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A better investment strategy in a bad environment

A parking strategy in a conservative portfolio

Given the continued uncertain economic environment, investors that are unsettled by poor investment returns, or who rely on a steady income from their investment, should consider our conservative investment portfolio. This is a portfolio with a high allocation to capital preservation assets (cash & bonds) and a small allocation to growth/risk assets (equities & property), targeting  inflation plus 3% to 4%.

Even investors with a higher risk profile could consider this parking strategy in a conservative portfolio until we foresee a more stable environment and better market opportunities. With this approach, the risk/growth allocation will be increased over time to produce a higher return.

Conservative Portfolio construction

Our conservative portfolio incorporates a diversified asset allocation with four selected fund managers that have strong fundamental investment processes, but varied market views. This ensures lower risk and limits the chance of downside losses as a result of concentrated mistakes.

The portfolio’s asset allocation is as follows:

Conservative Portfolio Asset Allocation

Portfolio historic performance

Over the last four years, the recommended income portfolio has produced an annual average 8.7% return versus the JSE’s total return of 5.4% and Rand/Dollar of 3.1%

Historic Performance

Portfolio funds’ performances

Portfolio fund performances

 

Prosperity Worldwide Flexible Fund of Funds:

One of the four recommended funds is the Prosperity Worldwide Flexible Fund of Funds, which is co-managed by Investonline director, Nick Brummer. The fund is a good representative of our house views as it invests in various asset classes around the world. The fund has produced a steady 9% p.a. return since inception, September 2014.

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