2019 Integrated Report

PPS INTEGRATED REPORT 2019 | 173 Total Portfolio excluding Group Investment Choice Investment Choice 2018 R'000 % R'000 % Local Equity 12 925 783 54.3 1 034 523 27.9 Fixed interest 4 134 492 17.4 1 614 361 43.6 Cash 1 637 542 6.9 208 015 5.6 International Equity 5 110 675 21.4 846 878 22.9 Total 23 808 492 100.0 3 703 777 100.0 The assets held to back the non-DPF component of the liabilities similarly reflect the Group’s risk appetite and the results of the asset liability modelling exercises undertaken in the past. Investment profits or losses arising from the impact of fluctuations in market values of assets and interest rates on the value of assets and non-DPF policy liabilities will be transferred to policyholders by adjusting the allocations made to the DPF component of their benefits. Younger policyholders have more time to recover from the volatility in the financial markets. For that reason the strategic asset allocation for the invested portfolio representing these policyholders has a higher exposure to equity and thus risk. Older policyholders have less time to recover from negative market performance, and are thus given a voluntary option each year to switch to more conservative investment portfolios from age 55 (‘Investment Choice’), i.e. portfolios where there is reduced exposure to equities. The assets held to back the non-DPF component of the policy liabilities are as follows: 2019 2018 Group R'000 % R'000 % Local Equity 428 128 10.8 688 653 15.5 Fixed interest 3 086 363 77.7 3 491 682 78.8 Cash 50 698 1.3 54 444 1.2 International Equity 408 218 10.2 199 070 4.5 Total 3 973 407 100.0 4 433 849 100.0 The assets backing the non-DPF liabilities are invested in such a manner as to try and minimise the asset liability mismatch for interest rate risk and duration risk.