Following the latest negative political and economic events, we felt it prudent to make a statement and let our investors know what the short-term impacts and long-term implications are for their investments. As a business, our key focus is to Protect and Grow our clients’ investments.
We have always been, and will always be, a Proudly South African Company which holds no political allegiances.
As extremely frustrating and disappointing President Zuma’s unjust cabinet reshuffle was last week, and the subsequent credit ratings downgrade by Standard and Poor’s Ratings Services last night, they were not entirely unforeseen. In fact, during February we sent the following update out to our clients regarding the investment changes we had made:
“While we cannot accurately predict exactly what levels the currency will trade at, we do believe that the Rand could continue to weaken slightly (R13.10 today) especially on the back of a ‘bad’ budget speech, the possibility of Pravin Gordhan being replaced and a looming credit downgrade this year. As such we wanted to lock in the gains we made at the end of last year when we down-weighted our offshore exposure, and provide our investors with a little insurance over the short to medium term. Our Investment case for offshore equities and especially property remains positive. Hence, we have implemented the following asset allocation changes: Up-weighted Global Equities and Properties to Neutral from Moderately Underweight (Cautious) and Down-weighted Fixed Interest (cash) from Overweight (Positive) to Moderately Overweight.”
Last week our house view strategy – Growth returned 1.93% (3.24% for the 12-month rolling period ending 31/3/17) and Regulation 28 Growth, for retirement funds, 1.03% (4.92% for the 12-month rolling period ending 31/3/17). Our Balanced Strategy returned 1.41% (2.94% for the 12-month rolling period ending 31/3/17) and Regulation 28 Balanced, for retirement funds, 0.87% (2.03% for the 12-month rolling period ending 31/3/17). Although these numbers are not bold in absolute terms, we assure you that relative to peers we have performed well, especially in a market where capital preservation has been key! This was a week characterised by a sharp fall in the Rand, a spike in bond yields (capital values fall) and a fall in specific domestic equities (namely Banks and Retailers). SA Listed Property came under pressure due to its high correlation with the bond market, but Foreign Property stocks did well. Rand hedge stocks also rose as they derive a large portion of their earnings abroad.
In a nutshell, a well-diversified portfolio will continue to offer you the best chance of producing long term capital growth, throughout market cycles.
If you do not have adequate exposure to offshore markets in hard currency, please speak with your Wealth Planners. We have a vast array of investments and products to suit your needs.
As always, we will continue to monitor your investments closely and make necessary adjustments along the way.
Now is the time for Active Citizenship, we need to stand tall and demand the change this country so desperately needs!
Please contact us if you have any questions or would like more information.