Fairheads Umbrella Beneficiary Fund (“the Fund”) is a Beneficiary Fund registered with the Registrar of Pension Funds under the Pension Funds Act (Act No. 24 of 1956) (as amended) (“the Act”).

The Fund was established to administer benefits awarded to the dependents of deceased retirement fund members, in terms of Section 37C of the Act. These benefits are administered to provide financial support to the dependents in the form of periodic distributions and to utilise the invested money to facilitate ad hoc payments in respect of the maintenance, education and general well-being, including medical costs of the dependants.

Membership Profile

Members of the Fund are mainly minors whose parents have died while in the service of employers with pension or provident funds and who do not have guardians or caregivers, or whose guardians or caregivers t do not have the required proficiency to administer the benefits responsibly for the minors. Members may also include majors who have consented to the Fund administering their benefits or majors labouring under legal disabilities.

The investment time horizon for each member is different, and can extend beyond 18 years depending on their age when their member fund account is set up.

Each member’s money is accounted for in a separately identifiable member fund account. 

Investment Approach

Because of a need for steady income, the greatest emphasis is placed on security of capital, secondarily on income, then only on capital growth.

For most members, their needs will be met by investing their money in a money market portfolio to cater for short-term cash requirements, with the rest of their money split between an income fund portfolio to generate income and a balanced fund portfolio to grow their capital.

All investment portfolios are compliant with Regulation 28 of the Pension Fund Act.  

Investment Portfolios Matching The Membership Profile And Needs

Investment analysis models are approved by the Trustees prior to the placement of the funds into the Fund and consist of the following:

• An allocation to cash (money market) portfolio consisting of at least twelve (12) months regular income plus fees to cater for short-term benefit payments;
• An allocation to an income portfolio (to generate monthly income flows and protect capital);
• An allocation to a balanced portfolio (to facilitate capital growth).

The split between the latter portfolios will be determined by a formula derived in the investment modelling exercise. The Fund Trustees will rebalance the allocation twice a year. 

Selection of Investment Managers

The Trustees consider a range of factors when appointing investment managers, including financial strength and reputation, performance track record, experience in managing assets with a particular mandate in place, investment style and philosophy, broad based black economic empowerment and fees.

In addition, the investment manager must integrate environmental, social and governance aspects into their decision-making process.

All investment managers are selected based on these criteria. The Trustees has selected the following managers to manage the Fund’s assets:

The Cash Fund currently consists of one underlying unit trust:

 Voting Policy

The Trustees recognise the Fund’s ownership responsibilities, however the Fund’s assets are held in pooled products. The Fund thus cannot exercise its ownership rights in respects of its investments.

However, asset managers are expected to influence the behaviour of companies into which they invest to encourage them to meet corporate governance and good citizenship best practice standards.

Appointed asset managers are encouraged to have a stated policy of voting proxy’s in the best interest of shareholders. Such policy shall be in writing and be available for review by the Board of Trustees on request. Asset managers should also be able to provide a report on their proxy voting record on request.

Impact Investing Policy

As a responsible institutional investor, the Fund recognises the importance of impact investing, which has as its purpose the intention to generate measurable positive social, economic and environmental impact alongside a financial return.

The Fund has as its principal long-term goal the provision of expected benefits to its members, having due regard to the term and nature of the obligations, and the associated investment risks.

The Fund further recognises that its members live in society where long-term sustainability of this society is vital. As such, the Fund intends to consider impact investing, whereby it will consider the allocation of capital to advance social, economic and environmental solutions through investments that have the dual objective of producing a financial returns and are focused on building long-term sustainable socio economic solutions.

The Fund will consider such investments in conjunction with its overall investment strategy, and will in due course assess the feasibility of investment opportunities as these may arise and as put forward by its appointed Asset Consultants.