FINANCIALLY TALKING JUNE 2021 - Old Mutual Invest
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FINANCIALLY TALKING JUNE 2021
2 FINANCIALLY TALKING
CONTENTS
STAY UPDATED 4
ECONOMIC PROSPECTS ARE IMPROVING 6
SUMMER BODIES (AND BUDGETS) ARE MADE IN WINTER! 8
SHARI’AH: REAPING THE BENEFITS OF INVESTING 10
ETHICALLY
PROTECT YOURSELF FROM SCAMS 12
“It always seems impossible until it is done.”
- Nelson Mandela
ELIZE BOTHA | MANAGING DIRECTOR: OLD MUTUAL UNIT TRUSTS
We have reached the halfway mark of the year and as the investment unit trusts, to drive a culture where retail investors
colder months keep us indoors, this is a great time for can use their direct investments as a force for good.
introspection. Now is the time to reflect on the past and plan
for the future. Having set your financial goals for 2021 at the We are pleased to announce that we have given all our
start of the year, it’s important not to let winter throw you Old Mutual Unit Trusts funds listed on the Old Mutual Wealth
off track. Think about what you planned to achieve at the investment platform an environmental, social and governance
beginning of the year and refocus on your goals. We tend to (ESG) rating to enable investors to easily invest with purpose.
take for granted the subtle but potentially significant impact This was done in collaboration with MSCI, a global leader
that seasonal changes can have on our lives in general, but in investment research. This makes choosing to invest with
especially on our spending and personal finances. In this purpose simpler than ever and is in line with our strategy of
edition, we share some tips on how to boost your financial continually innovating to meet the changing needs of our
well-being this winter. planners and clients.
SHARI’AH: REAPING THE BENEFITS OF INVESTING In closing, remember that when faced with a big goal, our
ETHICALLY perceptions of reality and what we are capable of may differ.
Investing ethically is at the heart of investing with purpose for If you are feeling despondent and fatigued by everything that
a rewarding future. Old Mutual (pioneers in ethical investing) is happening around you, remember that just as spring drives
and Al Baraka Bank (pioneers in Islamic finance) have worked away the cold of winter, there will be light once again at the
together to combine the principles of ethical and Shari’ah end of this season. If you remain focused on your investment
investing, creating our Shari’ah range of funds. In March goals, stay invested if you can, and diversify your investments,
2020, we launched the Old Mutual Albaraka Income Fund, even the seemingly impossible can be accomplished.
which has delivered above-inflation returns and has grown
to R800m in assets under management in a year.
In South Africa, there are currently over 20 Shari’ah funds with
R23 billion in assets under management (March 2021),
according to the Alexander Forbes Shari’ah Manager Watch.
We believe this is because of the alignment of values with
regard to where investors want to put their money, and how
that money can in turn do good. In this edition, we look at
how ethical investing has grown and garnered the support
of many investors over the past few years.
INNOVATION THAT MEETS THE GROWING NEED
FOR RESPONSIBLE INVESTING
As a responsible business, we believe that it is in the interests
of all participants in the financial ecosystem to play a proactive
role in creating long-term sustainable outcomes for all its
participants. We have developed a range of responsible
4 FINANCIALLY TALKING
STAY UPDATED
OLD MUTUAL UNIT TRUSTS TRANSFER TO NEW
ADMINISTRATION SYSTEM
We are in the final stages of moving our client administration to a new platform early in the next quarter.
As we prepare for this, we encourage you to familiarise yourself with the defaults below, which will be applied to any of
the scenarios that may still exist in your portfolio.
Please click here to access the Questions and Answers document, which details more information about these changes.
If you feel there is a question which we have not addressed, please contact us us at unittrusts@oldmutual.com or call
0860 234 234.
IF YOU HAVE: AFTER THE TRANSFER: DEFAULT OPTION APPLIED:
More than one debit order per unit trust Only one debit order per investment If multiple debit orders have the same
DEBIT ORDERS
fund within one investment contract. contract will be possible and you will frequency (e.g. monthly) these debit order
not be able to have multiple debit orders amounts will be combined to create one
within the same contract or unit trust fund/s. debit order amount.
If the debit orders have multiple dates
then the date of the debit order with the
highest value will be chosen.
A rand-based escalation amount on your Only percentage-based escalations can A percentage-based escalation amount will
investment contract. be administered. be calculated based on the rand amount
of the escalation and will be applied to
your contract. It should be between 1%
and 20%.
