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South African Reserve Bank

External Fund Management 

The SARB, similar to other central banks, complements its internal reserves management activities with a well-structured external fund management programme.  The rationale for this programme is mainly to enhance and build internal capacity and to diversify the risk/return characteristics of the reserves.
The programme, which was introduced in 1999 is periodically reviewed and refined to best suit the requirements of the SARB, in particular, the strategic asset allocation of its reserves.
The skills and knowledge transfer initiatives, which the SARB’s staff members have vastly benefitted from over the years, allowed them to manage more complex portfolios.  However, over time the SARB’s initial objective changed and is now focusing on external fund managers with diversification in mind, allowing them, given their higher level of professional expertise, to have more leeway in terms of risk taking and asset classes they can invest in.
To ensure that the SARB’s funds remain relatively safe during the external fund management tenure, a rigorous legal process is followed in the drafting of the Investment Management Agreements (IMAs) and the Investment Guidelines. In addition, formal portfolio performance reviews are presented on-site to the Reserves Management Committee of the SARB. 
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