GRADIDGE-MAHURA MODEL PORTFOLIOS

We believe that while some things are great on their own, they are even better together. This is one of our key values. We are in this together and, therefore, your success is our success.

With this in mind, one of the greatest challenges for financial advisors today is selecting the most appropriate unit trusts to include in a portfolio out of the ever-increasing universe of in excess of 1500 unit trust funds.

An important consideration relating to your investment portfolio is the manner in which changes can be made to the portfolio effectively. As a result, we have created model portfolios to avoid any delays inherent in this administrative process in order to manage your portfolio on a dynamic and ongoing basis.

We continue to investigate ways of securing access to specialised resources, while at the same time, managing your portfolio on a more efficient basis. We have entered into a formal joint venture with Analytics Consulting. A partner who shares our values and beliefs.

Analytics Consulting is an independent investment consulting and product development business that provides investment consulting services and bespoke product solutions to the top independent financial advisory and boutique investment management businesses in South Africa. The Analytics Consulting team originated from the Investec Asset Management stable and includes technical specialists who have worked for some of the top financial services businesses in South Africa, including Allan Gray, RMB, Stanlib, Momentum and Stonehage.

OUR INVESTMENT PROCESS

We have established a range of investment portfolios (also known as model portfolios) on the Allan Gray and Stanlib administrative platforms. These investment portfolios will facilitate the active management of our clients’ capital.

The portfolios will be proactively managed by an investment committee comprised of a number of investment specialists with proven track records. Analytics Consulting acts as the investment manager of the investment committee and Gradidge-Mahura will act as advisor to the investment committee. We believe that the combination of skills within the investment committee brings a positive dynamic to our offering.

The Gradidge-Mahura portfolios are subject to rigorous qualitative and quantitative analysis that facilitates the selection of quality unit trust funds within the portfolios.

The investment process is aimed at providing clients with a scientifically designed risk profiled balanced investment portfolio that is robust, yet dynamic in terms of adapting to changes in investment market cycles. Gradidge-Mahura will manage investment portfolios with risk profiles that are matched to the typical risk and return needs of conservative, cautious, moderate and aggressive investors.

Each of the portfolios will have a pre-determined strategic asset allocation that is monitored on an ongoing basis to maintain each portfolio’s risk profile. In addition to the strategic asset allocation, the Investment Committee monitors the macro economic environment with a view to determining whether tactical asset allocation changes are necessary.

THE GRADIDGE-MAHURA MODEL PORTFOLIOS HAVE THE FOLLOWING CHARACTERISTICS:

Gradidge-Mahura Income Portfolio

The objective of this portfolio is to provide investors with income with a focus on capital preservation. This portfolio maintains a low risk profile.
The portfolio will have a maximum of 10% exposure to equities.

Gradidge-Mahura Cautious Portfolio
The objective of this portfolio is to provide investors with income and conservative capital growth with a focus on capital preservation. The portfolio aims to generate a return of CPI* + 2% per annum, after cost, over any rolling 3-year period. This portfolio maintains a low risk profile.

The portfolio will have a maximum of 40% exposure to equities.

Gradidge-Mahura Moderate Portfolio
The objective of this portfolio is to provide investors with moderate capital growth. The portfolio aims to generate a return of CPI* + 3% per annum, after cost, over any rolling 5-year period. The portfolio maintains a moderate risk profile.

The portfolio will have of a maximum of 60% exposure to equities.

Gradidge-Mahura Growth Portfolio
The objective of this portfolio is to deliver long term capital growth. The portfolio aims to generate a return of CPI* + 5% per annum, over any rolling 7-year period. The portfolio maintains a high risk profile.

The portfolio will have a maximum of 75% exposure to equities.

Gradidge-Mahura Worldwide Flexible Portfolio
The objective of the portfolio is to deliver long term capital growth through equity centric investments. The portfolio aims to generate a return of CPI* + 5% per annum, after cost, over any rolling 10-year period. The portfolio maintains a high risk profile. The portfolio will have an equity exposure of anything ranging between 0% and 100%.

The breakdown of the underlying funds selected within the above-mentioned portfolio is available on the Gradidge-Mahura monthly fund fact sheets, as well as on your investment statements.

The investment committee aims to achieve an appropriate degree of diversification while combining the investment expertise of quality investment managers. The portfolios may have exposure to equities, property, bonds, cash and offshore investment instruments.

*The consumer price index (CPI) is the official measure of inflation in South Africa.

THE BENEFITS OF INVESTING IN THE GRADIDGE-MAHURA MODEL PORTFOLIOS

Structure

The portfolios will be model portfolios (otherwise known in the industry as wrap funds) that invest in unit trust funds and/or call accounts.

Flexibility

Our structure is able to access all the top funds and fund managers in South Africa. We are also able to access investment portfolio solutions that are not readily available on standard retail platforms. Furthermore, once you have signed the Analytics Consulting investment mandate, Analytics Consulting, in consultation with Gradidge-Mahura, will have the authority to manage your investment on a discretionary basis on your behalf, subject to your portfolios predetermined investment mandate and the decisions made by the investment committee. This enables us to manage your investment more efficiently without having to revert to you every time that we need to make necessary changes to your portfolios in your best interest.

Liquidity

By investing in unit trust funds, other than in extraordinary circumstances, you are able to switch out of your investment portfolio within 2 – 5 days. As is the case with your current investment, your investment may however still be subject to certain regulatory liquidity constraints.

Capital Gains Tax

As you may be aware Capital Gains Tax (CGT) is incurred whenever we change your portfolio, unless you are invested in the portfolio through a pre- or post-retirement fund product. It is important to therefore note that CGT events will be incurred by certain investors whenever Gradidge – Mahura makes changes to their investment portfolios. We do, however, believe that it is unwise to delay making necessary changes to your portfolio merely to avoid CGT accruals. On an annual basis, Allan Gray, Stanlib will notify all relevant investors of the CGT that has been incurred on their portfolios.

Costs

The use of the Ci Institutional building blocks (certain of which are passive investments) reduces the fees for investors within the Gradidge-Mahura portfolios.

For a complete breakdown on all the fees, please refer to the client mandate and the fund factsheet.

Gradidge-Mahura will charge an investment management fee of up to 0.20% (plus VAT) for providing representatives to act as representatives under supervision of Analytics Consulting in respect of the model portfolios and for their ongoing activities in this regards.

In consideration for the consulting services provided by Analytics Consulting in respect of the model portfolios, Analytics Consulting will charge a consulting fee of up to 0.20% (plus VAT) per annum of the market value of the investments.

If you have any further queries relating to the total costs applicable to your portfolio, please do not hesitate to contact your financial advisor. Remember, your success is our success.

Transparency

At any point in time, you will be able to determine the performance of your portfolio and the actual constitution of your investment portfolio.

Switching between funds and asset classes:
In future, Analytics Consulting will be mandated to manage your investment on a proactive basis, subject to your specific investment mandate and the decisions of the investment committee without you having to sign switch forms prior to necessary changes being implemented.

Administration

After careful consideration, Allan Gray and Stanlib have been selected to provide the legal framework for the Gradidge-Mahura portfolios and to act as administrator of the fund. Allan Gray and Stanlib have many years of experience and technical expertise and strong administrative capabilities.

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