More than one instance of the same unit On transfer to the new administration For standard investments only, multiple
FUNDS
trust fund in an investment contract. platform, multiple instances of the same fund instances will be merged into one
unit trust fund will not be possible within single unit trust fund within the contract
a single investment contract. and any existing debit orders across the
multiple funds will be consolidated into
one debit order instruction.
Created by popcornarts
from the Noun Project
Multiple methods of distribution from Only one distribution method is allowed Separate contracts will be created to support
unit trust funds within the same contract. for all unit trust funds per investment the different methods of distribution.
contract. You can choose one of the
following options at a contract level:
• Reinvesting into the same unit trust fund
• Distributions can be invested into any
fund of your choice OR
• Paid out into a bank account
More than one regular monthly, quarterly Only one regular disinvestment is allowed Consolidating all into one disinvestment
REGULAR
TRANSACTIONS
or annual disinvestment from the same per investment contract. instruction using the date of the
unit trust fund. disinvestment with the largest value.
However, the value of the disinvestment
can be allocated across different unit trust
funds within the same investment contract.
Contributed more than the maximum Contributions will be limited to R36 000 per Existing debit order amounts higher than
TAX-FREE
INVESTMENTS
limit of R36 000 per year for Tax-Free tax year with a current lifetime contribution R3 000 will be set to R3 000 per month.
Investments. of up to R500 000.
Multiple Tax-Free Investments across Only one Tax-Free Investment across Not applicable.
22seven and Old Mutual Unit Trusts. 22seven and Old Mutual Unit Trusts will
be allowed.
FINANCIALLY TALKING 5
CHANGE TO ELECTRONIC
COMMUNICATION
USE
- I N C R E AS I N G
R
HE EVE D MUT
UAL
WITH T G Y , O L
HNOLO EFITS O
F
OF TEC H E B E N
ES IN T DENCE
VIA
BELIEV S P O N
RRE T.
NG CO O POS
SENDI O S E D T
AS O P P
EMAIL
THE BENEFITS OF EMAIL CORRESPONDENCE:
Quicker and timeous delivery of correspondence, with a lower carbon footprint when compared to
post correspondence.
Transaction statements are password protected to ensure your investment and personal information
remain confidential.
Allows you to “opt in” to receive additional correspondence (such as transaction notifications), which is
not available for post correspondence.
WHAT MUST YOU DO?
Send a request to the Old Mutual Unit Trusts service centre to change your correspondence
preference to email. You can do so by calling us on 0860 234 234 or +27 21 503 1770 or emailing
unittrusts@oldmutual.com.
6 FINANCIALLY TALKING
FINANCIALLY TALKING 7
ECONOMIC PROSPECTS
ARE IMPROVING
A year ago, South Africa tentatively emerged from the see higher readings, largely due to the recovery in global
first hard lockdown. Surveying the economic damage fuel prices from very low levels a year ago. But inflation
caused by the pandemic, it felt a bit like stepping into a is unlikely to run away, and this means that interest rates
disaster scene. South Africa’s 7% economic contraction can remain close to the current accommodative levels
in 2020 was the worst on record. On the other hand, for some time.
there was a sense of cautious optimism that the storm
had passed and left us with an opportunity to reshape The big boost has come from elevated global commodity
prices. Prices of a wide range of raw materials, from
society and personal lives for the better.
palladium to copper to iron ore, have shot up in recent
Today, it appears that neither the best nor the worst months. This is due to the recovery in near-term global
demand following the lockdowns, as well as increased
predictions came to pass. For instance, working from home
expected longer-term demand from the transition to
has turned out not to be such a utopia, and comes with
green energy. Supply has not been able to respond as
its own challenges. But as bad as the recession was last
quickly, since not all existing mines are running at full
year, initial estimates were for things to be even worse,
capacity, due to the pandemic. And it can take years for
and now a strong recovery is taking shape locally.
new mines to be built. Talking about a new “commodity
supercycle” seems a stretch, but a period of elevated prices
This was despite expectations that Covid-19 would be
will help South Africa greatly. Already, SA exports are at
the final nail in the coffin for South Africa. It’s hard to
record-high levels.
imagine a more severe stress test than this pandemic. For
all its many faults and shortcomings, the country did not
Meanwhile, mining shares have pushed the JSE higher,
collapse. There is enough resilience in the people and the
while increased tax revenue from mining companies takes
institutions of this country that enabled us to absorb the
some pressure off Government’s finances. South Africa’s
blows, and we are still standing, bruised but not beaten.
status as a commodity country has also supported the
rand, which won back its Covid-related losses against
So, what is driving this recovery? First and foremost,
the US dollar.
