Discovery Limited · JSE:DSY
Discovery — Investor Presentation (April 2021)
40 slides from Discovery's investor presentation, April 2021
Slide 1: Discovery Invest Business Update
DISCOVERY INVEST BUSINESS UPDATE
Slide 2: Business Update
BUSINESS UPDATE AUA New business +9% to R107 billion -3% +56% June - Dec Jan – Mar 2021 over 2020 2020 v 2019 v Oct - Dec 2020 Jan-20 Feb-20 Aug-20 Oct-20 Dec-19 Apr-20 Jul-20 Dec-20 Mar-20 Jun-20 Sep-20 May-20 Nov-20 Fastest growing retail asset manager Global Sales since our inception Invest 35,00
Slide 3: Shared Value Model Drives Resilience
SHARED VALUE MODEL DRIVES RESILIENCE Contribution holidays Withdrawals Lapses More than Down Down 83% 23% 33% back in payment since Mar 2020 since Aug 2020 30,000 Trendline Error 20,000 10,000 - Mar-20 Aug-20 Jan-21 Mar-20 Aug-20 Jan-21 Aug-20 Oct-20 Dec-20 Feb-21 Source: Internal data as at Februar
Slide 4: COVID-19 Saw an Unprecedented Market Drop and Recovery
COVID-19 SAW AN UNPRECEDENTED MARKET DROP AND RECOVERY World indexes 1 Jan 2020 to 1 April 170 150 Average 130 across indexes 110 90 JSE AllShare over one year 70 50 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 JSE ALLSHARE NASDAQ S&P 500 DOW JONES Source: Publically available data., Morningstar data a
Slide 5: Record Net Industry Inflows in 2020 – 86% to Interest-Bearing
RECORD NET INDUSTRY INFLOWS IN 2020 – 86% TO INTEREST-BEARING Return of asset classes 1 April 2020 to 1 April 2021 57.7% 36.4% 33.1% 17.0% 4.6% -15.7% SA Equities SA Property SA Bonds SA Cash Global Equities Global Bonds Source: Publically available data., Morningstar data as at 7 April 2021. ASISA
Slide 6: Our Business Model
OUR BUSINESS MODEL Brilliant asset management with leading partnerships OPTIMAL PRODUCTS & STRUCTURES UNIQUE REWARDS & INCENTIVES
Slide 7: Discovery Funds Aim to Consistently Outperform Peers
DISCOVERY FUNDS AIM TO CONSISTENTLY OUTPERFORM PEERS 3-year rolling weighted percentile ranking: Discovery vs competitors 100% 90% 80% Discovery Funds 70% performed above average 60% 50% 40% 30% since Nov 2008 20% 10% 0% Nov-08 Nov-11 Nov-14 Nov-17 Nov-20 Source: Ninety One data as at February 2021
Slide 8: Strong Performance Across Our Fund Range
STRONG PERFORMANCE ACROSS OUR FUND RANGE Multi-asset range Local single asset-class Equity Flexible Property Performance quartile Six One year Three year Five years over six months months over one year Discovery Dynamic Asset Optimisers Q2 over three Q1 over three Conservative 1 2 1 1 and five years
Slide 9: Discovery Balanced Fund Managed By
DISCOVERY BALANCED FUND MANAGED BY Holistic investment approach Asset allocation adjusted for growth Consistent out-performance 9.5% increase in 100% Quartile over three year rolling periods equity exposure 90% 80% Fundamentals over one year 70% 60% 50% 40% Asset allocation since February 2020 30% O
Slide 10: Discovery Global Equity Feeder Fund Managed By
DISCOVERY GLOBAL EQUITY FEEDER FUND MANAGED BY Experienced management team In depth 4Factor approach Fund portfolio & performance Top five holdings following themes of More than specialists across Technological disruption Strategy Earnings P/E ratio of 14X – positioned for growth Global sectors Regi
Slide 11: Discovery Global Value Equity Feeder Fund Managed By
DISCOVERY GLOBAL VALUE EQUITY FEEDER FUND MANAGED BY Large exposure to “reopening stocks” Drove substantial returns 41% Oct-20 Apr-21 112% over six months Oct-20 Apr-21 86% Oct-20 Apr-21 129% since market crash Oct-20 Apr-21 Source: Morningstar data as at 5 April 2021, Discovery data as at 6 April 2
Slide 12: The Discovery Dynamic Asset Optimiser Fund Range
THE DISCOVERY DYNAMIC ASSET OPTIMISER FUND RANGE Dynamic asset allocation managed by Award winning performance One-year return of Discovery Dynamic Asset 16 years average Extensive global Optimisers experience knowledge Discovery Moderate DAO Finalist for Best moderate fund: Discovery funds Dynamic
Slide 13: Discovery Global Multi-Asset Portfolios
DISCOVERY GLOBAL MULTI-ASSET PORTFOLIOS CONSERVATIVE MODERATE GROWTH $ $ Up 3% in USD Up 7% in USD Up 10% in USD over six months over six months over six months Asset allocation Asset allocation Asset allocation Equities Equities Equities Fixed Income Fixed Income Fixed Income Cash Cash Cash Other O
Slide 14: Discovery Global Share Portfolios | Strong Returns in USD
