There is still a good story to be told

Finweek English Edition - - FUNDFOCUS - Is an in­de­pen­dent writer on pub­lic pol­icy and in­vest­ment mar­kets.

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.

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