Consumers: Short-term » Glossary

A term used to indicate losses resulting from voluntary sacrifices on the part of the master of the ship for the purpose of preserving the safety of the ship and remainder of its cargo. Such losses must be borne proportionately by all owners of the ship and its cargo

General Equity Funds are unit trusts with a medium risk profile invested in selected shares across all sectors of the JSE offering medium to long term investment growth. The JSE All Share Index serves as a benchmark for the performance of these funds.

Unit trusts in this category invest in selected shares across the range of the JSE as well as across the range of large, mid and smaller capitalisation shares. These funds do not subscribe to a theme or investment style. Capital growth over the medium to long term is the investment objective. The benchmark is the JST All-Share Index.

Gensec Bank is a leading South African investment bank, specialising as a wholesale provider of derivative-based risk management products to the savings industry. It is also a prominent arranger of debt and equity finance for corporates and is a manager of private equity funds. Through its proprietary trading desk the bank acts as a market maker in most South African financial instruments. Gensec Bank, which is wholly owned by Sanlam, has a primary and dedicated capital base of over R1 billion. Gensec\'s credentials are well established, with current offshore assets under management of more than R3 billion. Constant communication between Gensec Head Office in Cape Town and the London office ensures a range of products ideally suited to the South African investor. Your Sanlam offshore investments will be actively managed by Gensec International Asset Management - a division of Gensec, and part of the Sanlam group of companies.

Government stock (bonds). The government raises capital for large projects by issuing medium and long – term fixed interest – bearing securities on the capital market.  

Global Macro Funds base their trades on macroeconomic or top-down analysis. Their managers exploit macroeconomic moves such as direction of market prices of currencies, commodities, equities or interest rates through excessive derivative usage and the moderate use of leverage. Normally the securities are global, highly liquid, commoditized products (i.e. stock index futures, bond futures, and currencies). Global Macro funds tend to be the largest hedge funds by capital and can be directional or non-directional.

Gold funds seek capital appreciation by investing in gold mining shares. They may be more volatile than funds invested in many sectors. The benchmark is the JSE Gold Index.

Government Bond Index.

A period (usually one month) following a life premium due date during which the premium may be paid. The policy stays in force during this period of grace. Also known as days of grace.

The gross account of an insurance company is its underwriting result in respect of all of its insurance business or a class of insurance business before taking into account the effect of reinsurance ceded.

The aggregate of claim payments made without deductions for credits (subrogation, salvage, etc) or reinsurance during a given period.

The sum of all goods and services produced by a country, expressed as an annual total. GDP growth indicates whether or not an economy is growing.

The aggregate expenses of investigating and adjusting specific claims, which are charged directly to the individual claims before deductions for credits or reinsurance.

The total limit of liability accepted by an insurer on an individual risk (i.e. retention plus all reinsurance ceded).

The aggregate of loss payments before deductions for credits (subrogation, salvage, etc.) and reinsurance during a given period.

Reckless action without regard to life or limb.

Direct premiums plus inward reinsurance premiums (both net of return premiums). Also defined as premiums written and received but before deduction of reinsurance ceded.

Returns quoted are gross of management fees and Retirement Funds Taxation, not showing the true return of the investment.

Provides benefits for a group of individuals to compensate for lost time due to sickness or injury. Sometimes also covers dependents

Life insurance issued to a group of persons with related interests. It is usually issued to an employer to cover his employees. The sum insured in respect of each employee is usually a predetermined multiple of the employee’s annual earnings. Group life insurance usually takes the form of yearly renewable term insurance with the annual premiums calculated by reference to the age of, and sum insured for, each member. A policy issued by a life insurer over the lives of employees of the same company. The benefits are usually paid on the same basis for all employees e.g. four times the annual salary in the event of death.

Growth funds seek maximum capital appreciation by investing in rapidly growing companies. Growth companies can be defined as those whose profits are in a strong upward trend or are expected to grow strongly and which normally trade at a higher than average price/earnings ration. These funds invest in growth companies across all sectors of the JSE. The benchmark is the JSE All Share Index.

An investment manager who seeks to buy shares that sell at relatively high P/E ratios due to high earnings growth, with the expectation of continued high earnings growth.

Shares that trade at higher PE multiples, and have the long-term appreciation of the original investment as their primary goal.

A line of business comprising fidelity and performance guarantees. See bond, fidelity and bond, performance.

A type of short-term insurance or reinsurance policy where the contract undertakes to provide benefits relating to the failure of a person to discharge an obligation.

As the name implies this fund guarantees your net investment during the entire term of the investment. This is a low risk fund. The growth in the fund is added to your investment as a bonus that becomes part of the investment and cannot be lost. Bonuses are added daily or monthly, depending on the type of investment. All the accumulated bonuses are payable when the investment or policy matures. In terms of current tax legislation, these bonuses are tax-free.

An investment portfolio sold by life insurers suitable for pension funds which guarantees a fixed level of bonus annually. Other bonuses are at the discretion of the life company. This type of portfolio should be contrasted with a unit linked portfolio. The typical insurer\'s Guaranteed Fund is based on normal balanced portfolios (i.e. between 60% and 70% invested in shares). The insurer uses an investment reserve to smooth investment bonuses - during good years they declare lower bonuses, which builds up reserves, while in poor years they replenish part of the bonuses by using some of its reserves. The insurers are very protective of the reserves (rightly so), which implies that they do not allow funds (or their members) to select against the guaranteed fund when they withdraw. The insurers therefore have the contractual right to pay out withdrawals over a number of years in cases where the market value of the underlying assets is less than the book value (capital plus bonuses), or to alternatively pay out only the market value of the underlying assets. Following the market correction of 1998, the market value of some of the guaranteed funds were in the order of 65% of book value and the market value of even the strongest guaranteed funds, were in the 80% to 90% range. Guaranteed Funds declare vesting and non-vesting bonuses, which provide many potential problems in a member choice environment. If a member moves out of a guaranteed fund, they can only withdraw their capital and bonuses that have fully vested. This allows non-vesting bonuses to build up to disproportionately high levels. Non-vesting bonuses will also, as a matter of course, build up to about 30% of the total value in seven years. These non-vesting bonuses can only be withdrawn if market conditions justify it.

Insurance provided by a life insurer guaranteeing increased cover to the insured at specified later dates without further medical evidence. This is the right of an insured to buy additional life cover from an insurer without further evidence of health or other underwriting criteria.

In the absence of a natural guardian, one may be nominated in a will. Such a guardian must first be appointed by the Higher Court before he can act as such. The function of a guardian is to assist the minor in matters in which he is legally incompetent to act. The guardian must be exempt from furnishing security or he/she must provide the Master of the Higher Court with security. The guardian is not necessarily the person in whose care the minor is, but this is usually the case. Normally the trustees of the testamentary trust will administer the assets, while the guardian will administer the property and take care of the person of the minor child/children.