund regulations.Motivation: Asset allocation plays a pivotal role in achieving the required rate of return of any portfolio. However, the restrictions on asset allocation imposed by article 28 of the Pension Funds Act of 1956 limits pension funds’ ability to achieve adequate returns.Research approach: A survey was conducted among chief investment officers (CIO) of the top 25 South African investment management companies.Main findings: The study proposes changes to the Income Tax Act, the Collective Investment Scheme Control Act and Regulation 28 of the Pension Funds Act.Managerial implications: The proposed framework should result in fewer pensioners becoming dependent on the state for their pension and empower pensioners to have greater amounts of post-retirement savings.Contribution: The contribution of this article is the proposed changes to the regulatory framework, which could – ceteris paribus: (1) Enable SA retirement fund investors to contribute to the retirement wealth pool in an unconstrained manner. (2) Enable SA retirement fund assets to increase investment returns by as much as 1.21% per annum. (3) Increase the average SA GRRs from the current projected 10.0% to 10.7% by 2045. (4) Increase the efficacy of the existing tax incentives. (5) Reduce spending requirements for grants in the national budget.

scholarly journals Assessing Market Risk in BRICS and Oil Markets: An Application of Markov Switching and Vine Copula

2021 ◽  
Vol 9 (2) ◽  
pp. 30
Author(s):  
John Weirstrass Muteba Mwamba ◽  
Sutene Mwambetania Mwambi
Keyword(s):  
South Africa ◽  
Crude Oil ◽  
South African ◽  
Asset Allocation ◽  
Markov Switching ◽  
Tail Dependence ◽  
Lower Tail ◽  
Oil Market ◽  
Oil Markets ◽  
Vine Copula

This paper investigates the dynamic tail dependence risk between BRICS economies and the world energy market, in the context of the COVID-19 financial crisis of 2020, in order to determine optimal investment decisions based on risk metrics. For this purpose, we employ a combination of novel statistical techniques, including Vector Autoregressive (VAR), Markov-switching GJR-GARCH, and vine copula methods. Using a data set consisting of daily stock and world crude oil prices, we find evidence of a structure break in the volatility process, consisting of high and low persistence volatility processes, with a high persistence in the probabilities of transition between lower and higher volatility regimes, as well as the presence of leverage effects. Furthermore, our results based on the C-vine copula confirm the existence of two types of tail dependence: symmetric tail dependence between South Africa and China, South Africa and Russia, and South Africa and India, and asymmetric lower tail dependence between South Africa and Brazil, and South Africa and crude oil. For the purpose of diversification in these markets, we formulate an asset allocation problem using raw returns, MS GARCH returns, and C-vine and R-vine copula-based returns, and optimize it using a Particle Swarm optimization algorithm with a rebalancing strategy. The results demonstrate an inverse relationship between the risk contribution and asset allocation of South Africa and the crude oil market, supporting the existence of a lower tail dependence between them. This suggests that, when South African stocks are in distress, investors tend to shift their holdings in the oil market. Similar results are found between Russia and crude oil, as well as Brazil and crude oil. In the symmetric tail, South African asset allocation is found to have a well-diversified relationship with that of China, Russia, and India, suggesting that these three markets might be good investment destinations when things are not good in South Africa, and vice versa.

scholarly journals Aspects of volatility targeting for South African equity investors

2014 ◽  
Vol 17 (5) ◽  
pp. 691-699 ◽  
Author(s):  
Bhekinkosi Khuzwayo ◽  
Eben Mare
Keyword(s):  
South African ◽  
Asset Allocation ◽  
Implied Volatility ◽  
Equity Market ◽  
Risky Asset ◽  
Risk And Return ◽  
Asset Classes ◽  
The Absolute ◽  
Equity Index ◽  
Targeting Strategy

We consider so-called volatility targeting strategies in the South African equity market. These strategies are aimed at keeping the volatility of a portfolio consisting of a risky asset, typically an equity index, and cash fixed. This is done by changing the allocation of the assets based on an indicator of the future volatility of the risky asset. We use the three month rolling implied volatility as an indicator of future volatility to influence our asset allocation. We compare investments based on different volatility targets to the performance of bonds, equities, property as well as the Absolute Return peer mean. We examine risk and return characteristics of the volatility targeting strategy as compared to different asset classes.

scholarly journals The bond and bond option market: The case of South Africa 1984–2014

2015 ◽  
Vol 13 (1) ◽  
pp. 1309-1321
Author(s):  
Ronald H Mynhardt
Keyword(s):  
South Africa ◽  
South African ◽  
Bond Market ◽  
Investment Risk ◽  
The South ◽  
Option Hedging ◽  
Hedging Strategies ◽  
Bond Options ◽  
Bond Option ◽  
Option Market

Bond option transactions from a hedging perspective are currently almost non-existent in the South African bond and bond option market. As a result of comments and suggestions made by academics and independent observers a study was conducted in the South African bond options market amongst former and current bond option traders. The goals of the present study was to establish if bond options can be an effective hedging tool in the South African bond market, to conduct empirical tests on the basic option hedging strategies to ascertain these particular strategies’ suitability as hedges against investment risk by using actual market movements in the South African bond market, and to formulate recommendations that could be implemented to re-establish bond options as a viable hedging instruments in South Africa and also introduce it to Africa.

