This article will review Nedgroup Investments.
In a previous article, we analysed a South African fund manager called Investec and its difficulty in spreading to the masses, the way it performed and why there were better options on the market.
The first thing we noticed is the relative difficulty in gaining trust and notoriety if your company lies in the African continent. And second being that Investec underperformed the market by a large margin, asking for high fees when so many better options were available.
Will Nedgroup Investments, service provided by Nedbank, South African bank, be better than Investec? What if compared to the other options?
The Sarwa robo-advisor that integrates human participation has been one of the few that manages to perform similarly to the market.
Will Nedgroup Investments manage to offer better deals than Investec and Sarwa?
What is Nedgroup, or better, Nedbank?
Back in 1888, it started as a Dutch bank in Amsterdam, a bank designed to help the settlers who were departing to South Africa for business, to buy and/or cultivate the land.
In the 1970s, upon many variations, the name changed drastically with the advent of the independence of South Africa.
Nedgroup Investments, among many other products, is a financial service offered by Nedbank in South Africa.
Nedbank’s primary market is South Africa and operates mainly in the continent, in the Southern African Development Community through subsidiaries and banks in:
- Zimbabwe
- Angola
- Kenya
- Lesotho
- Malawi
- Mozambique
- Namibia
- Swaziland
Nedbank operates also outside of Africa, having international offices in Guernsey, Isle of Man, Jersey, the UK and the UAE. These offices’ goal is mainly to support their African-based clients abroad.
Today is the largest banking network in Africa, headquartered in Johannesburg, with more than 2000 banks spread in 39 countries, managing a comprehensive amount of almost 1.1 trillion South African rands or 60 billion USD.
Why companies in Africa are difficult to market
Lying on the poorest continent is far from being convenient. Like India, Africa is well known to be a global leader in the scamming industry, being Nigeria and Ghana on the podium and South Africa not too far from the ‘’winner’s circle’’.
Contrary to popular belief, South Africa is far from being a third world country, it is a developing economy, deeply corrupt and with deep wealth inequality issues but similar GDP per capita to Brazil and Turkey.
Sadly, as a consequence of some major issues related to corruption, it is hard for investors to trust African governments, banks and their services.
This happens not only because of dubious practices but also because the interest rates in these countries are volatile and so is the inflation that could lead to social disruptions. Taking all this into account, it is difficult to attract big investors in Africa.
Nedgroup’s recent history and difficulty in spreading to the masses
Nedgroup won in 2008 its first Raging Bull Awards as the top Offshore Management Company of the Year in South Africa. Since 2008, they have kept being in the first, second and third position respectively.
Recently Nedgroup tried to become more popular among investors through its social media campaign on YouTube, Linkedin, Facebook and Twitter, where they try to educate about what investments are and how to take action.
By reviewing the broker Trading212, we got how important educating your investors is in order to make them aware of their choices and, the more you help them, the happier they are to be part of your team.
Unfortunately, Nedbank even by posting hundreds of videos, webinars and explanatory videos, it did not manage to gain people’s attention as their videos are somewhat complex, somewhat ‘’random’’, and somewhat just not ‘’human’’ not being able to see who is teaching you. There is an absence of human interaction that would surely help.
We could say that the traditional approach of Nedbank should be revised as it has great opportunity, though, there is some big issue that condemns Nedbank and that could impede this company to be a worldwide investing option in the near future.
Nedgroup Website Overview
The website, similarly to their marketing approach is rough, inefficient and bland. It is not friendly towards beginners even if Nedbank seems to be wanting them and surely would appreciate having a wider audience.
The website is relatively minimalistic, poor in content and limited to some assertions typical of a business to make it seem more trustworthy.
Even though the content displayed goes straight to the point, it is necessary to download several PDFs and even by reading them, if you are not into the finance industry, it is really difficult to grasp their meaning.
What are the requirements to open an account with Nedgroup Investments?
If you want to open an account with Nedgroup Investments, you will have to download several PDFs and fill in all the sheets. You can do it writing by hand or using specific software, it is a long process and you will be asked to provide:
- An applicant’s certificate you have to download from their website and then send to them compiled through email or fax
- Personal data like name, surname, age, date of birth, address etc
- National ID number
- Passport number
- Data of your employer or company
- You will have to sign and fill a FATCA and CRS declaration of your tax residency and tax ID number
The overall process could take some days as it has to be manually verified.
What offerings does Nedgroup Investments have?
Nedgroup Investments states that it collects not only South African financial advisors but financial advisors from all around the world studying the best investment approach for their customers.
Today, if you choose to invest through Nedgroup Investments in an International Fund you will be able to invest in the following currencies:
- South African Rand, locally
- American Dollar USD for most investors also outside of the US
- EUR and CHF from customers all around the EU and EEA
- GBP, as previously mentioned Nedgroup is active in the UK.
