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Liberty's index-tracker fund poised for growth as it marks its 10th anniversary

Liberty's index-tracker fund poised for growth as it marks its 10th anniversary
06-06-24 / Tommy Jackson

Liberty's index-tracker fund poised for growth as it marks its 10th anniversary

Johannesburg - Liberty's institutional index-tracking fund has attracted more than R9bn in assets under management since its founding 10 years ago, indicating investors' growing desire for reliability and stability in an uncertain world.

The appeal for index tracking lies in its cost-effectiveness compared to actively managed funds, and its role in making the investment universe more accessible, even for institutional investors like retirement funds and their members. 

According to Kgotso Thipa, Manager of Investment Services at Liberty Corporate Benefits, an estimated 14% of assets under management in South Africa comprise tracker funds and exchange-traded products, indicating gradual up-take by retirement funds. "This is solely because index tracking funds are low-cost, less volatile and offer competitive returns over time. This becomes attractive for an investor who is looking for stable growth over a period." says Thipa.

In South Africa, the index tracking landscape is yet to reach its full potential, and Liberty Corporate Benefits is well positioned to take full advantage of this potential growth. SA retirement fund portfolios are estimated at R4.26-trilllion, which is almost equivalent to our country's GDP.

"As one of the competitive participants in the index tracking space, we are confident that the up take for index tracking will rise as other investment houses see its benefits and adopt the philosophy behind it. We are encouraged by mature markets such as the United States, where assets in passive funds recently surpassed those in active funds." adds Thipa.

The Liberty Corporate Benefits' Index Tracking offering is a demonstration that we care about clients' retirement goals through our outcome-based investment philosophy.  In a country where a significant number of the labour workforce earns below R500,000 a year and endure higher costs of living, workers are likely to have insufficient retirement savings. It then becomes vital for employers and corporate advisers to optimize retirement investment outcomes for employees through investing in low cost and competitively performing investment vehicles such as index trackers. 

Where appropriate, other types of investment offerings might be better suited for certain members' retirement income needs.  Hence, index tracking is by no means the "silver bullet" to all retirement savings challenges. 

"We are truly excited to have reached this milestone as it indicates that as a business, we are not for ourselves, but for the institutional investors who choose to entrust us with their assets. It is indeed a proud moment to have witnessed such gradual growth and we hope to see more asset allocators choose index tracking, in the interest of ensuring solid retirement outcomes for members of retirement funds." concludes Thipa.

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