What an extraordinary year! To those who have suffered losses, in different ways, we offer our sincere condolences. We’ve all had our personal journey of dealing with the uncertainties and effects of the Coronavirus. Hopefully, we can all learn something from this extraordinary time, if anything an appreciation for what we have and how quickly it can be lost.
As financial advisors, the year has challenged our rationality and resolve. But, thankfully, with 30 years of investment experience, our deep understanding of markets has enabled us to guide our clients efficiently through this volatile and uncertain time.
At the start of the pandemic, we forecast that a vaccine would be produced for distribution in 2021 and that life would get back to “normal” in 2022. Globally this is likely, but for SA the damage to the already fragile economy, will unfortunately set us back for many years to come.
The stock market collapsed and recovered sharply
The JSE All Share Index plunged 35% in a month, as sharply as previous crashes, but recovered much faster than any other previous market crash. The quick recovery was driven by foreign shares as global markets reacted positively to large amounts of US and European monetary stimulus injected into their economies.
In the months leading up to the crash, Investonline had taken a conservative market approach as we warned that global equities were expensive and risky. This reduced the extent of the fall, and in April, as markets started to recover, we recommended a phased-in return to risk assets by a partial switch into balanced funds.
With the global distribution of vaccines in 2021 confirmed, economic recovery is becoming more visible which should add to more rational investment markets and more balanced returns across asset classes.
The Rand’s Seesaw
True to form, the Rand fluctuated sharply, spiking as high as 19.1 to the Dollar and recovering back to 15.2. This volatility added to many investor fears as the Rand is seen as the barometer of the country’s future. Unfortunately, the effects of the pandemic and the poor way that the government handled its effects, has materially weakened the SA economy. This led us to change our view on the Rand, recommending various levels of increases to offshore assets depending on one’s investment strategy. As with all investment recommendations, our forecast of a weakening Rand is a long-term view, which we are very comfortable with. Please click here to read our Rand report.
Prosperity Fund’s continued solid performance
Our in-house Prosperity Fund largely represents our market views. The Fund navigated the crash and kept its exceptional six-year track record intact of 8.3% growth per year, well above the JSE All Share Index of 4.8% and inflation of 4.6%.
Investonline still had a good year
Despite a disruptive year, which included all staff working from home and then returning to the office in phases, Investonline had another good year. We continued to grow the business with two new valuable employees, plus a third new employee to start in the new year. We upgraded our financial planning tools with our new asset-map information gathering application and further digitalised our communication processes.
Overall client retention was good, and we thank our clients for the trust and faith they have in us. New client growth remained strong as many people became more comfortable communicating digitally (such as Zoom), which is a hallmark of Investonline and adds to our more efficient interaction with clients.
We look forward to 2021, as the strength of company, with its additional resources, continues to seek improvements to enhance our value-add to our clients.
We wish you a blessed festive season and a new year of prosperity.