DISCOVERY GLOBAL SHARE PORTFOLIOS | STRONG RETURNS IN USD TO DATE GLOBAL GROWTH GLOBAL MILLENNIAL 38% return in USD >50% return in USD over one year over one year +8.75% +25% on MSCI World on MSCI ACWI Growth 25-40 high Emphasis fundamentally solid … that service tech- quality stocks on valuation co
Slide 15: Our Business Model
OUR BUSINESS MODEL Brilliant asset management with leading partnerships Competitive platform for all fund choices OPTIMAL PRODUCTS & STRUCTURES UNIQUE REWARDS & INCENTIVES
Slide 16: Lump-Sum Retirement Annuities & Preservers Monthly Admin Fees
LUMP-SUM RETIREMENT ANNUITIES & PRESERVERS MONTHLY ADMIN FEES 100% external fund selection 70% external fund selection R 534 R 534 Choice of Enjoy on our platform with Shared Value benefits R 383 R 383 R 180 R 180 R 96 R 96 R0 R0 250,000 1,000,000 250,000 1,000,000 DISCOVERY Boost Accelerator DISCOV
Slide 17: Our Business Model
OUR BUSINESS MODEL Brilliant asset management with leading partnerships Competitive platform for all fund choices OPTIMAL PRODUCTS & STRUCTURES UNIQUE REWARDS & INCENTIVES Unmatched outcomes using behavioural economics
Slide 18: Shared Value Gives Extra Value and Enhances Outcomes
SHARED VALUE GIVES EXTRA VALUE AND ENHANCES OUTCOMES ACROSS WRAPPERS on our on lump-sum on our Living Annuity Retirement Annuities local Endowment 19% 90% 22% average income boost chance of benefits more likely to remain exceeding all admin fees invested through the 2020 market crash Source: Discove
Slide 19: Best Product Outcomes for Clients and Advisers
BEST PRODUCT OUTCOMES FOR CLIENTS AND ADVISERS Pre-retirement Post-retirement fund Average client gets boost behaviour 19% more income 75% Average client receives replacement ratio OR an upfront boost of 11% and invests 3 years longer seven years more income Results in in Adviser fees Results in in
Slide 20: Brand and Shared Value Model Resonate with Consumers
BRAND AND SHARED VALUE MODEL RESONATE WITH THE CONSUMERS Brand Health Research 2020 Discovery Invest brand is leading the industry 1st versus four other major platforms >4,000 people surveyed beating most platforms Source: askafrika research March 2021
Slide 21: Same Shared Value Model in Umbrella Is Seeing Strong Traction
xx SAME SHARED VALUE MODEL IN UMBRELLA IS SEEING STRONG TRACTION Rapid growth since launch in July 2018 Schemes Members Assets under management 356 43,152 R5.7bn 2.6x 6.2x 31x 95 6,966 R178m June-19 March-21 June-19 March-21 Jun 2019 Jun 2021 (incl.s14 in progress) Attractive benefits Distinct digit
Slide 22: Simpler. More Cost-Effective. New Opportunities.
xx Simpler. More cost-effective. New opportunities. Highest paying Investment opportunity to More cost-effective Living Annuity now capture global megatrends offshore investing enhanced even further
Slide 23: Simpler. More Cost-Effective. New Opportunities.
xx Simpler. More cost-effective. New opportunities. Highest paying Investment opportunity to More cost-effective Living Annuity now capture global megatrends offshore investing enhanced even further
Slide 24: Highest Paying Living Annuity Now Enhanced Even Further
x HIGHEST PAYING LIVING ANNUITY NOW ENHANCED EVEN FURTHER More competitive admin Simplified Higher income fees on all funds income boost structure on every fund
Slide 25: More Competitive Admin Fees on All Funds
MORE COMPETITIVE ADMIN FEES ON ALL FUNDS Lower annual admin fee Cost-effective with 100% external funds 0.65% Fund size Current annual admin fee Discovery Average 0.60% First R1,500,000 0.55%+VAT Next R2,500,000 0.35%+VAT 0.55% Above R4,000,000 0.20%+VAT 0.50% 0.45% 0.40% Fund size Annual admin fee
Slide 26: Current Income Boost Structure – Discovery Funds
CURRENT INCOME BOOST STRUCTURE – DISCOVERY FUNDS Vitality Status Max boost Yearly from VHG Yearly Diamond Bronze retirement None Silver Gold retirement Blue income % income % Activity 2.50% - 3.00% 10% 12.5% 15% 20% 25% 30% 2.50% - 3.00% 10% 5% 5% 5% 20% Achieve at least 2 activity goals from Active
Slide 27: New, Simplified Income Boost Structure on Discovery Funds
NEW, SIMPLIFIED INCOME BOOST STRUCTURE ON DISCOVERY FUNDS Vitality status Yearly retirement Diamond Bronze None income % Silver Gold Blue 2.50% - 3.00% 12.5% 12.5% 20.0% 30.0% 40.0% 50.0% 3.01% - 3.50% 7.5% 7.5% 13.5% 20.0% 25.0% 35.0% 3.51% - 4.00% 5.0% 5.0% 10.0% 13.5% 16.5% 20.0% 4.01% - 4.50% 3.