South Africa benefits from the strong global
economic recovery. Vaccines, reopening and ample This commodity price windfall is pure luck, and no
support from governments and central banks mean achievement of our own. It would be foolish to pretend it
2021 could be a blockbuster year for global growth. will always last, since commodity prices are cyclical. And
it is important that South Africa continues to take steps
South Africa has not had much by way of vaccinations or to improve the business, climate and drive long-term
financial support from Government, and there is still much growth. There have been some positive developments
uncertainty about the path of the virus, but we do benefit on this front, but it remains slow-going. Nonetheless, for
from interest rates at 60-year lows. Inflation is also quite the first time in a long time, there is reason to feel more
low by historical standards. Yes, the next few months will optimistic about domestic economic prospects.
8 FINANCIALLY TALKING
SUMMER
BODIES (AND
BUDGETS)
ARE MADE IN
WINTER!
Seasonal overindulgence can affect your figure as well as goals for 2021 at the start of the year, it’s important not to
your finances. We share advice on how to curb “comfort let winter throw you off track. We tend to take for granted
spending” in the cold months. the subtle but potentially significant impact that seasonal
changes can have on our spending and personal finances.
When the sunlight begins to fade and that first, crisp
chill hits the air, the cravings for comfort food suddenly Here are tips to keep your finances toned and trim, and
appear. For many of us, this means hearty stews and roasts, ready for summer celebrations.
decadent pasta sauces, buttery curries or gorgeously
gooey desserts. Yum! TIP 1: FOCUS ON YOUR GOALS
What are you saving for? What is your financial vision? If
But beware: seasonal overindulgence is not only limited
you don’t know, speak to a financial adviser who can help
to food, but can also relate to personal finances. We’ve
you get clear on financial goals that align with your desires
all heard of comfort eating and, similar to this, there’s
comfort spending. For instance, at this time of the year for your life. If you are already clear on what you want,
we may be tempted to fork out money for new clothes keeping these goals top of mind can help curb unnecessary
because last winter’s items are just so, well, last season. Or spending. That way, it’s a much easier decision to put that
we may want to buy new soft furnishings, such as blankets, designer item (which you don’t really need) back on the
cushions and throws, to keep warm in style. Meanwhile, shelf because you know what you’re investing towards.
our electricity bill goes up as we plug in heaters, keep TVs
It’s easy to forget your goals when you’re in the grips of a
on longer, turn on ovens and hot-water taps more often,
“lust purchase” or you’re forgetting to turn off lights and
not to mention our lights are on for longer as daylight
heaters.
hours dwindle. We might also spend more on food – for
example, on richer ingredients, speciality cheeses and One way to keep your vision in focus is to indulge your
desserts, or ready-made meals and takeaways. creative streak by making a vision board. Include pictures
This makes it the perfect time to extend the saying, “Summer of everything you hope to accomplish with your money,
bodies are made in winter”, to your budget – boosting whether it’s paying off your bond, a dream holiday, early
your financial well-being along with your physical health. retirement, or starting your own business. Cut out images
Winter can creep up on our finances and wreak havoc from magazines or make a Pinterest board and print it
on our budget as we hibernate. Having set your financial out. Place this vision board somewhere you’ll see it everyFINANCIALLY TALKING 9
day, such as in your kitchen, or you could even take a TIP 3: COMMIT AND FOLLOW THROUGH
photo and make that the wallpaper for your computer In the same way that regular exercise – even on cold and
or smartphone. rainy days – is key to getting your summer body ready, so
too is regularly exercising your restraint muscles when it
TIP 2: DO A SEASONAL BUDGET MAKEOVER
comes to online purchases or all those big SALE signs.
Review your budget in light of possible seasonal changes
Even the best intentions will not prevent your budget
to your lifestyle and finances. To accommodate some of
from getting flabby if you don’t back them up with action.
the expenses associated with winter, you may need to
So, next time you find yourself indulging in a little retail
cut down in other areas. Don’t let this upset you. This
therapy, take a look at your vision board and remind
kind of financial discipline is key to achieving success in
building your long-term wealth. Make some time to go yourself that foregoing little luxuries now will bring you
through your existing budget, adjusting for any likely cost that much closer to achieving your long-term goals. Once
increases during winter (and if you don’t have a budget, you have reviewed your plans and decided on the way
use this time to create one based on your specific financial forward, make every effort to commit and stick to the plan.
goals). Electricity is the most obvious one, so allow for that,
perhaps seeing where you can reduce costs in other areas
such as entertainment and going out, to compensate.
