Yousuf asks: Is there one source where I can find all the info on preservation funds and their performance to make a decision on which one to choose?
Maya replies: Unfortunately there is no single source, unlike, for example, the unit trust industry where there are companies like Plexus and Profile Media that do the return comparisons.
This is because the retirement industry is very diverse. You have life companies and asset managers and even portfolio managers all managing retirement money.
The best bet is to look at the general performance of the fund manager where the funds are invested. In many cases when you transfer your retirement funds to a preservation fund you can select the underlying fund manager. Many of these fund managers also run unit trusts, so you can get an idea from their performance in those products.
Alexander Forbes runs a Large Manager Fund Watch that also tracks the performance of the industry’s largest retirement fund managers. The top five over the last five years are Allan Gray, Coronation, Investec, Foord and Prudential. You will find the same names topping the unit trust performance charts.
You also need to look at costs. There can be many cost layers in a preservation fund, especially if you invest via a life house. There are the financial adviser fees; a fee for the preservation structure; platform fees; and asset management fees. Make sure you understand exactly what all the fees come to in total — both upfront and ongoing. Don’t be fobbed off with the total expense ratio as this does not include the adviser’s fee, which is not only upfront but also ongoing.
Coronation, Investec and Allan Gray offer retirement fund platforms that you can invest in directly and which cut out some these additional fees.
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