New Discovery Invest range designed to stand out from the crowd

In the three years since its inception, Discovery Invest has accumulated over R14bn in AUM, with the figure doubling in the last year alone. Its growth reflects solid, stable investment performance and downside protection through the 2008/9 market volatility.

In the context of this steady performance, Discovery Invest has launched two new products and two new funds, each with distinct benefits previously unavailable to South African retail investors within a single package.

With over 900 local unit trust funds in the South African market, launching further funds may seem gratuitous. However, Herschel Mayers, chief executive officer, Discovery Invest, believes there is appetite among investor for more comprehensive, fresh offerings:

“We identified very specific gaps in the market which inspired us to develop three fresh investment products exclusive to Discovery Invest. We believe these features, packaged together in a single product, will rise above the plethora of other investment products. We believe their innovation will cut through the clutter and hit a chord with investors.”

For retirement saving, the Guaranteed Escalator Annuity provides a protected minimum income growth level, unlimited upside potential as well as downside protection. It combines the best of both living and fixed annuities, with a guaranteed income for life, and any remaining capital passed to beneficiaries in the event of death.

“The Guaranteed Escalator Annuity delivers where other products fall short. The issue with a dichotomous choice between a linked or fixed annuity means two things can happen. Either an investor outlives their savings, or dies soon after retirement and is unable to leave a legacy for loved ones’, says Mayers.

While linked products (LISPS) receive over 50% of flows from the SA collective investment industry, they offer little differentiation, innovation or protection, meaning many investors tend to be overly conservative. The Classic Flexible Investment Plan provides access to a full range of investment options, with immediate access to the investments if needed. It also offers improved performance and protection, and refunds up to 100% of Capital Gains Tax liability, making it a more tax-efficient offering than traditional LISPS.

Another benefit is the fair performance fee protector option which gives performance fee refunds of up to 100% and makes it one of the most cost-effective linked products on the market. The early retirement disability protector boosts the investment by up to 20% to compensate for missed growth opportunities, should the investor become disabled. ‘We also provide a 100% escalator death guarantee, giving dependants 100% of the highest value achieved in the event of an untimely death’, says Mayers. The quartile performance protector boosts the investor’s contribution by up to 30% in the event of fund under-performance.

The Discovery Best Ideas Fund is suitable for investors with an appetite for risk, and those able to stomach short-term market fluctuations. Unlike a traditional unit trust which is limited in terms of ability to hold concentrated positions in stocks or make use of alternative instruments and strategies to generate returns, the Best Ideas Fund is not constrained in the same way and will seek to generate superior long-term returns. Investec Asset Management’s Sam Houlie will manage the Discovery Best Ideas Fund.

Following the success of its local range, Discovery has created a Global Escalator Fund which is accessible through the Discovery Invest Offshore Endowment Plan. The dollar-denominated Fund provides exposure to both foreign equities and a US dollar cash account, with a guarantee that each Escalator unit will always be worth at least 80% of its highest value in dollar terms. Guaranteed offshore investments are not commonly available to local investors, making this feature unique.