SLASH YOUR MONTHLY BILLS
This can be a positive opportunity for the family to come together and brainstorm ways to keep costs low.
Here are some ideas:
• Turn off lights whenever you leave a room.
• Wear an extra layer of warm clothing.
• Use energy-saving cooking devices or just make sure that you use the correct pots and
pans (a large pan takes more energy to heat).
REDUCE • Cook extra to heat and eat the next day.
ELECTRICITY • Use a hot water bottle to warm your bed instead of an electric blanket.
• Take short showers instead of baths (this also reduces your water bill).
This applies to everything you buy.
• Draw up a meal plan for the week, which will result in less waste.
• Make a list of only what you need before shopping and stick to it.
PLAN BEFORE • Assess what additional items of clothing are absolutely necessary, so you won’t be tempted
YOU SHOP to buy anything you don’t need.
• Buy
unpackaged, seasonal fruit and vegetables as well as no-name or “house brand”
products from your supermarket. These are usually cheaper without compromising on quality.
SHOP SMARTER • Stock up on essentials if they are on sale.
FOR GROCERIES • Instead of buying ready-made meals, cook from scratch to cut costs.10 FINANCIALLY TALKING
SHARI’AH:
REAPING THE
BENEFITS OF
INVESTING
ETHICALLY
Investing ethically is at the heart of investing with purpose digital innovations, which has seen an introduction of
for a rewarding future. Old Mutual (pioneers in ethical green, blockchain and inflation-linked sukuks.
investing) and Al Baraka Bank (pioneers in Islamic finance)
have worked together to combine the principles of ethical PERFORMANCE
and Shari’ah investing, creating our Shari’ah range of funds. Since inception, the Old Mutual Albaraka Income Fund
has delivered above-inflation returns and has grown to
In March 2020, we launched the Old Mutual Albaraka R800m in assets under management.
Income Fund. This income fund is the fourth in our Shari’ah
suite of funds, comprising: Old Mutual Albaraka Income OLD MUTUAL ALBARAKA INCOME FUND
Fund; Old Mutual Albaraka Balanced Fund; Old Mutual PERIODS TO 31 MARCH 2021
Albaraka Equity Fund and Old Mutual Global Islamic
12%
Equity Fund.
10.2
10%
8.5
GROWTH OF SUKUK 8%
8.1
Our Shari’ah funds are invested in Islamic bonds or sukuks,
6% 5.3
an Arabic word that means “certificates”. Unlike bonds 4.6
3.8 3.5
4%
that indicate a debt obligation, a sukuk offers the holder 2.9
1.9 1.9
ownership of a physical asset. Another way to look at a 2%
sukuk is to think of it as a share certificate in an unlisted 0%
joint venture, for example a wind or solar farm. Sukuks 6 Months 1 Year
are priced according to the value of the physical assets as Old Mutual Albaraka Income Fund Benchmark (STeFI)
Shari'ah Income Fund Average CPI (Inflation)
well as the credit rating. The sukuk will increase in value Income Fund Peer Group
when the assets increase in value, whereas profits from
bonds correspond to a fixed interest rate or credit rating. FAITH-BASED INVESTING
Faith-based investing refers to investment solutions
According to Refinitiv, one of the world’s largest providers
that are consistent with faith-based principles such as
of financial market data and infrastructure, sukuks were
Christianity, Judaism, Islam and Hinduism, etc. as part of
launched in several non-Muslim countries in 2020,
the investment process.
including Hong Kong, Luxembourg, South Africa (the Old
Mutual Albaraka Income Fund), Senegal and the United The popularity of Shari’ah investments among non-Muslim
Kingdom. They conclude that the growth has been aided investors is nothing new for Old Mutual, with almost
by the continued innovation in sukuks, keeping up with 30% of our Shari’ah funds held by non-Muslim investors.FINANCIALLY TALKING 11
We believe this is because of the alignment of values with common values with the higher objectives of Islamic
regard to where investors want to put their money, and law – which, among others, seeks the preservation and
how that money can in turn do good. protection of life, resources and the environment.
We go beyond the literal meaning of the law, raising the bar
In South Africa, there are currently over 20 Shari’ah funds
to incorporate the purposes and objectives behind Shari’ah,
with R23 billion in assets under management in March 2021,
integrating both Shari’ah standards and ESG principles
according to the Alexander Forbes Shari’ah Manager Watch.
into our investment process. The wealth created from this
investment approach is also shared with disadvantaged
THE IMPORTANT LINK BETWEEN ETHICAL
communities in support of UNSDGs.
