by | Dec 1, 2023

Dear Investor

As you may be aware we launched our Model Portfolio’s with the help of Morningstar more than a decade ago back in July 2011. This partnership has proved to be most beneficial to both our clients and us as a business. Morningstar Investment Management South Africa (Pty) Ltd is a subsidiary of the Morningstar Investment Management Group, based in Chicago, USA.

Our investment arm, Resolute Asset Management, works closely with Morningstar to ensure that our Model Portfolios are actively managed utilising a best of breed approach to achieve consistent upper quartile returns.

Why Model Portfolio’s: The legislative environment and investment industry is complex, and the pace of change makes it a challenge to focus on running a business that is client-centric, while staying on top of the more technical and administratively cumbersome parts of managing investment portfolios. Combine it with the fact that there are more than 1,500 registered unit trusts to choose from in South Africa, complicated pricing models and ever-changing markets and the task is even more daunting. This translates into a challenging portfolio construction process, hence the decision to partner with Morningstar Investment Management.

We follow a strict process whereby investments are managed by an Investment Committee of specialists with proven track records. In their selection of unit trusts, the investment committee aims to achieve an appropriate degree of diversification while combining the investment expertise of quality investment managers. All portfolios are subjected to rigorous qualitative and quantitative analysis when selecting underlying unit trust funds. The portfolios are managed to meet the needs of end-investors while taking the investment landscape into account. Model portfolios provide you with many benefits in terms of flexibility, liquidity, and transparency. With the help of Morningstar, we continuously negotiate reduced fees on the underlying funds where possible to ensure that our clients benefit from cost-effective portfolios.

We are very proud of the Portfolio results that we have achieved over the past decade, (see attached) and we remain resolute in our mission to deliver consistent upper quartile returns at a competitive price!

From a pricing perspective the industry average cost for this DFM function ranges from 0.25% to 0.5% per annum. As a business we have prided ourselves on delivering both professional service and portfolio results which has led to positive investment and retirement outcomes for our clients over almost two decades now. Since the launch of our Model Portfolio’s our DFM fee has been unchanged and below the average at 0.20%, and our total portfolio fees priced very competitively, in most instances comfortably below average. Due to increasing costs associated with inflation, compliance and technology needs we are adjusting the DFM fee by 0.05%, from 0.20% to 0.25%. (Morningstar 0.10% & Resolute Asset Management 0.15%). This change will come into effect on the 1st of February 2024.

Please note that no action is required on your part as this fee is deducted annually and paid monthly within the investment itself by the respective administrative platform. Our Model Portfolios are our best House View and have been a successful part of our strategy for over 10 years now, however you do have the option to unwrap from these models should you wish to do so, but this may negatively impact the active management process and the preferential portfolio fees achieved.

If you have any questions or concerns, please feel free to contact your Wealth Manager directly.

Yours Sincerely,

Quinton Ralph CFP®

Founder and Managing Director