GTC Q2 2023 June

Jillian Larkan Head – Healthcare Consulting   _______________________________________________________________________________________________________ Navigating the 2024 medical aid landscape: Balancing health and finance   September of each year marks the beginning of the medical aid premium announcements for the next year.  These have historically been concluded by the end of each October.  As medical aid premiums – more than any other household expense, other than perhaps electricity – routinely increase by more than CPI, many South African consumers are understandably anxious about budgeting for the funding of their 2024 healthcare premiums. This year, the Council for Medical Schemes (CMS) issued guidance, urging medical aid providers to keep their increases within a range of ‘5% plus reasonable utilisation estimates’ in the fairly technical 12-page Circular 27 of 2023 entitled: ‘Guidance on contribution increases and benefits changes for 2024’.  In summary, Mr Mfana Maswanganyi – the Executive... Read More

Jenny Williams Senior Servicing Consultant     _______________________________________________________ Considerations of a long-term well-structured retirement portfolio – Part 2 What is the appropriate construction of an investor’s retirement portfolio – and debunking some common investment myths Last quarter we covered the structuring of retirement portfolios as the first in a three-part series.  This quarter sees us analysing the difference between pre – and post – retirement portfolio construction.  We also analyse some investment errors we see fairly consistently.   Considerations and pitfalls of portfolio construction within a retirement portfolio which may still be many years from retirement When considering assets related to retirement savings, many investors, regardless of their age, immediately revert to an orientation of preserving capital at all costs, favouring this conservatism over a bumpier investment ride up to, and into retirement.  Ironically, this primary decision often undermines the... Read More

Sabir Bacus Senior Benefit Consultant _______________________________________________________________________________________________________ The imminent Two-pot retirement system and how it will affect retirement planning  The media has been awash with articles and opinion pieces regarding the proposed Two-pot retirement system.   In addition to the media focus on early access to retirement savings (through which Government is attempting to assist members in financial distress), it is also important to understand the balance of the draft legislation which has been introduced to limit the continuous consumption of retirement savings (in occupational pension and provident funds) each time a member exits a fund.   A large proportion of fund members who resign before retiring opt for a cash withdrawal benefit.  The continuous cashing in of retirement savings upon resignation, over a member’s working lifespan, will see their retirement savings assets dependent only on their last membership before their... Read More

Clive Eggers Head – Multi Managed Portfolios     _______________________________________________________________________________________________________ The rise of Artificial Intelligence and its impact on Investment Management  As part of GTC Asset Management’s ongoing research into investment strategies, trends, and managers, we have been following developments in the rise of ‘artificial intelligence’ (AI) and particularly its use in the investment management arena.  The concept of AI is not new, indeed one of the most significant research papers, credited with significantly advancing work in this field dates back almost 70 years! (* ‘A Proposal for the Dartmouth Summer Research project on Artificial Intelligence’, J McCarthy, ML Minsky, N Rochester, CE Shannon, 31 August 1955). The recent attention has been driven by the amazing intuitive interactions between users and the latest iteration of these systems (e.g., ChatGPT), particularly in the areas of language and art.  We recently polled... Read More

An in-depth market commentary – detailing global and local investment performance over the quarter – with our Asset Management team – along with industry leaders – diving into the increasing use of ‘Artificial Intelligence’ platforms such as ChatGPT – and related AI technology – and its impact on reporting and investing. Market Overview Q2 2023 The rise of AI and its impact on Investment Management

In-depth market commentary and the Magnificent Eight The quarter ending June 2023 has continued to reflect a challenging global investment market backdrop. Considerable market volatility and uncertainty have endured amid subdued global trade expectations and recessionary fears. Given their concerns about longer-lasting inflation, increasingly restrictive monetary policies from global central banks have kept markets on an uneven footing.  All this necessitates continued caution in portfolio positioning. Over the quarter: Much of the uncertain market rhetoric since the start of the year has been masked by the share price gain of a few global technology companies primarily linked to the artificial intelligence space.  These shares represent a large weighting within global developed market indices and almost fully account for the entirety of the positive dollar-based performance delivered by the S&P500 index over the half year.  The collection of these ‘Magnificent Eight’... Read More

Gary Mockler Group Chief Executive Officer _______________________________________________________________________________________________________ Robbing Peter to pay Paul – a GTC perspective on the Two-pot retirement system With the advent of the Two-pot retirement system, GTC is being asked for an opinion on this mechanism.  Before I put forward this opinion, some context on the retirement savings regime in South Africa is called for.  For as long now as I can remember, various pundits and authors (they are not always the same thing) have been quoting the very poor records of South Africans, as retirement savers.  A commonly used statistic is that some 6% of South Africans retire with sufficient financial means to continue life as before without having to adjust their lifestyle or continue earning.  A quick Google trawl as I write this confirms that this statistic (or thereabout) prevails today, and it is my... Read More

Jillian Larkan Head – Healthcare Consulting   _______________________________________________________________________________________________________ Will South Africans really have the free healthcare the NHI brochure promises? The National Health Insurance (NHI) Bill was passed by the National Assembly on 12 June 2023 and is now headed to the National Council of Provinces, where it will undergo further scrutiny. When a Bill is passed, it has usually undergone rigorous scrutiny, verified proof-of-concept, and is ready for practical implementation. In GTC’s estimation, South Africa is, unfortunately, light-years away from meeting our healthcare objectives, notwithstanding the passing of the NHI Bill last month. Governments’ ‘What is NHI?’ brochure reveals what the South African population has been told about this national scheme.  Let’s unpack why the vision portrayed by the brochure is ideal for all South African citizens, and where we think it will not work. The brochure confirms that... Read More