AND ESG INVESTING
Shari’ah investing principles have historically been ADDRESSING SOCIAL ISSUES
interpreted by scholars to determine what the minimum Old Mutual and Al Baraka partnered with the South African
standards are that an investment must satisfy to meet the Muslim Charitable Trust (SAMCT) in 2008 to act as a conduit
requirements of Islamic law. Our investment approach for the provision of funding assets, services and other
incorporates the higher purposes and objectives of Islamic resources to approved public benefit organisations. Funds
law by actively incorporating ESG principles and United are distributed to improve the health and development
Nations Sustainable Development Goals (UNSDGs), sharing of people, irrespective of race or religion.12 FINANCIALLY TALKING
PROTECT YOURSELF
FROM SCAMS
When natural disasters or pandemics like Covid-19 occur, there is often an increase in opportunistic criminal activity
on the internet. Criminals are preying on fear and send all sorts of scams related to the coronavirus. It is therefore
critical to remain supervigilant.
New types of scams continue to emerge in which fraudsters 4. FAKE CHARITIES
lure you into providing personal and confidential information You may receive emails or visit websites that ask you for
like your ID number, bank details, etc. charity donations for studies, doctors, or victims that may
have been affected by Covid-19. Scammers often create
Ultimately, it’s up to each of us to stay informed and think
fake charity emails after global disasters or pandemics.
twice before sharing our personal details online or over
the phone.
Some examples of these types of scams include:
HOW TO PROTECT YOURSELF
1. MALICIOUS WEBSITES FROM SCAMMERS
The purpose of these websites is to infect your device
with malware. Watch out for sites such as coronavirus(.)
com or corona-virus-map(.)com. Thousands of websites Be alert to the fact that scams exist.
registered contain the word "corona" and many of those
are suspicious. Some of these websites distribute malware.
Don’t open suspicious texts or pop-up
windows or click on links or attachments
2. SPAM EMAILS in emails – delete them.
These emails aim to grab your curiosity by using
conspiracy-themed catchphrases, such as “censored”, to Beware of any requests for your details
try and sell information (paid-for videos) or goods that or money.
are now in high demand, such as masks, hand sanitisers
or vitamins, for example.
Be wary of unusual payment requests.
3. PHISHING SCAMS
Be aware of suspicious emails that appear
These appear to come from organisations such as the
to come from an official organisation
CDC (Centres for Disease Control) or the WHO (World such as the WHO or the South African
Health Organisation), but they actually contain malicious Department of Health.
phishing links or dangerous attachments. The message
often states that it has a “new” or an “updated” list of
If you want to make a charitable donation,
cases of coronavirus in your area. These emails contain
go to the charity website of your choice to
dangerous links.
submit your payment. Type the charity’s
It can also be a phone call requesting you to update or web address in your browser instead of
clicking on any links in emails or other
verify your details to obtain the information needed to
messages.
access your bank account. In some cases, you may even
recieve an unverified message saying that the bank will Stay cyber safe and report any suspicious online
be in touch soon to confirm your details, and you will activity. Call 0800 22 21 17 or visit www.tip-offs.com
receive a false phone call.FINANCIALLY TALKING 13
About Old Mutual Unit Trusts
Old Mutual Unit Trust Managers (RF) (Pty) Ltd is a registered manager in terms of the Collective Investment Schemes Control Act 45
of 2002. The fund fees and costs that we charge for managing your investment are set out in the relevant fund's Minimum Disclosure
Document (MDD) or table of fees and charges, both available on our public website, or from our contact centre. Collective Investment
Schemes are generally medium- to long-term investments; the value of participatory interests or the investment may go down as well as
up; past performance is not necessarily a guide to future performance. Old Mutual is a member of the Association for Savings & Investment
South Africa (ASISA).
Important information
Old Mutual Unit Trust Managers (RF) (Pty) Ltd is part of Old Mutual Wealth (OMW), which is an elite service offering brought to you
by several licensed Financial Services Providers in the Old Mutual Group ("the Old Mutual Group"). This newsletter is for information
purposes only and does not constitute financial advice in any way or form. It is important to consult a financial planner to receive
financial advice before acting on any information contained herein. OMW, the Old Mutual Group and its directors, officers and
employees shall not be responsible and disclaim all liability for any loss, damage (whether direct, indirect, special or consequential)
and/or expense of any nature whatsoever, which may be suffered as a result of, or which may be attributable, directly or indirectly,
to the use of, or reliance upon any information contained in this newsletter.You can also read
