There is still a good story to be told
edition of FundFocus celebrates its 10th anniversary, although in the decade prior to that, finweek had generated a range of regular unit trust, private equity and hedge fund supplements.
The purpose of establishing FundFocus as such was to bring these under a single umbrella and ensure that they are published with consistent regularity. We believe, firstly, that it’s proved an important guide to investors and investment advisers, and secondly, provided a sound platform for fund industry players to present important insights and showcase cutting-edge strategies.
Paging through the first edition, one sees that the major focus in 2006, interestingly, was on volatile markets (as it is this quarter), though in general the outlook then seemed fairly reasonable. Stanlib’s Paul Hansen stated that he was concerned that higher interest rates in the US were a headwind, but he remained confident about Europe, Japan and Asia.
A year later, the situation – so it was thought – was much the same. Stanlib portfolio manager, Hlelo Giyose, warned about being “blinded by the negative”, declaring that in his view only 30% of good news was priced into the market. Paul Hansen meanwhile commented that “offshore funds are screaming value”.
I had just returned from China and the Middle East (which was very different to what it is now), oil was riding high, markets were booming, and I had no difficulty endorsing those views.
Then the following year, in October 2007, the Bear-Sterns ignited carnage came. We reported that the US S&P 500 had dived 18% and the JSE 20%. Three months later, we reported on even further carnage, and that gold was set to rise to $2 000 an ounce!
Sanlam strategist Alex Pestana counselled caution, however: “The chances of a financial ‘tsunami’ sweeping the globe are pretty unlikely, but conditions are going to be tough going forward and investors would be well placed to avoid being spooked by those high-octane ‘cowboys’ and ‘naughty boys’ who are creating credibility crises.”
Said prominent Investec value manager, John Biccard: “Good news is hard to imagine but the bad times will eventually recede.”
Incidentally, two or three years ago Biccard punted gold mining shares and was considered crazy. But he has been proven right over the past year with DRDGold up 265%; Harmony, 185%; Sibanye Gold, 121%; and AngloGold, 82%.
The overall investment outlook at present remains tenuous, but the good news, according to Investec’s Jeremy Gardiner writing in this edition, is that there is reason to take heart. The world will grow again, demand for commodities will return, and some sanity is returning in local political circles.
In similar vein, Prudential’s David Knee argues that markets have generally discounted a downgrade* of South Africa to junk status and in his view the yields of over 9% on long-dated South African government bonds offer compelling value over the medium term, even factoring in higher inflation.
Also in this edition, we give considerable attention to multi-asset funds, worldwide index feeder funds, and low-cost alternatives to common active management strategies.
We hope that these add considerable clout to your investment strategy.
The world will grow again, demand for commodities will return, and some sanity is returning in local political circles.