2014: An overview: South Africa is in its 20th year of democracy. This is also an election year for this country. There are more than 151 different parties registered. Some good, some bad but most of them is unknown. The top parties are still the ANC and the DA. There are some newcomers on the block like EFF and Angang. The ANC has been making promises for many a year but struggle to deliver. Corruption is strive and uncontrollable. Crime is very high and they struggle to effectively combat it. The end result of this is that they keep on blaming apartheid and refuse to take any of the blame. There is a certain faction that is pro Zuma and a definite faction that is against Zuma. This is not doing the ANC or the voters any good. Their break up with certain unions also could also count against them. The president has just now been proved to have over expended his budget on security on a mansion that was built. Everybody in the country knew this except cabinet. Strange how Democracy made every President that was elected overspend on their homes. The members of parliament overspend on cars. All of this comes from the tax payer’s pocket. The DA also had a very unsuccessful year so far. They tried a marriage with ANGANG but this did not work. The divorce was as quick as the marriage. This disturbed a lot of their voters. Would these voters now vote for a different party? Time only will tell. The EFF is buying their vote with unsustainable promises. Big promises have been made should they win the election. Unsustainable promises, but it has caused a swing and it looks as if they are attracting a small part of the previous ANC vote. Will ANGANG make an impact? They have been very quiet and did not make any real promises. In this country you need to have big promises to win an election. Even if you can’t keep those promises. The 2014 election will be the most interesting election since our democracy. Our economy is not growing as rapidly as we would love to have it grown. The forecast for 2014 is only 2.7%. The outlook for the rest of the world is ever so bleak. USA at 2.8%, Russia at 3.4, China at 7.7 and Asia at 6.4. Overall we are in there, but our currency is actually depreciating fast. We have the Rand playing dodge ball with the other currencies. The Rand is at current all over the show and certain economist is even suggesting a further 10% drop in value. THE WAY FORWARD: The real way forward will only be after the election. It is a waiting game to see which party will govern where. Will there be a change in Government? I doubt that. I do believe that the ANC will lose a bit of their base power overall but will gain more power in Kwa-Zulu Natal. Only time will tell. Our inflation is rising and we have a few long term problems facing us. The depreciating Rand is making oil more expensive. We have a drought over vast areas in our country that can push the price of food up over the months to come. The Ukraine crisis can also increase the gold price. Our current labour unrest will also increase our labour cost pushing inflation up further. The Reserve Bank has increased the repo rate making the cost of debt more expensive. There is even talk of a further increase in repo rate of up to 1% for the year. OUR INVESTMENT STRATEGY FOR 2014: Investment must be diversified. There is too many maybe in the current investment field. 5 shares in South Africa caused over 70% of the growth. That was a very narrow margin to be in. At ONE Rock we want to keep on looking holistically at what our clients need and how they need their investments to perform. The volatility and poor performance of certain single sectors has forced us to look at other ways of investing wisely. Our way forward will be balanced funds. Dissecting Balanced Funds: All Balanced funds have certain parameters that it must conform to. Certain Balanced funds can also conform to Regulation 28. These parameters will define how much money can be invested where. A norm is about the following: Up to 25% of all money may be invested offshore, while up to 75% may be into equities. The fund can also be 100% invested into Cash. There is also certain parameters of how much can be invested into Bonds. This gives the fund manager or managers the right to seamlessly move between different assets and asset classes. It is always wonderful to have that 1 share that outperforms the market but not that good if it underperforms. Fund managers can thus move in or out of assets as long as they stay within their boundaries. I do not like to change an investment pattern, but I believe going forward we need to rely more on Balanced Fund Managers. These funds will give our clients the opportunity to have their investment outperform inflation or more. I will still advocate using more than 1 different Balanced fund going forward. This still offers diversity as every fund manager has his own style and way of investing. I am going to steer clear of the Stanlib Property Income fund for the foreseeable future. We had good growth on this fund but this is slowing down with the change into 2014. We had on average about 18% growth but we are not anywhere near to that so far. A few funds we are going to utilise this year are the following: STANLIB Balanced fund: Growth of 18% for the past 5 years and 16% the past year. CORONATION Capital Plus: Growth of 16.5% for the past year. Coronation Balanced Plus: Growth of 25% for 2013. ALLAN GRAY Balanced Fund: Growth 21% for the past year and 16.4% over 5 years SANLAM Balanced Fund: Growth of 15% overall. Overall if you were invested equally between all these funds you would have about 16%. Please remember to always ask your advisor before you decide on a fund. Your advisor has been trained to give you the best advice at the specific time. Advice will be based on your specific risk profile. Trade safe and diversify. Use Balanced funds that have a track record. As with anything else caution must be used. All figures mentioned are historical data and the future data may look better or worse. Yesterday no 1 fund is not always going to be tomorrow’s no 1. Anything can happen that can influence a funds performance.
Posted on: Thu, 20 Mar 2014 10:17:42 +0000
Trending Topics
Recently Viewed Topics
© 2015