For large retirement funds the debate about making an appropriate asset selection, depending on whether it is a defined benefit or defined contribution fund, is quite real.
But that is not always the case for small retirement funds, many of which have moved their portfolios into a managed prudential unit trusts to secure better management fees.
The disadvantages of an off-the-shelf product is that the retirement fund has little choice over the composition of the fund. Although it can choose from about 14 different unit trusts, once a retirement fund has chosen a managed fund, its asset allocation is largely dictated by the fund manager's view of the market.
As this week's Moneymate graph, above, shows, the three biggest managed prudential funds tend to hold the bulk of their investments in industrial shares and, in the case of BoE Managed and Investec Managed Funds, in "other assets", namely gilts. The gilt holdings have varying maturity levels.
All three managed funds retain a relatively liquid position at close to 20 percent of the fund.
Prudential investment requirements specify that retirement funds must hold a maximum of 75 percent in equities. Managed prudential unit trusts show quite diverse approaches.
Gail Boon, fund manager for the Investec Managed Fund, does not agree that defined benefit and defined contribution funds should have separate strategies because the selection of assets for retirement should be based on individuals' needs, and not the type of fund.
The investment performance should be good enough to provide for individuals' retirement needs.
South Africa is likely to follow the section 401(K) system in the United States, where individuals choose from different retirement funds with different risk profiles, Boon says.
In general, managed prudential unit trusts have performed quite well against retirement funds because the unit trusts have experienced greater inflows than many of the more static retirement funds and this allows them to be more flexible.
The managed prudential funds tend to hold a relatively high proportion of industrial shares because in the long term industrial shares have delivered good returns.
Within their equity holdings, managed prudential funds tend to hold few gold shares.
Boon says although gilts are included in managed funds, they are no longer the counter-balance to equities they used to be.
In the past the gilt market has tended to move in the opposite direction to equities, but now it tends to lead the equity market and the lag time has fallen to about three months.
Greater diversification comes from using cash in the portfolio, but it is difficult for a unit trust to justify holding more than 50 percent of its assets in cash.