3. What do people invest for ?
• For capital growth
• Save R 100 000 every year for ten years
• R 1 million saved capital
• Sensible investments
• Value R 2.5 million
4. Critical unanswered questions?
• How do you choose sensible investments?
• How could you have known 10 years ago that
today the value would be R 2.5 million?
• Is R 2.5 million enough – how do you know?
5. 1 Year 3 Years 5 Years 7 Years 10 Years
Rank 4/161 11/130 5/113 1/96 14/60
Annualised
Return
20.4% 22.1% 19.4% 16.6% 17.5%
Sector Average 10.5% 16.7% 14.1% 9.7% 15.4%
As at 31st December 2014 Source: ProfileData
7. R -
R 50 000
R 100 000
R 150 000
R 200 000
R 250 000
R -
R 1 000 000
R 2 000 000
R 3 000 000
R 4 000 000
R 5 000 000
R 6 000 000
R 7 000 000
R 8 000 000
03 04 05 06 07 08 09 10 11 12 13 14
IncomeProduced
CapitalValue
Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)
Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)
Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund
R1 million Investment since 2004
Source: ProfileData & Marriott
8. R -
R 50 000
R 100 000
R 150 000
R 200 000
R 250 000
R -
R 1 000 000
R 2 000 000
R 3 000 000
R 4 000 000
R 5 000 000
R 6 000 000
R 7 000 000
R 8 000 000
03 04 05 06 07 08 09 10 11 12 13 14
IncomeProduced
CapitalValue
Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)
Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)
R85k
Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund
R1 million Investment since 2004
Source: ProfileData & Marriott
9. R -
R 50 000
R 100 000
R 150 000
R 200 000
R 250 000
R -
R 1 000 000
R 2 000 000
R 3 000 000
R 4 000 000
R 5 000 000
R 6 000 000
R 7 000 000
R 8 000 000
03 04 05 06 07 08 09 10 11 12 13 14
IncomeProduced
CapitalValue
Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)
Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)
R85k
R187 k
Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund
R1 million Investment since 2004
Source: ProfileData & Marriott
10. R -
R 50 000
R 100 000
R 150 000
R 200 000
R 250 000
R -
R 1 000 000
R 2 000 000
R 3 000 000
R 4 000 000
R 5 000 000
R 6 000 000
R 7 000 000
R 8 000 000
03 04 05 06 07 08 09 10 11 12 13 14
IncomeProduced
CapitalValue
Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)
Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)
R85k
R39k
R187k
Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund
R1 million Investment since 2004
Source: ProfileData & Marriott
11. R -
R 50 000
R 100 000
R 150 000
R 200 000
R 250 000
R -
R 1 000 000
R 2 000 000
R 3 000 000
R 4 000 000
R 5 000 000
R 6 000 000
R 7 000 000
R 8 000 000
03 04 05 06 07 08 09 10 11 12 13 14
IncomeProduced
CapitalValue
Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)
Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)
R85k
R39k
R187k
R198k
Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund
R1 million Investment since 2004
Source: ProfileData & Marriott
12. R -
R 50 000
R 100 000
R 150 000
R 200 000
R 250 000
R -
R 1 000 000
R 2 000 000
R 3 000 000
R 4 000 000
R 5 000 000
R 6 000 000
R 7 000 000
R 8 000 000
03 04 05 06 07 08 09 10 11 12 13 14
IncomeProduced
CapitalValue
Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)
Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)
R85k
R39k
R187k
R198k
R7.2 mil
R2.5 mil
Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund
R1 million Investment since 2004
Source: ProfileData & Marriott
13. R -
R 50 000
R 100 000
R 150 000
R 200 000
R 250 000
R -
R 1 000 000
R 2 000 000
R 3 000 000
R 4 000 000
R 5 000 000
R 6 000 000
R 7 000 000
R 8 000 000
03 04 05 06 07 08 09 10 11 12 13 14
IncomeProduced
CapitalValue
Income Produced - Marriott Dividend Growth Fund (RHS) Income Produced - Top Performing High Yield Bond Fund (RHS)
Capital Value - Marriott Dividend Growth Fund (LHS) Capital Value - Top Performing High Yield Bond Fund (LHS)
R59k
R39k
R102k
R167k
R7.1 mil
R2.0 mil
Marriott Dividend Growth Fund vs a Top Performing High Yield Bond Fund
R1 million Investment since 2004
Source: ProfileData & Marriott
14. 3.1 3.0
2.7
1.9
0.2
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Proctor and
Gamble
Nestle Johnson and
Johnson
US 10 Year
Government
Bond Yield
US Cash Index 1
month Libor
0.25%
1.13%
2.50%
3.63%
0%
1%
1%
2%
2%
3%
3%
4%
4%
Current Fed
Fund Rate
End 2015 End 2016 End 2017
US Fed Funds Rate Projections
Portfolio
100%
Equities
Select Multi-National Blue Chip Companies vs US long term
Bond Yield & Cash Yield
Source: Bloomberg
15. Source: National sources; McKinsey Global Institute
57%
58%
62%
81%
0% 50% 100%
Public speaking
Death
Investing in the stock market
Skydiving
What scares you?
