Prescribed assets and passive funds preoccupy asset managers
Government's plan will be deficient if it forces pension funds to invest in asset classes that are are not profitable or do not have the right risk profile, says chief economist
The increasing allocation to passive funds, a squeeze on active management fees and uncertainty about whether the government will follow through on the ANC’s plan to look into prescribed assets is keeping SA asset managers on their toes, says Alexander Forbes. The country’s largest pension fund administrator said it does not think the idea of prescribed assets in its current form will be pursued by the government. “It’s not a government process yet. The moment it becomes a government process, then we’ll engage. But it’s a long-term risk and a low-probability event,” said Isaah Mhlanga, executive chief economist at Alexander Forbes Investments. Mhlanga said prescription will be bad if it forces pension funds to invest in asset classes that are not profitable or do not have the right risk profile. It will make it difficult for asset managers to protect investors’ money. He said Regulation 28, which prescribes how much of pension fund assets can be allocated to different asset classes ...
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