Metropolitan smooth bonus portfolio – one of the best long term performers in SA insurance industry declares impressive bonuses

Metropolitan Retail has declared 2010 bonus rates of 7,5% for endowment policies and 8% for retirement annuities.

Metropolitan's smooth bonus portfolio - the main underlying investment for its suite of investment products - was designed to provide stable long term returns that beat other investments, like bonds or money market instruments, for risk-averse investors.

Alex Ollewagen, Head of Investment Products at Metropolitan Retail says the 2010 bonus declarations highlight the company's position as one the industry's top performing smooth bonus portfolios, while at the same time maintaining comfortable funding levels.

Over the past 20 years - through numerous market cycles – smooth bonus funds have rarely failed to protect investors from market volatility.

This is due to a combination of factors including the fact that smooth bonus funds are: (1) well-regulated in South Africa, (2) managed by a committee that includes independent members, (3) invested in diverse assets including cash, bonds and equities that collectively reduce volatility, and (4) relatively competitive from a cost perspective.

Ollewagen says while he is encouraged by the fact that South Africa has moved out of the recession that plagued the global market over the past three years, investment markets are likely to remain unpredictable for some time to come.

This view is spurred by the global economy that still faces major headwinds including massive fiscal debt in developed countries That could drive global interest rates; inflation fears in developing markets fueled by portfolio inflows and massive unemployment in the wake of the recent recession, which many, including the International Labour Organisation (ILO) believe will still take years to recover to pre-2008 levels.

Ollewagen says investing in a smooth bonus portfolio is likely to mitigate the impacts of a volatile market, while at the same time providing better expected returns than bonds and cash.

Given the declaration of 7.5% for endowments and 8% for retirement annuities for the year 2010, Metropolitan has confirmed its competitiveness in smooth bonus performance.

Over 10 and 15 years, Metropolitan's endowment smooth bonus declarations are the best in the market, with its five-year average also being very competitive. Over 15 years, its retirement annuity declarations are rated best in the market, with 10 and five year declarations also being very competitive.