Mar­ket re­warded those who stuck it out

Weekend Argus (Saturday Edition) - - PERSONAL FINANCE - More on unit trust fund per­for­mance next week

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.

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