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Our Market Views

2020 is likely to be another volatile investment year, but that should not deter one from achieving above-inflation investment returns. Our views remain similar to our 2019 year-end view, and it is important to understand that most of the SA negativity is already priced into investment markets.
Any positivity will boost investments. Therefore, despite the gloomy economic conditions, the local investment outlook is attractive:
Local equity valuations are near their all-time low;
Local, real interest rates (4%) are relatively high and provide lots of room for interest rate cuts, which would be very positive for the economy and investments;
These high, real interest rates are attractive to global investors where aggregated global real interest rates are currently negative;
SA is at the bottom of the business cycle, meaning any growth will be very positive for company earnings.
Globally, we continue to be cautious. Developed market (especially the US) valuations are high, while general Emerging Markets (including SA) offer value, in our opinion.

Investment Strategy

Benefiting from attractive local valuations in the short term is difficult to predict, but over the medium term (+3 years) we are confident that double digit investment growth should be restored. For most investors, the best returns are realised over the long term and therefore, a long-term view – that would reap the benefits from the current attractive local valuations – should be adopted. However, if one is reliant on a stable income or just cannot tolerate longer periods of slow returns, we recommend adopting a “parking strategy” into our low-risk investment portfolio which has generated a return of 9% to 10%. Once the environment appears more certain, we will recommend moving into more growth assets, which should generate double digit returns.

Investonline Portfolio Performance

Actual 10-year performance annualised from Jan 2010 to Jan 2020

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