Discovery Invest shakes up the market with R20bn investor windfall, launch of longevity solution, 100% return in USD dollars and Bitcoin fund

Discovery Invest has returned over R20 billion to its investors in shared-value rewards. The Discovery Group-owned asset manager has paid out R6.8 billion of those benefits to clients. Another R13.2 billion has accrued to clients who haven’t reached retirement or the end of their long-term investments, which will be paid out in the coming years. With the shared-valued investment model delivering richly for clients, the company has announced new products to keep improving the long-term returns trajectory for South African investors.

Discovery Invest started in 2007. It subsequently launched its unique shared-value model to encourage positive investment behaviours among South Africans to help solve South Africa’s dismal retirement outcomes. National Treasury reports that only 6% of South Africans have enough savings for retirement.

Discovery Invest CEO, Kenny Rabson, says these shared value payouts and client data show that their model is succeeding in creating better retirement outcomes.

Clients who receive Discovery Invest’s unique savings rewards and boosts save on average more than three years longer than those that don’t. They make higher contributions to their investments and more ad-hoc deposits. They also withdraw lower amounts when they retire – a staggering 32% of the Discovery Invest Living Annuity book who receive these incentives draw-down less than 3% of their savings per year when they retire.

“This data proves that our interventions are creating the positive investor behaviour we need as a country. We need to see that change in behaviour if we hope to reduce the proportion of people who end up relying on their families, communities, the state or debt for survival in South Africa,” says Rabson.

Through its powerful portfolio of investment products, Discovery Invest has become the fastest-growing retail active unit trust asset manager in South Africa since its launch. It now boasts more than R145 billion in assets under management.

Providing new solutions for increasing life expectancy

Globally, people are living longer, a conundrum that threatens to leave many people without sufficient income in retirement. Between 2010 and 2021, there has been a 188% increase in people who have reached age 100. The World Health Organization has projected that there will be three times more people over the age of 80 by 2050, compared to 2020. In response to this, Discovery Invest has created a new retirement income plan to add to their retirement income plan suite.

“We’ve known for some time that people spend way longer in retirement than in the past century. But now the data tells us that it’s only going to get worse. At the same time, they need the value of their retirement assets protected for their beneficiaries in the case of early death. This calls for a new approach to funding retirement,” says Rabson.

Discovery Invest has thus launched the Secure Capital Annuity, a new breed of annuity that guarantees income for life and pays back capital when a person dies.

“Fixed annuities and living annuity certainly have their place and are appropriate investment vehicles. However, there is a growing segment where guaranteed income together with capital protection perfectly fills the need,” adds Rabson.

Discovery Invest now offers South African investors the unique opportunity to structure this annuity for higher income in up to ten years of their retirement, assisting with early retirement costs such as travel and other experiences. This is in the form of a unique 13^th cheque each year. The income then reduces as clients become more sedentary as they get older and then increases again in later years to fund the increased medical expenses retirees usually face at this later stage.

Discovery Dollar Capital 200+ and Bitcoin Fund

Discovery Invest’s global offering has been bolstered by the launch of a US Dollar version of its popular structured note offering. Discovery Dollar Capital 200+ gives investors a 100% gross return after five years in USD (before fees and taxes) if an underlying global share portfolio return is flat or positive over that period. It provides some downside protection and additional upside if the portfolio returns more than 100%. This is the highest paying dollar structured product Discovery has launched. Discovery has also created a powerful benefit where clients can buy into this below the prevailing rand dollar exchange rate.

Discovery Invest has also launched its own Bitcoin Fund in its tax efficient endowment policy. It also provides its signature shared value structure giving up to 20% boost to any money invested in the fund.

The Discovery Bitcoin Fund will give South African investors Rand-denominated exposure to BlackRock’s fastest-growing exchange-traded fund (ETF). Rabson says Discovery Invest added the Bitcoin Fund because it is always looking for opportunities to bring the best that the investment world has to offer to South Africa. Now that the US Securities Exchange Commission has approved a handful of Bitcoin ETFs, it has become a viable alternative asset to invest a small amount of an investor’s portfolio without the need for direct ownership of actual Bitcoins.

Complementing these offerings is a new Fund, hedged by Goldman Sachs International, called the Discovery Focused Return Fund that will target double-digit gross returns. Although the returns are not guaranteed, it aims to target a gross return of between 10% and 12% each year over the medium term under most market conditions.

The Discovery Bitcoin Fund and the Discovery Focused Return Fund are immediately available. The Discovery Dollar Capital 200+ tranche will be available on the Discovery Global Endowment until 19 July 2024 or until capacity runs out. The Discovery Secured Capital Annuity will be available from 20 May 2024. For more information, speak to a registered financial services adviser.