Risk Levels on Nedgroup Investments
Nedgroup has seven levels of risk where 1 is the least risky and 7 is the riskiest. Unfortunately, only 4 of these are available, being level 3, 4, 5 and 6.
- If your approach to risk is 3, your money will be managed by the Pyrford Investment manager, where you can choose from class A to D.
- If your approach to risk is 4, your money will be managed by either BlackRock Investments manager or FPA, where you can choose from class A to D.
- If your approach to risk is 5, your money will be managed by either Ardevora, Resolution Capital or Veritas Asset Management Investment manager, where you can choose between class A to D.
- If your approach to risk is 6, your money will be managed by NS PARTNERS Investments manager, where you can choose from class A to D.
Comparison Between Risk 3 and Risk 6: Expectations and Costs
Risk Level 3
Pyrford is a London-based boutique investment manager that became a 100% subsidiary of Nedbank recently. Here we compare the different classes of the same investment manager, Risk level 3:
- Class A: With a Risk Level 3 you can invest not less than $4000 (also in GBP) for 3-5 year terms. You will be expected to pay from 0-3% immediately and 1.35% yearly (1.60% total) and gain 2.61%
- Class B: With a Risk Level 3 you can invest not less than $4000 for 3-5 year terms. You will be expected to pay from 0-3% immediately and 1.75% yearly (2.00% total) and gain 2.26%
- Class C: With a Risk Level 3 you can invest not less than $4000 for 3-5 year terms. You will be expected to pay 0.00% immediately and 1.10% yearly (1.10% total) and gain 2.21%
- Class D: With a Risk Level 3 you can invest not less than $1.000.000 (also in GBP) for 3-5 year terms. You will be expected to pay 0.00% immediately and 1.00% yearly (1.00% total) and gain 0.70% (Yes you are losing money).
By investing in the Risk 3 Level, you are investing mainly in American, British, Australian and Canadian bonds and some US, EU and UK equities. These prices do not consider VAT.
Risk Level 6
Arguing to Nedgroups, NS Partners is a portfolio management team composed of experienced emerging market analysts, many of whom have more than 20 years of experience. There are only 3 classes available, A, C and D.
- Class A: With a Risk Level 6 you can invest not less than $4000 for 5-7 year terms. You will be expected to pay from 0-3% immediately and 1.50% yearly (1.60% total) and lose -6.60%
- Class B: With a Risk Level 6 you can invest not less than $4000 (also in EUR and GBP) for 5-7 year terms. You will be expected to pay from 0-3% immediately and 2.00% yearly (2.10% total) and lose gain/lose not stated.
- Class C: With a Risk Level 6 you can invest not less than $4000 for 5-7 year terms. You will be expected to pay 0% immediately and 1.10% yearly (1.10% total) and lose -2.87%. These prices do not consider VAT.
By investing in the Risk 6 Level, you are investing mainly in Chinese, Taiwanese, South Korean, Indian, Russian, Brazilian, Thai, South African and Mexican equities. Among the equities present in your portfolio you will find:
- Alibaba, 8.1%
- Tencent Holdings 7.7%
- Taiwan Semiconductor Manufacturing Company 5.7%
- Samsung Electronics Co Ltd 5.5%
- Housing Development Finance Co Warrant 3.0%
- Several others.
What are the advantages and disadvantages of Nedgroup Investments?
Advantages
- It isn’t the worst investment platform in the expat arena. There are far worse options as per the article below.
- They are an established group so that gives people some emotional comfort even though in reality “big isn’t always beautiful”
Disadvantages
- It is South African and African-centric rather than truly international.
- Similarly to Investec, the process takes time but Nedgroup also needs you to fill in different documents by hand or Word and then send them through email.
- Nedgroup’s videos and teachings about finance/investments are rough and not enjoyable for newcomers.
- Nedgroup’s website still needs improvement as it lacks important content.
- Nedgroup’s does not have risk level 1-2 and 7 options as stated on the website and some Investment Managers of Nedgroup do not have all classes from A to D.
- Nedgroup’s data is not updated, hence it is not possible to estimate how much will investing through them make and with the data given it seems to underperform or just cause losses.
- No relevant reviews found for the company
If you have an investment here and aren’t happy, or are looking to invest in general, you can contact me.
If you live in South Africa you can directly contact Nedgroup Investments for free at the following number:
- Toll-free from South Africa 0800 999 160
- International tel +44 (0) 1624 645150
- Or contact them by email at helpdesk@nedgroupinvestments.com
Further Reading: Utmost Worldwide Choice Review examines diverse investment opportunities, offering insights that complement considerations in the Nedgroup Investments Review.
