Market rewarded those who stuck it out
Last year began with widespread pessimism in investment markets and ended with investor exuberance, Prudential Portfolio Managers says.
The JSE reached a low in March. In the space of nine months, the market moved from total despair and very attractive share valuations to a far more optimistic outlook and much fairer valuations, the manager says.
“Yet the market has handsomely rewarded those investors who bought when the outlook was incredibly uncertain and hazy, and it has penalised those who waited until they could see through the windscreen to the road ahead,” Prudential says.
The FTSE/JSE All Share index ended the year with a return of 32.13 percent (according to ProfileData). The popular domestic equity general funds returned an average of 26.61 percent for the year, with a wide divergence between the returns of the top and the bottom performers (43.52 percent versus 12.29 percent).
Prudential says the equity market ended the year 52.7 percent up from its low in March last year but still 16 percent below its May 2008 peak.
According to ProfileData, the FTSE/JSE Listed Property index returned 14.07 percent for the year. The real estate fund sub-category’s average return was below the index, at 12.43 percent for the year.
Bonds had a bad year. The BEASSA All Bond index returned 1.15 percent, and bond funds produced an average return of minus 0.18 percent.
Prudential says international markets as measured by the Morgan Stanley Capital World index (MSCI) were up 26.98 percent in United States dollar terms, but an investment in rands in the index would have earned only 0.32 percent for the year (according to ProfileData).
The rand strengthened by 22.3 percent over the year, diluting otherwise stronger dollar returns.
Foreign general equity funds returned an average of 4.8 percent last year (according to ProfileData).
Despite a recovery of 69.5 percent in the global equity market as measured by the MSCI since it reached a low in March last year, Prudential says the market is still 30.6 percent down on its previous high set on October 31, 2007.