16.
17. 0.0
0.2
0.4
0.6
0.8
1.0
1.2
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Annual Dividends
Dot com
bubble
Asian
financial
crisis
Black
Wednesday
Sub-prime
crisis
Global
debt crisis
Source: Bloomberg
18. Market Cap Filter
Dividend filter
Economic
screen
Industry
screen
Market capitalisation > R2bn
Int: Listed on major first world exchanges
26. Market Cap Filter
Dividend filter
Economic screen
Industry screen
Most widely
held stock in SA
exclusions
0
20
40
60
80
100
120
140
Dec 11 Dec 12 Dec 13 Dec 14
Brent Crude Oil ($ per barrell)
Source: I-Net
27. Market Cap Filter
Dividend filter
Economic screen
Industry screen
Company
screen
Filters out companies with
specific risks to dividend
28. Market Cap Filter
Dividend filter
Economic screen
Industry screen
Company
screen
Strategy?
Debt levels?
Cash flow?
Margins?
exclusions
29. Market Cap Filter
Dividend filter
Economic screen
Industry screen
Company
screen
Filtered out companies with
risks to future dividends
32. Market Cap Filter
Dividend filter
Economic screen
Industry screen
Company
screen
Yield
screen
Yield: 0.3%
PE: 100
Yield: 1.8%
Yield: 1.9%
exclusions
33. Market Cap Filter
Dividend filter
Economic screen
Industry screen
Company
screen
Yield
screen
South Africa: 15 companies
International: 21 companies
34. Local Equities Dividend Growth
FNB 28%
British American Tobacco 26%
Mr Price 26%
Nedbank 18%
Bidvest 16%
AVI 15%
Clicks 13%
MMI 12%
Life Healthcare 12%
Standard Bank 11%
Spar 11%
Liberty 9%
Tiger Brands 9%
Nampak 9%
Vodacom -5%
Average: 14%
Source: I-Net & Company Financials
35. International Equities Dividend Growth
Allianz 17.8%
Spectra Energy 12.8%
General Electric 12.7%
General Mills 11.6%
Diageo 9.1%
Coca Cola 8.9%
Philip Morris International 8.4%
Pfizer 8.2%
Reynolds American 8.1%
Vodafone 7.9%
IMI PLC 7.8%
Procter & Gamble 7.0%
Johnson & Johnson 6.1%
Unilever 6.0%
Kelloggs 5.6%
British American Tobacco 5.2%
McDonald's 5.1%
Nestle 4.9%
Verizon 3.4%
HSBC 2.1%
Sanofi-Aventis 1.1%
Average: 8%
Source: Bloomberg
40. Market Cap Filter
Dividend filter
Economic screen
Industry screen
Company
screen
Yield
screen
South Africa: 15 companies
International: 21 companies
41.
42. Umbrella Solution
• Why the Umbrella Solution?
