2019: A year to remember – but will you remember it as it truly was?
- There has certainly been no lack of negative news in 2019
- But is this a balanced perspective?
- As South African investors we do face severe headwinds and uncertainty
- Had investors remained invested in a globally diversified portfolio, like the Nedgroup Investments Balanced Fund they would have experienced a 12.4% return compared to the average money market fund return of 5.6% or average income fund of 8.4%.*
- As at the end of November, global equities were up 22.5%** in US dollars for the year to date, despite all the news covering US/China trade wars. Meanwhile, SA equities*** were up 8.5%, albeit concentrated in the performance of the platinum and gold stocks. South Africa’s euro bond issue was 2.7 times oversubscribed. What do they know that we don’t?
- Another misconception is that the markets have been extremely volatile. In reality, it has been close to a multi-year low as shown by the US Volatility Index (VIX) and South African Volatility Index (SAVI) in the chart below.
Source Morningstar calculated from 31 December 2018 to 31 November 2019. All performance is quoted net of all fees with all income re-invested
**As measured by the MSCI All Countries World Index GR
***As measured by the FTSE/JSE All Share Index TR
Clearly, we need to nurture a more balanced, fact-based view of our environment. I hope this newsletter serves as a starting point.
The endless criticisms for President Ramaphosa’s inaction was put to rest by JP Landman, our political analyst. In his recently published research note he highlighted all the positive developments and initiatives undertaken by the President including the challenges. None of which were widely reported in the mainstream media.
Recently, being crowned Champions at the 2019 Rugby World Cup and the R365bn of investment pledges at the second Annual South African Investment Summit in the same week brought a refreshing air of national pride – and more importantly, the pledges were from both domestic and international corporations. This sends a positive signal to investors that corporate South Africa is becoming less negative on their expected return on investment.
As South African investors we do face severe headwinds and uncertainty and ignoring them would also be an unbalanced perspective. However, during these periods we encourage clients to remain invested in globally diversified portfolios, not to get distracted by the headlines, focus on reducing costs and demand transparency from their service providers.
According to Dr Hans Gosling and his fact checking, the world is improving much faster than the mainstream media would have us believe. Investors who can avoid the noise and hype in the media and stay balanced and rational in their assessment of the situation, will most likely stay the course in their investments and, as a result, stand to gain from the longer-term scenario.
At Nedgroup Investments this is one of our missions – to ultimately help our investors make better investment decisions. I hope you enjoy the variety of views in this newsletter and may it provide some food for thought as you head into the holiday season.