Investment portfolios positive despite volatile markets
NFMW portfolios delivered excellent returns compared to the South African investment industry
Looking back over the last 12 months, we have seen many surprises on a global scale, including Brexit, Donald Trump winning the US presidential election and in South Africa, political and economic uncertainty have resulted in a challenging year for investors.
“The uncertainty, together with the recent Cabinet reshuffle, credit downgrades and poor economic growth rate, created negative sentiment among foreign investors and local businesses alike,” says Sean Samons, principal executive officer of the National Fund for Municipal Workers (NFMW).
“Recently, South Africa’s economy slipped into a technical recession as GDP declined 0.7% in the first quarter of 2017 (and 0.3% in the last quarter of 2016). This poses a serious challenge for our policymakers, who are wrestling with high unemployment and budgetary constraints.
“Economic growth in South Africa is desperately needed as the South African consumer is under severe pressure.”
Samons says that in June 2017 local equity markets fell sharply amid the uncertain business environment, with foreigners selling out of local markets.
The All Share index lost 3.5% in the month with all JSE sectors being similarly affected. The rand remains extremely volatile and appears to react quickly to any political news. For example, before the release of the mining charter and the public protector’s recent comments, the rand traded as high as R12.62 before quickly weakening to R13.08 after the reports.
Samons reports that given the backdrop of the market performance, the various NFMW investment portfolios delivered excellent returns when compared to the South African investment industry.
“We are proud to say that on a like-for-like basis (gross of fees) the NFMW Aggressive Growth portfolio is ranked fourth over a one-year period, third over a three-year period, and first over a five-year period.
“Although South Africa is currently in a weak economic environment, sentiment and policy changes can happen and [things can] improve quickly.
“In times like these it is always a good idea to remain focused on your long-term investment strategy and not make any decisions based on the short term,” concludes Samons.
Sean Samons. Photo: Supplied