World equity markets have been very volatile over the last year reflecting the uncertainty in the worlds economic environment. Over the last 12 months the JSE All Share Index, the USA S&P 500 Index and the MSCI world’s Index are down 5%, 4% and 8% respectively. These are difficult times for investors and capital preservation should be a key objective.
As markets remain uncertain we continue to recommend a conservative diversified approach in order to minimise downside risk and preserve capital. Our recommended conservative diversified multi-asset portfolios over the last year have produced returns between 7% and 10% as we’ve reduced equity exposures.
Looking forward, we believe investors should reduce their investment return expectations for the next two years to between 8% and 12% per annum from a diversified portfolio.
In a recent article from Allan Gray they discuss the benefits of capital protection.
Click here to read the full article.
The crux is Allan Gray would rather sacrifice some upside potential in order to protect your investment when inevitably markets move down. This approach gives you the best chance of growing your wealth over the long term.
Allan Gray funds have been positioned conservatively resulting in some underperformance relative to their competitors. However with the declining market their capital preservation approach should ensure better outperformance into the future.
Enquire about our Recommended Portfolios or do your free Risk Profile.
