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The simple answer is fees. OUTvest’s ONEfee model (explained below) helps to minimise the Effective Annual Cost (“EAC”) of the investment. Minimising fees helps to maximise the after-costs growth of your Retirement Annuity. The diagram on the left provides a generalised illustrative example of the effect of cost savings on investment performance – a reasonable cost saving makes a huge difference!
Effective Annual Cost (“EAC”) is an industry-wide standardized disclosure methodology that can be used by investors to compare charges and their impact on investment returns across most retail investment products. The EAC enables investors to make better informed decisions when assessing various regulatory wrappers (such as Retirement Annuities). You can find out more about EAC and how it is calculated on the Association for Savings and Investments South Africa’s website here.
To obtain the EAC on your existing RA, you can simply request the Effective Annual Cost from your current RA provider, alternatively we are also happy to assist but will need a signed Letter of Authority from you.
OUTvest has taken the unusual step of ensuring that the investment management fees1 (see note below) for its underlying funds are invoiced directly to OUTvest, thereby excluding this cost from the EAC that eats away at investor returns. OUTvest’s ONEFee model is novel because they deduct only one fee that covers the entire investment process, including advice, investment management, and administration. This simplifies and makes it more transparent for clients.
OUTvest offers a range of funds designed to ensure that you meet your investment goals. The OUTcautious, OUTstable, OUTmoderate and OUTaggressive index funds are all passively-managed, rules-based portfolio designed in conjunction with CoreShares to track their various benchmarks. If you look at the latest fact sheets here you will notice that the funds all have one thing in common – Total Expense Ratios of 0% (for the reasons above ). The funds are rounded off with a money market fund run by Granate.
If this looks interesting, please let me know when we can sit together and go through the digital advice system to see the impact a fee reduction could have on your retirement funds!
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