Hopefully you are indoors and keeping yourself warm whilst reading our latest newsletter! I thought it would be of interest to you to understand further the compilation of a Model Portfolio and how it “works”.You may have noticed that you are invested in the Jurgens Secure/Moderate/ Balanced or Boutique portfolio. In my described example, I will refer to the Balanced portfolio.The Balanced Portfolio is made up of four unit trust funds. These funds all subscribe to guidelines required at this level of risk. These unit trust funds cannot exceed 75% equity exposure and a maximum of 25% offshore exposure. (These funds are commonly used in retirement annuities, Asset Preservation Funds and Living Annuities).
Approximately 130 Funds available in this risk category, we at Jurgens Finance strive to be invested in the top quartile funds (ie: the top 25% of 130 funds which would equate to the top 33 funds).Various portfolio managers have different views, resulting in some funds being more cautiously positioned than others, thus making their fund occasionally fall into the second quartile category.Our constant communication with portfolio managers allows us to monitor the fund performance and decide whether to remain invested in their particular fund should it move into the second quartile.There are a variety of aspects to consider when selecting a fund manager:
- The holding investment company’s reputation;
- Current positioning of the fund and the past track record of the fund;
- Manager’s remuneration structure and whether he has his own cash invested in the fund;
- Fee structure of the fund.
Our investment committee meets regularly to discuss market conditions, company asset manager views, tracking of our selected unit trust funds and potential risks.
A client recently asked me why the Jurgens Balanced Portfolio had remained invested in the same four unit trust funds for over a year. The answer was that all four funds had performed consistently well in their risk category and that switching had not been necessary. Should they continue performing in the top quartile for a further 12 months we would, once again, not switch funds. Changing the “make up” of the Balanced Portfolio would only be initiated should one of the funds under perform. One would, in most cases, prefer to be invested in a new fund for at least twelve to eighteen months.
Some advisory businesses charge an increased fee for being invested in their selected unit trust portfolio funds. Jurgens Finance does not follow this trend. By way of an ongoing and researched process, our experienced, qualified panel ensures the correct funds are selected based on your risk profile. This essential regular monitoring of unit trust funds ensures continued competitive returns with costs being reduced wherever possible.
Employee Benefits from Estelle Susanna
Further to our In Touch article regarding the introduction of new retirement contribution maximums with effect from 1 March 2015 to 27.5%, some contributors may have been wondering how they would benefit by contributing above the R350,000 per annum limit.
Contributions in excess of the annual limits may be rolled over to future years where the amounts will again be deductible together with contributions made in that year, but subject to the limits applicable to that year.
At retirement, if any excess contributions have not been allowed as a tax deduction, these contributions will accrue to the tax free portion. The value will be available to be offset against any lump sum income prior to the tax calculation, or, will be available at assessment to reduce the tax payable in respect of compulsory annuities compulsory annuity income.
Also to come into effect from 1 March 2015, Income from Income Disability products will be paid to the claimant tax free. This will apply to existing claimants as well as new claimants.
Short Term News from Greg Brits
In this article we would like to deal with maintenance of your home and resultant damage, optional extras on vehicles and underinsurance.
These issues often cause confusion when claiming and we feel it best to address certain situations not covered by insurance policies which you may be unaware of.
Home maintenance: The principle of insurance is to be covered for sudden and unforeseen events. Events that occur due to deterioration over time, are not covered. For example, where damp proofing has not been maintained or rising damp occurs, this will not be covered by the policy. Please keep in mind that if the condition of a house is not maintained, that the resultant damage claim could be rejected i.e. the loss could have been foreseen. More and more, many bank insurance policies are being rejected for maintenance related claims. Please ensure that homes are well maintained, roofs and general areas requiring damp or waterproofing, are regularly attended to.
Unfortunately, pipes in walls that gradually deteriorate e.g. due to rust, are not covered but should they cause resultant damage, this will be covered. Breaking the wall to get to the pipe is not covered. Please check your policy for exclusions that may apply.
Extras on vehicles: Please note that extras on vehicles for example, tow bars, bull bars, canopies are not covered unless they have been mentioned under the specific motor section. Only items that are fitted by the motor manufacturer will be insured. Many clients assume that items that are fitted to LDV or SUV vehicles like tow bars are standard when in fact they are an aftermarket accessory. Please check your policy to ensure that these items have been listed. If you are unsure whether they are factory fitted items, please call the manufacturer and give them your VIN number to obtain this.
Being underinsured: In our previous article we dealt extensively with the insurance on buildings and house contents. Please ensure that these are adequately insured. Building values should be based on R13 500 per square meter of the primary residence to allow for all the extras like pools, boundary walls, gates, demolition costs and professional fees. Please note that this is just a guideline and that a professional valuation should be done to get the accurate value. Should you be under insured, the insurer is entitled to impose averages on your claim which may leave you out of pocket. In simple terms, if you insure for half the replacement value, the insurer will pay half your claim.
Should you wish to discuss any of the above please do not hesitate to contact us and we will gladly assist.
POST NOTE: Cell Numbers that now appear on your phones when you receive a call from Jurgens Group land-line, no longer display “unknown”. The following four cell numbers appear if you wish to save them as Jurgens Group: 082 906 0342, 082 906 0339, 082 906 0338, 082 906 0337.