Recently, Allan Gray outlined the importance of taking on risk and understanding your personal risk profile. An investment in Money Market funds will not be enough to sustain your retirement. An investor retiring with R10million and drawing 5% would deplete their capital in 25 years if invested 100% in cash, versus a conservative balanced portfolio investment returning 10% p.a. which should last 47 years. There are various considerations to deliberate when thinking through your view on risk.
The Prosperity IP Worldwide Flexible Fund of Funds (Prosperity), (co-managed by Investonline director, Nick Brummer) was ranked first in its category of Multi-Asset Worldwide flexible funds over three years in the Morningstar rankings, beating 41 funds to claim top spot. This outperformance is 5.5% per annum higher than the average fund in this category.
Since inception – 19 September 2014 – The Prosperity Fund has produced an annualised 8.1% return to 13 April 2018 (source: Profile Data). This has mainly been achieved by taking measured risk in irrationally priced global asset classes.
After three years of sluggish returns from local investment markets, the outlook is positive and we expect far better returns. However, this will be from selected areas. Local is becoming ‘lekker’ again but beware of offshore markets. In our new quarterly outlook, we explain why markets have been difficult, outline the risks we face, identify opportunities in our markets and forecast returns you should expect in 2018 and 2019.
Like most investments over the last three years, the listed property sector has had a rough ride only returning on average 2% per annum versus the JSE All Share Index returning 6.7% and the average unit trust balanced fund 4.3%. The long-term (14 year) average annual returns are 19.3%, 16.9% and 11.6% respectively. Part of the property sector’s poor returns is due to the recent sharp 40% decline in the Resilient group of companies, which comprised 40% of the sector. It is still unclear what the value proposition holds for Resilient, but excluding this group, the sector is starting to look attractive if you have a positive outlook for the South African economy. The recent property sector decline highlights the importance of key investment principals, such as having a diversified portfolio managed by a credible advisor and not having your wealth overexposed to one sector or asset class such as property. The Nedgroup Property Fund avoided the Resilient collapse.
This is a difficult question and one that regularly confronts us. Often filled with doubt and constant second-guessing, we ponder how to select the right dentist, doctor, lawyer, financial advisor etc. These are people we need to trust, but many times, we’ve felt dissatisfied. To minimise disappointment, we’ve compiled a list of 10 critical issues which should be considered.