Slide 28: New, Simplified Income Boost on External Funds
NEW, SIMPLIFIED INCOME BOOST ON EXTERNAL FUNDS Vitality status Yearly retirement Diamond Bronze None income % Silver Gold Blue 2.50% - 3.00% 7.5% 7.5% 10.0% 12.5% 12.5% 15.0% 3.01% - 3.50% 5.0% 5.0% 7.0% 7.5% 8.5% 10.5% 3.51% - 4.00% 3.5% 3.5% 3.5% 5.0% 5.5% 7.5% 4.01% - 4.50% 2.5% 2.5% 2.5% 3.5% 4.
Slide 29: Extra Monthly Income on Any Fund for Life
EXTRA MONTHLY INCOME ON ANY FUND FOR LIFE Diamond R39 750 Diamond R33 750 R 33,000 R 30,000 R 30,938 R 30,000 with no with no Vitality Vitality Competitor Discovery Competitor Discovery 25% in Discovery Funds 50% in Discovery Funds The above example is for illustrative purposes only. Assumes lump-su
Slide 30: Living Annuity Quote Enhanced to Assist in Retirement Planning
LIVING ANNUITY QUOTE ENHANCED TO ASSIST IN RETIREMENT PLANNING Informed decision-making in retirement with new actuarial & medical insights: How likely you are to live to 90/100 years old You are getting a boost of 34% to your retirement income Dear Henry Your life expectancy based on your Vitality
Slide 31: Simpler. More Cost-Effective. New Opportunities.
xx Simpler. More cost-effective. New opportunities. Highest paying Investment opportunity to More cost-effective Living Annuity now capture global megatrends offshore investing enhanced even further
Slide 32: Four Megatrends Have Been Accelerated by COVID-19
FOUR MEGATRENDS HAVE BEEN ACCELERATED BY COVID-19 The AI market to grow to Technology $190 billion by 2025 Mortality The rise of Morbidity digital work Need for green alternatives - UN predicts a Telemedicine Ecommerce Environment 40% shortfall in global water supply in 2030 Changes in ESG spending
Slide 33: The Discovery Global Megatrends Fund Advised By Goldman Sachs
THE DISCOVERY GLOBAL MEGATRENDS FUND ADVISED BY GOLDMAN SACHS GLOBAL EQUITY PORTOLIOS TOP 5 HOLDINGS: Backtesting The Discovery Global Megatrends Fund Tech Advancement 140 Future Technology Leaders 135 130 Environmental 125 Sustainability Environmental Impact 120 115 110 Outperformed Future of MSCI
Slide 34: Simpler. More Cost-Effective. New Opportunities.
xx Simpler. More cost-effective. New opportunities. Highest paying Investment opportunity to More cost-effective Living Annuity now capture global megatrends offshore investing enhanced even further
Slide 35: Recalibrated Shared Value & Currency Enhancer to Lower Fees
WE’VE RECALIBRATED SHARED VALUE & THE CURRENCY ENHANCER TO LOWER FEES Lower admin fees and access fees Optimised Global Endowment Previous admin fee Average rate over 2020 Currency enhancer Investment size Internal funds External funds First USD 50,000 0.70% 0.80% Next USD 50,000 0.60% 0.70% Next US
Slide 36: Making the Discovery Global Endowment More Cost-Effective Than Ever
MAKING THE DISCOVERY GLOBAL ENDOWMENT MORE COST-EFFECTIVE THAN EVER Clients can invest below the prevailing exchange rate Benefits can exceed all admin fees over ten years R 0.61% 0.61% 0.59% 0.58% 0.58% Yearly admin fee net of benefits $ (100% invested externally) 0.42% Market rate Discovery Rate R
Slide 37: Summary
xx SUMMARY Highest paying Investment opportunity to More cost-effective Living Annuity now capture global megatrends offshore investing enhanced even further Lower admin fees Advised by Lower admin fees Simplified boost structure 0% Zero access fees Boosts on ANY fund
Slide 38: Discovery Capital 200+ April 2021 Tranche
DISCOVERY CAPITAL 200+ APRIL 2021 TRANCHE – ONLY 1 WEEK LEFT! if global share portfolio is flat or positive Global share portfolio of established stocks Unlimited upside potential above 100% growth Downside protection provided the global portfolio does not fall by more than 30% during the five years
Slide 39: Discovery Invest: Simple. Cost-effective. More opportunities.
DISCOVERY INVEST Simple. Cost-effective. More opportunities.
Slide 40: Thank You
THANK YOU i=