Meeting Laven Chetty, Director at Global Investment Reporting

  • Q: How did you get involved in financial services - was it always something you wanted to do?
  • A: I actually wanted to be a Chartered Accountant and focused my tertiary education on achieving this goal. After moving to Johannesburg in 1999, I joined M Cubed as an investment administrator, which is where I discovered the world of investments. Having had very little exposure to investments, I started with borrowing books from the library to better understand the characteristics of the investment instruments. Thereafter I completed the SAIFM Registered Persons Exam and changed my B.Com degree area of specialisation to Risk and Investment Management. In 2003, I was appointed as an investment analyst for M Cubed Multi-Managers, where I spent the next 5 years in fund management before joining Grant Thornton Capital as Head of Investments and subsequently started Global Investment Reporting for investment compliance reporting.

  • Q: What makes a good investment strategy for a long term investment?
  • A: One of the key factors to consider is the probability to outperform inflation. A good investment strategy would therefore increase the probability of outperforming inflation whilst reducing the risk of capital loss. Investors usually look for the highest return with no risk – whoever invents that investment product will be very rich! Depending on the investment asset class, volatility and risk can both enhance and erode performance which means diversification of risk through multiple asset classes should be included in the overall strategy. Long term investments should be seen as “buy and hold” strategies as constant review and change can lead to underperformance. Investors should also maintain their investments during good and bad times. Therefore, choosing between active or passive strategies seems less important than committing to a long term investment and sticking to it!

  • Q: What is good about South African pension fund law and legislation and what needs more work?
  • A: South African Pension fund law is amongst the strongest in the world, given the regulations and incorporation of First World ideologies such as Environmental, Social and Governance (ESG) investment principles. There has also been an increase in compliance and reporting to ensure protection from high-risk investments. These compliance limits are world class and will contribute to the success of the local retirement fund market. Although the compliance laws are in existence for more than 3 years, the regulator has created a self-regulation environment where funds only report if they have breached the prescribed limits. As the industry struggles to produce the compliance reports regularly and there are no consequences for non-compliance, many funds simply ignore the compliance reporting. In my opinion, the regulator needs to enforce its regulations through compulsory submissions, audits, on-site visits and trustee sign-off to ensure that funds comply with the risk parameters as the regulations are there to protect the interests of the members of the fund. By the same token, retirement fund trustees should proactively understand the regulations, implement direct compliance reporting and avoid conflicts of interest to meet their fiduciary responsibilities as described in Regulation 28.

  • Q: Competition can breed innovation and result in many benefits for the end user - is our fund management and administration market competitive, is it easy for new market entrants?
  • A: New entrants find it difficult to penetrate the investment and administration markets as clients resist change or “choose” to maintain the status quo – as it is easier than changing suppliers. Many funds enter into undefined contract periods with suppliers which lessens the requirement for performance evaluation and competition. New entrants usually bring innovative products, systems and efficiencies – but are unable to meet with key decision makers to demonstrate their capabilities. Although clients tend to gravitate towards larger, more established businesses, new entrants can sometimes deliver a superior service at lower costs, if they are given the opportunity. The industry should apply a defined contract period for services (5 years), after which the clients must go through a tender/due diligence process to confirm the service provider(s) meet all the requirements of the client. This would confirm the fund is receiving the best value for money.

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