Investment strategy
Legal Provident Fund offers members a lifestage model default strategy as well as individual choice portfolios. The fund’s assets are managed by Alexander Forbes Investments. For more information about Alexander Forbes Investments or the fund’s portfolios please visit www.alexanderforbesinvestments.co.za
Lifestage model
Given that not all members are comfortable with making investment choices, the trustees have decided to offer a range of portfolios, which are combined to provide a suitable default investment strategy known as the lifestage model. This model places members in appropriate portfolios or a combination of portfolios based on their number of years to retirement.
The underlying portfolios used are as follows:
| Portfolio | Risk profile | Aim |
|---|---|---|
| AFI Performer | High / Medium | To blend investment managers to achieve superior returns at average risk. |
| AFI Real Return Focus | Medium / Low | To provide a gross return of above inflation over every rolling three years and to protect capital over a rolling 12 months. |
| AFI Banker | None | To provide an investment return above the average of money –market portfolios. |
The table below shows the full portfolio structure across the lifestage model effective from 1 July 2016, comprising of different allocations to Alexander Forbes Investments’s Performer, Real Return and Banker. This table shows the “phase-down” methodology towards lower risk portfolios in the lead-up to retirement:
Member investment choice
Members may choose one or a combination of the following portfolios in structuring their own investment strategy:
| Portfolio | Risk profile | Aim |
|---|---|---|
| AFI Performer | High / Medium | To blend investment managers to achieve superior returns at average risk. |
| AFI Real Return Focus | Medium / Low | To provide a gross return of above inflation over every rolling three years and to protect capital over a rolling 12 months. |
| AFI Banker | None | To provide an investment return above the average of money –market portfolios. |
The investment strategy chosen by the member will not change unless the member chooses to complete a switch form and changes their strategy. Members may switch between portfolios by following the procedures adopted by the fund administrators. (link to switch form). All completed switch forms must be submitted to zzswitches@aforbes.co.za.
Lifestage
model
model
| Age | Portfolio | Allocation |
|---|---|---|
| 18 to 55 | AFI Performer | 100% |
| 56 | AFI Performer AFI Real Return Focus | 70% 30% |
| 57 | AFI Performer AFI Real Return Focus | 60% 40% |
| 58 | AFI Performer AFI Real Return Focus | 50% 50% |
| 59 | AFI Performer AFI Real Return Focus | 40% 60% |
| 60 | AFI Performer AFI Real Return Focus | 30% 70% |
| 61 | AFI Performer AFI Real Return Focus | 20% 80% |
| 62 | AFI Performer AFI Real Return Focus | 10% 90% |
| 63 | AFI Real Return Focus AFI Banker | 90% 10% |
| 64 onwards | AFI Real Return Focus AFI Banker | 67% 33% |
Investment switches between portfolios are automatic and will take place at the month-end of the month in which a member’s birthday occurs. Member’s existing retirement savings as well as his/her future contributions will be invested in accordance with the default lifestage model.