Sanlam launches innovative empowerment funds

Bongani Mncwango, executive of Sanlam Personal Finance Distribution

A new range of retail funds will allow previously disadvantaged individuals to invest in empowerment transactions, including private equity deals, via a collective investment-type mechanism. Launched by Sanlam Personal Finance (SPF), they are the first funds of this kind to be offered as an underlying investment choice by a life assurer in South Africa. The aim is to offer competitive investment performance while at the same time promoting social and economic upliftment.

Bongani Mncwango, executive of Sanlam Personal Finance Distribution, says, “The funds will allow previously disadvantaged clients to participate in listed and unlisted empowerment transactions, as well as allow exposure to socially responsible investments and community builder property. We anticipate they will deliver excellent investment performance with the added incentive for clients that their funds will be aiding growth and development in their country.”

The funds will be constructed from the following asset classes:

• private equity: including BEE financing,
• equity: socially responsible listed shares,
• property: community builder property investments,
• bonds and government bonds: socially responsible bonds, and
• cash.

The proportion of funds allocated to each asset class will vary depending on the risk profile (conservative, moderate or aggressive) of the fund option chosen.

“The empowerment funds work in the same way as any other Sanlam fund. When a previously disadvantaged client purchases an endowment policy from Sanlam they have the option of selecting these empowerment funds as their underlying fund choices in the endowment. With a relatively small recurring premium, individuals will gain access to a diversified portfolio. The minimum premium for endowments is R250 per month for terms longer than 10 years, and R400 per month for terms shorter than 10 years.”

Mncwango says, “Investors will benefit the most if they view the funds as long term investments since the underlying assets will deliver the most value over the longer term.”

Due to legal restrictions on the ownership of BEE assets, the empowerment funds will only be available to previously disadvantaged individuals. These funds will be actively managed by Sanlam Investment Management.