Fi­nan­cial ad­vice from SA’s top woman as­set man­agers

To mark Women’s Day, ap­proached four of South Africa’s lead­ing women in the as­set man­age­ment in­dus­try, ask­ing them about their own in­vest­ments and what in­vest­ment lessons they had learnt the hard way that they could pass on to you.

Weekend Argus (Saturday Edition) - - FRONT PAGE -

My long-term in­ter­ests are aligned to those of my clients. I am there­fore in­vested in one of our flag­ship re­tire­ment (reg­u­la­tion 28-com­pli­ant) port­fo­lios, the 27four CPI+7% port­fo­lio. The port­fo­lio is 75% in­vested do­mes­ti­cally with 25% in­vested glob­ally.

At an as­set-class level, we have di­ver­si­fied ex­po­sure across eq­ui­ties, fixed in­come, listed prop­erty and al­ter­na­tives. This port­fo­lio can be con­sid­ered ag­gres­sive, be­cause it has about 70% ex­po­sure to growth as­sets such as eq­ui­ties. Do­mes­tic mar­ket re­turns were strong up to 2015. How­ever, re­turns have been sub­dued since then. Over such pe­ri­ods, we have to re­main stead­fast in our views and look beyond the noise and short-term fluc­tu­a­tions. Re­tire­ment-fund in­vest­ing is about long-term value cre­ation.

The low-re­turn en­vi­ron­ment has been char­ac­terised by a vi­cious cy­cle of a lack of in­vest­ment from do­mes­tic cor­po­rates, keep­ing re­turnon-in­vest­ment con­tained. These cor­po­rates have ex­cep­tion­ally healthy bal­ance sheets, with R1.4 tril­lion in cash. Re­turns over the long term will im­prove as the in­vest­ment en­vi­ron­ment im­proves for the deployment of this cash, gen­er­at­ing the ex­pected level of re­turn from a high-eq­uity bal­anced fund.

The global eq­uity en­vi­ron­ment has al­ready seen the man­i­fes­ta­tion of this as cor­po­rates have be­gun to in­vest, gen­er­at­ing stel­lar earn­ings and sup­port­ing strong eq­uity re­turns.

We can’t un­der­es­ti­mate the im­pact that quan­ti­ta­tive eas­ing and low in­ter­est rates have had on dis­tort­ing mar­ket forces in the short term and how bond yields were driven lower de­spite de­te­ri­o­rat­ing lo­cal fun­da­men­tals.

We should have had more bonds and bond prox­ies, and the les­son learned is to be tac­ti­cal in short-term al­lo­ca­tions to take ad­van­tage of tem­po­rary mar­ket ab­nor­mal­i­ties, pro­vided you are be­ing paid to take on the risk.

As in­vested as we are in our lo­cal po­lit­i­cal and eco­nomic sit­u­a­tion, we are a small part of the global vil­lage, and the search for yield dom­i­nated ev­ery­thing else. This pro­vided an op­por­tu­nity to own high-yield­ing as­sets and at the time and we didn’t own enough.

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