– Designed with retirement reform in mind
– Guided by independent, non executive trustees
– Low costs – 1% all in fee including administration costs
43. Why the Umbrella Solution?
• Low costs
• No Marriott initial fee
• All in fee of 1% per annum
– Includes administration as well as operating costs of the fund such as audit
– Includes asset management
– No performance fees
• Fees for advisors will be as agreed between the employer
and advisor – Marriott will facilitate the payment which can
be:
– Asset based
– Contribution based
44. 12.0%
15.0%
18.5%
22.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1% 2% 3% 4%
Percentagesavingrate
All in Fee
Savings rate needed to achieve a 70% replacement income upon retirement
Assumptions:
Term 40 years
Portfolio Return = Inflation + 5%
Guaranteed Inflation Linked Annuity Rate = 6.5%
• 1% all in cost
54% increase in
savings rate
Why the Umbrella Solution?
45. Impact of costs on different salary bands
• Contribution Rate = 10%
• Expected Return = 12%
• Annual Fee = 1.14%
• Average annual fee over 10 years:
Why the Umbrella Solution?
No fixed monthly fee:
R40 fixed monthly fee:
46. Umbrella Solution
• Why the Umbrella Solution?
– Designed with retirement reform in mind
– Guided by independent, non executive trustees
– Low costs – 1% all in fee including administration costs
– Annuity for life – seamless transfer to Marriott’s Living Annuity
– Simple Offering – only 3 investment portfolios
48. Yield = 3.5%
Growth in income = 8.0%
after fees
Investment Choice
Local
Equities
International
Equities
49. Yield = 4.0%
Growth in income = 6.0%
after fees
Investment Choice
International
Equities
Local
Equities
50. Yield = 5.0%
Growth in income = 2.0%
after fees
Investment Choice
Local
Equities
International
Equities
51. Date
High Equity
Portfolio
Inflation (CPI) Real Return
1 Year 24.4% 5.1%
19.3%
3 Years 18.7% 5.4%
13.3%
5 Years 16.2% 5.1%
11.1%
7 Years 13.3% 5.7%
7.6%
10 Years 14.2% 5.9%
8.3%
Investment track record
Source: Profile Data – The track record of the high equity portfolio has been calculated using Marriott’s underlying portfolios
52. Date
Balanced Fund
of Funds
Inflation (CPI) Real Return
1 Year 16.8% 5.1%
11.7%
3 Years 15.3% 5.4%
9.9%
5 Years 12.9% 5.1%
7.8%
7 Years 11.1% 5.7%
5.4%
10 Years 13.1% 5.9%
7.2%
Investment track record
Note: Marriott Balanced Fund of Funds has been used as a proxy for the returns of the Umbrella Balanced Portfolio.
53. Date
Low Equity
Portfolio
Inflation (CPI) Real Return
1 Year 11.7% 5.1%
6.6%
3 Years 10.3% 5.4%
4.9%
5 Years 9.6% 5.1%
4.5%
7 Years 9.0% 5.7%
3.3%
10 Years 10.3% 5.9%
4.4%
Investment track record
Source: Profile Data – The track record of the low equity portfolio has been calculated using Marriott’s underlying portfolios
54. Umbrella Solution
• Why the Umbrella Solution?
– Designed with retirement reform in mind
– Guided by independent, non executive trustees
– Low costs – 1% all in fee including administration costs
– Annuity for life – seamless transfer to Marriott’s Living Annuity
– Simple Offering – only 3 investment portfolios
– Income focused investing ensures more certainty to
the Salary Replacement Ratio
55. Why the Umbrella Solution?
Monthly income earned:
R 173,000 in year 25
Value in today's terms:
(Ave inflation 6%) R40,300
Salary Replacement Ratio:
76%
Monthly income earned:
R 173,000 in year 25
Value in today's terms:
(Ave inflation 6%) R40,300
Salary Replacement Ratio:
76%
56. Conclusion: Umbrella Solution
• Low cost– 1% all in fee including administration costs
• Simple Offering – only 3 investment portfolios
• With a meaningful and accurate Salary Replacement
Ratio
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