RAND WATER PROVIDENT FUND ANNUAL REPORT 2022-2023

The Investent policy and strategy has been developed within the constraints of the current legislative environment and has been structured to comply with the requirements of the Pension Funds Act, Regulation 28 and Pension Fund Circular 130. The Fund is invested in pooled portfolios managed via insurance policies (Old Mutual Multi-Managers and 27/4 Investment Managers) and Collective Investment Schemes (Weaver Investment Management). Weaver is currently in its infancy, with a considerable amount of investment required to build the requisite infrastructure and capabilities. They have been deliberately set up in a way that allows us to swiftly adapt to new trends as they emerge and deliver new solutions at pace. We remain steadfast in our belief that doing the right thing for members will translate into sustainable financial value over the long term. The board of trustees recognises that they do not have the requisite skill, experience or time to spend on detailed investment matters. As a result, the board of trustees has appointed a multi-manager to construct investment portfolios and appoint underlying asset managers for the different portfolios. The multi-manager is responsible for the ongoing monitoring of the appointed asset managers and is required to make changes to the portfolios as and when circumstances dictate. Different Portfolio Constructions Each inflation targeted portfolio has a target weighting for the various asset classes. Based on quantitative analysis, this mix of assets should provide the target return over the recommended holding period with the highest degree of probability. Inflation plus 1-3% Inflation plus 3-5% Inflation plus 5-7% Local Equity 11 30 41 Property 3 3 3 Equity Long/Short 5 5 5 Fixed Income 14 15 8 SA Money International 47 12 3 Equity 11 25 32 Property 3 3 3 Fixed Income 6 7 5

Strategic asset allocations are reviewed on a 3-year cycle or shorter, and often in response to regulatory changes impacting portfolio construction.

22 Rand Water Provident Fund Annual Report | 2022-2023