scholarly journals Benchmark selection and performance

2019 ◽  
Vol 19 (4) ◽  
pp. 511-531 ◽  
Author(s):  
Dirk Broeders ◽  
Leo de Haan
Keyword(s):  
Asset Allocation ◽  
Pension Funds ◽  
Investment Risk ◽  
Cross Sectional ◽  
Security Selection ◽  
Regulatory Data ◽  
Investment Returns ◽  
And Performance ◽  
Style Preferences ◽  
The Impact

AbstractUsing regulatory data free of self-reporting bias for 2007–16, we decompose investment returns of 455 Dutch pension funds according to their key investment decisions, i.e., asset allocation, market timing and security selection. In extension to existing papers, we also assess the impact of benchmark selection. Over time, asset allocation explains 39% of the variation of returns, whereas benchmark selection, timing and selection explain 11%, 9% and 16%, respectively. Across pension funds, asset allocation explains on average only 19% of the variation in pension fund returns. Benchmark selection dominates this by explaining 33% of cross-sectional returns. We relate the choice for a specific benchmark to investment, risk and style preferences.

scholarly journals Assessing Market Risk in BRICS and Oil Markets: An application of Markov Switching and Vine Copula

2021 ◽  
Author(s):  
John Weirstrass Muteba Mwamba ◽  
Sutene M Mwambi
Keyword(s):  
South Africa ◽  
South African ◽  
Asset Allocation ◽  
Inverse Relationship ◽  
Markov Switching ◽  
Tail Dependence ◽  
Particle Swarm Algorithm ◽  
Lower Tail ◽  
Oil Market ◽  
Vine Copula

This paper investigates the dynamic tail dependence risk between BRICS economies and world energy market in the context of the COVID-19 financial crisis of 2020, to determine optimal investment decisions based on risk metrics. For this purpose, the study employs a combination of novel statistical techniques ranging from Markov Switching, GARCH and Vine copula. Using a dataset consisting of daily stock and world crude oil prices; we find high probability of transition between lower and higher volatility regimes. Furthermore, our results based on the C-Vine copula confirm the existence of two types of tail dependence: - symmetric tail dependence between South Africa and China; South Africa and Russia; and lower tail dependence between South Africa and India; South Africa and Brazil; South Africa and Oil. For the purpose of diversification in these markets, we formulate an asset allocation problem using C-vine copula-based returns and optimize it using Particle Swarm algorithm with a rebalancing strategy. The results show an inverse relationship between the risk contribution and asset allocation of South Africa and oil market supporting the existence of lower tail dependence between them. This suggests that when South African stocks are in distress, investors tend to shift their holdings in oil market. Similar results are found between China and oil. In the upper tail, South African asset allocation is found to have an inverse relationship with that of Brazil, Russia and India suggesting that these three markets might be good investment destinations when things are not good in South Africa and vice-versa.

scholarly journals Single-use of endodontic hand files: perceptions and practise

2018 ◽  
Vol 20 (1) ◽  
pp. 32-36 ◽  
Author(s):  
Glynn Dale Buchanan ◽  
Nichola Warren
Keyword(s):  
South Africa ◽  
Observational Study ◽  
South African ◽  
Financial Constraints ◽  
Primary Reason ◽  
Study Participation ◽  
Dental Practices ◽  
Single Use

Background: The concept of single-use of endodontic files remains controversial in the published literature. The extent and attitudes concerning the single-use of endodontic hand files is currently unknown in many countries. Aim: The prevalence and perceptions regarding the single-use of endodontic files was investigated in this descriptive observational study. Methods: A questionnaire regarding the perceptions and usage protocols of endodontic files was developed. Twenty-seven South African dental practices were included in this study. Participation was voluntary. Results: None of the respondents reported single-use of endodontic hand files. Several decontamination methods were used by the respondents for reprocessing endodontic files. Discussion: Financial constraints were reported as the primary reason for the reuse of endodontic files. As no standardised method of reprocessing these instruments exists for South Africa, written guidelines on this subject should be developed.

scholarly journals Return-based style analysis of domestic targeted absolute and real return unit trust funds in South Africa

2012 ◽  
Vol 9 (2) ◽  
pp. 274-286
Author(s):  
Elbie Louw ◽  
I.C. de Beer
Keyword(s):  
South Africa ◽  
Literature Review ◽  
South African ◽  
Asset Allocation ◽  
Strong Form ◽  
Style Analysis ◽  
The South ◽  
Trust Funds ◽  
Sample Data ◽  
Unit Trust

By means of return-based style analysis (RBSA), heterogeneous style sub-categories were identified within the targeted absolute and real return (TARR) category of the South African unit trust market to create a framework for sub-categorisation. The study dealt with TARR funds and their place within the investment universe. The literature review emphasised the importance of asset allocation, which supports the use of RBSA to identify asset allocation and further provided a motivation for the semi-strong form of RBSA applied to the sample data. The findings suggest that in general, return-based style analysis applied to each fund identifies the asset allocation for the fund and is valid and that the collective results of return-based style analysis applied to the funds can be used to create a framework for sub-categorisation

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