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1              Great historical investment returns and proven retirement investment solutions

The Fund has been outperforming its peers, net of fees, for many years. This still holds true during these tough economic times. The Fund’s life stage investment strategy matches your investment to where you are on your retirement journey. This means that when you are younger, your investment grows your savings and as you get closer to retirement, it focuses more on protecting your nest egg.

2              In-Fund Living Annuity (IFLA)

As a member of the Fund, you have the option of moving a portion of or all your retirement savings into an incredibly cost-effective Living Annuity provided by the Fund when you retire. Investing in this Living Annuity is effectively the same as ‘buying’ a pension. This will allow you to continue benefiting from the consistent great investment returns.

3             Pooled Annuity Account (PAC)

As a member of the Fund, you have the option of using a portion of or all your retirement savings to purchase an incredibly cost-effective single life pension or a joint life pension when you retire. It will cost you less than purchasing a pension or annuity outside the Fund. This will allow you to continue benefiting from the “economies of scale” in terms of fees.

You may use your retirement savings to purchase a combination of both IFLA and PAC.

4              A solid and proud history

The LA Retirement Fund has been helping members on their retirement journey since 1943.

5              Constant focus on costs

The Fund remains committed to keeping costs low and retirement savings high.

6              Excellent governance

The LA Retirement Fund places a priority on being well-managed and keeping to the rules and laws that govern retirement funds in South Africa. This ensures that that Fund members are protected and looked after by an experienced Board of Trustees and a dedicated Principal Officer. The fund has enjoyed clean annual audits for decades.

7              Pension-backed housing loans

The Fund offers members access to a valuable pension-backed home loan scheme. This means that qualifying Fund members can get surety for a home loan from FNB of up to 60% of their member share (i.e. the total amount saved up in their Fund account)

8              A dedicated Fund Counsellor

If you need help in understanding your options while you are a member of the Fund or when you are about to retire or leave employment, for whatever reason, the Fund’s Counsellor will assist you by explaining your options and associated costs

9              Provision of a premium quotation

We are the only Fund that offers potential members a no obligation Fund cost and a voluntary insured risk benefit monthly premium quotation to help them understand how much of their monthly contributions would go directly to retirement savings.

DEBUNKING THE MYTH OF THE LARGE FUND

Is it better to be a member of a 50 000 plus member Fund or a 5 000 plus member fund?

It would be disingenuous to give a definitive answer without analysing the merits of each fund. Conventional wisdom would suggest that the bigger the fund, the more attractive the proposition is for the member, much of the real-world evidence gathered to date suggests that the truth is, in fact, quite the opposite. While a large fund has the economy of scale to control some costs, its gains are eroded away by needing more expensive specialists, they generally pay their trustees and principal officer 4 times more and justify annual overseas trips, sometimes twice a year. They tend to lean toward more expensive marketing strategies and give aways. The cost of which is paid by the members. They generally have more expensive offices and multiple offices which drives up the cost. They can’t always secure cheaper insured benefit rates because their claims experience is very high. Smaller funds also outperform the large Funds and offer members better investment returns. Ultimately, members are financially better off in a 5 000 plus member fund.

When it comes to investing, which funds generally perform best?

In terms of performance and generating alpha, the bulk of the existing research identifies smaller funds as being the best performers.

Among the most comprehensive recent work on this topic was carried out by Aurum, a specialist investment manager that’s focused on selecting hedge funds. In June 2019, Aurum disclosed its research tracking the growth of the hedge fund industry between 2010 and 2018, involving some 8,000 active and closed hedge funds.

With the tracked funds divided into five groups according to AUM: less than $50 million; $50 million to $250 million; $250 million to $1 billion; $1 billion to $5 billion; and greater than $5 billion (analogous to micro caps, small caps, mid caps, large caps, and mega caps of equities), Aurum found that while year-on-year differences are visible, the clear overall trend is that smaller funds outperform their larger counterparts.

The average yearly return for the ‘micro’ group was 7.7%, compared with 6.6% for the ‘small’ group, 5.7% for the ‘mid’ group, 5.6% for the ‘large’ group, and 5.1% for the ‘mega’ group.

“Investment managers often profit far more from piling up assets than from handling those assets well. So, when one tells you that increased funds won’t hurt his investment performance, step back: his nose is about to grow.” Warren Buffett, 2003.

Given the specific, pronounced qualities that smaller funds offer vis-à-vis their bigger peers, small funds are absolutely worth the risk. As the evidence shows, their performance is likely to outshine bigger funds, which means that they should ordinarily be preferable to investors. Their nimbleness, their size advantage when quickly moving in and out of trading positions, and their ability to more effectively tap into early, unexplored opportunities means that there is potentially a huge amount of upside being sacrificed should they be ignored.

See https://kingsbridgealts.com/fund-size-and-performance-why-small-funds-are-the-best-performers/