COMMUNICATION OF FEES AND CHARGES INCURRED BY THE CAPE MUNICIPAL PENSION FUND (CMPF) IN RESPECT OF THE VARIOUS INVESTMENT PORTFOLIOS FOR THE 12 MONTHS ENDING 30 JUNE 2019
Dear Member
As previously communicated to you via Fundtalk, default regulations 37, 38 and 39 came into effect as at 1 March 2019. This communique focuses specifically on default regulation 37 of the Pension Funds Act, 1956 which stipulates that “all fees and charges, whether borne directly or indirectly by the fund, must be disclosed on a regular basis to members of the Fund”.
This note sets out the estimated investment portfolio fees and related costs and charges for the latest financial year ending 30 June 2019.
The investment management fees and related charges which currently apply to the CMPF investment portfolios are expressed as a percentage of the amount invested, per annum. This includes VAT where applicable. In practice, fees and charges are usually taken monthly (so the monthly fee percentages can be estimated by dividing the figures shown in the table below by 12).
Remember that the investment performance figures shown to CMPF members are after all these fees and charges have been deducted, i.e. they are net of all these fees and charges.
| Investment Portfolio |
Investment management fees including performance fees (1) |
Other investment-related costs and charges (2) |
Total fees and charges |
| Market Portfolio |
0.47% |
0.17% |
0.65% |
| Low Equity Balanced Portfolio |
0.37% |
0.12% |
0.48% |
| Money Market Portfolio |
0.17% |
0.00% |
0.17% |
| Shari’ah Portfolio |
0.86% |
0.22% |
1.08% |
| Stable Portfolio |
1.82% (3) |
0.10% |
1.92% |
(1) Where the CMPF has a performance fee arrangement in place with an investment manager, performance fees may be payable depending on how these managers perform compared to their benchmarks (targets), and therefore the total fees and charges will vary from time to time. The table above allows for performance fees over the year ending 30 June 2019 – performance fees in future years may be higher or lower than for the last year. As at 30 June 2019, about 50% of the asset value of the Market Portfolio, 20% of the LEB Portfolio and 60% of the Stable Portfolio is subject to performance fees.
(2) Other costs and charges include items such as trading costs (e.g. stockbroker commission when shares are bought and sold), bank charges, taxes and custody fees.
(3) Includes the “capital charge” of 0.9% p.a. (reduced from 1.0% p.a. to 0.9% p.a. since 1 October 2018) levied by the insurer (Momentum) in respect of the guarantees provided under the smoothed-bonus policy.
These portfolio fees and charges have changed from time to time in the past, and may change (up or down) in the future. The CMPF Board is committed to ensuring that the investment portfolios are reasonably priced and competitive.
Disclaimers and important note
· Past investment performance is not necessarily a guide to future investment performance;
· The information contained in this note does not constitute advice by either the Board of Trustees, or by its advisors;
· Members may need to seek expert financial advice before making an investment decision.