FTSE/JSE All Share In­dex (Alsi): –0.22 per­cent with div­i­dends rein­vested SA Bond In­dex: –2.27 per­cent FTSE/JSE Listed Prop­erty In­dex: –0.35 per­cent MSCI World In­dex: 7.29 per­cent in rands and –0.07 per­cent in United States dollars. The rand fell 6.4 per­cent against the US dol­lar and 8.1 per­cent against the euro. Alsi: 21.01 per­cent with div­i­dends rein­vested SA Bond In­dex: 6.26 per­cent FTSE/JSE Listed Prop­erty In­dex: 24.02 per­cent MSCI World In­dex: 37.22 per­cent in rands and 16.01 per­cent in US dollars. The rand fell 15.46 per­cent against the US dol­lar and 19.25 per­cent against the euro. Alsi: 18.11 per­cent a year with div­i­dends rein­vested SA Bond In­dex: 10.66 per­cent a year FTSE/JSE Listed Prop­erty In­dex: 23.58 per­cent MSCI World In­dex: 21.25 per­cent a year in rands and 11.24 per­cent in US dollars. The rand fell 22.78 per­cent (8.26 per­cent a year) against the US dol­lar and 27.79 per­cent (10.28 per­cent a year) against the euro. de­vel­op­ing coun­tries, where in­ter­est rates on bonds will also rise to com­pete for the pool of global sav­ings.

Cur­ren­cies that ben­e­fited when in­vestors came to their mar­kets in search of higher yields will come un­der pres­sure once the flow of in­vest­ments into their mar­kets stops or re­verses, De Kock says. In an­tic­i­pa­tion of th­ese changes, the rand has weak­ened ma­te­ri­ally and lo­cal bond yields have moved higher and are likely to go higher still, he says.

Al­though it is clear that re­turns from bonds will be poor, it is un­cer­tain what this will mean for eq­ui­ties, De Kock says.

Coro­na­tion be­lieves the Fed­eral Re­serve will be very care­ful about re­duc­ing its stim­u­lus of the US econ­omy and will do so only if the econ­omy is healthy enough, he says.

As the global econ­omy con­tin­ues to re­cover, Coro­na­tion thinks it will be un­wise to re­duce ex­po­sure to eq­ui­ties too early, De Kock says.

In­vestec’s flag­ship multi- as­set fund, the Op­por­tu­nity Fund, re­mains ex­posed to off­shore mar­kets at close to the max­i­mum of 25 per­cent of the fund.


Sumesh Chetty, a port­fo­lio man­ager in the Op­por­tu­nity Fund team, says al­though most eco­nomic in­di­ca­tors are point­ing to fur­ther strength in the US econ­omy, In­vestec is slightly less op­ti­mistic about global prospects than most in­vestors be­cause it is of the view that in­creases in bond yields will re­sult in fur­ther pres­sure on con­sumers in the form of higher mort­gage bond re­pay­ments.

Nev­er­the­less, the strength­en­ing re­cov­ery should give in­vestors more ap­petite for US eq­ui­ties and bring a stronger US dol­lar with it, he says.

The Op­por­tu­nity Fund’s man­age­ment team has strug­gled to find at­trac­tively priced op­por­tu­ni­ties lo­cally but has been able to find them off­shore, where risk is lower, cash flows are su­pe­rior and val­u­a­tions are bet­ter, Chetty says.

Paul Hansen, di­rec­tor of re­tail in­vest­ment mar­ket­ing at Stan­lib, says Stan­lib was ex­pect­ing global eq­uity re­turns of 15 per­cent in rands for this cal­en­dar year, but global eq­ui­ties had al­ready re­turned 32.6 per­cent in rands by the mid­dle of this month.

Global eq­ui­ties have had a strong run since July last year and are up more than 50 per­cent since then in rands, de­spite a pe­riod of con­sol­i­da­tion over the past few months, Hansen says.

Stan­lib is of the view that global eq­ui­ties will con­tinue their up­ward trend, but much of the re­turn may al­ready have been earned, he says.

Stan­lib re­mains over­weight in off­shore eq­ui­ties, pre­fer­ring them to lo­cal eq­ui­ties, he says.

Global prop­erty has come back strongly and has reached an at­trac­tive level af­ter a sharp cor­rec­tion, Hansen says.

PSG As­set Man­age­ment is also keep­ing its in­vest­ments in off­shore mar­kets at the max­i­mum lev­els, de­spite the fact that th­ese mar­kets have al­ready had a strong run.

Shaun le Roux, port­fo­lio man­ager at PSG, says that PSG is a bot­tom- up man­ager – it chooses shares based on its re­search into whether they rep­re­sent good busi­nesses in which to in­vest and not on trends in the econ­omy.

PSG is still find­ing good op­por­tu­ni­ties to in­vest in ex­cel­lent com­pa­nies off­shore that will pro­duce bet­ter re­turns than qual­ity com­pa­nies listed on the JSE, he says.

PSG’s off­shore al­lo­ca­tions are mainly to stocks in the US, but the man­ager is also in­vested in some at­trac­tively priced Euro­pean com­pa­nies, Le Roux says.

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