Integrated Report 2018

PPS

INTEGRATED REPORT 2018

176

NOTES TO THE

CONSOLIDATED

FINANCIAL STATEMENTS

(continued)

for the year ended 31 December 2018

The unit trust fund vehicle and related procedures for offering investments is mature within South

Africa and is well-regulated.

The unit trust funds which are defined as portfolios can be grouped under the group company, namely

Professional Provident Society Investments Pty Ltd ('PPS Investments'), a Professional Provident

Society Insurance Company Ltd subsidiary. Described below is the unit trust subsidiary and its respective

mandate and objective.

Funds managed by PPS Multi-Managers Pty Ltd

PPS Investments employs a multi-manager investment approach that is designed to generate acceptable

levels of returns at lower than average levels of risk. This is achieved by:

• thorough and ongoing quantitative and qualitative research process of potential managers in the

domestic market;

• selecting specialist asset managers, taking their investment style and specific areas of

expertise into consideration;

• determining the optimal blend of selected managers within the portfolio through a portfolio

construction and optimisation process;

• writing segregated investment mandates with selected managers to tightly control portfolio risk;

• continuous monitoring of the portfolio risk and return characteristics of each selected manager as

well as of the overall portfolio; and

• making manager changes where PPS Investments feels this is in the best interest of investors.

The Collective Investments Scheme Control Act also imposes specific restrictions which the underlying

managers have to comply with and also restricts the interest rate and credit risk, where applicable,

that they are able to take.

(a) PPS Conservative Fund of Funds

Investment objective

To maximise total portfolio return while outperforming a conservative real return target of CPI +

2% per annum over the medium term.

Investment mandate

This multi-managed fund invests in a number of underlying managers with the specific mandate

to employ real return strategies to provide real capital growth. Flexible asset allocation provides

diversification across all asset classes and sectors, with equity exposure limit to not more than

40% of the portfolio value.

Typical investments

The managers invest in fixed instruments such as money market and bonds, as well as local and

international equities.

Risk exposure

A conservative fund exposed to credit risk, interest rate risk, local and international equity price

risk and currency risk.

35. MANAGEMENT OF RISKS

(continued)

35.3

Financial risk management

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