This week I thought I would give you Coronation’s view on the market. It’s short; too the point and they share a similar view to mine.
Our views remain largely unchanged – we continue to believe that global equities offer the highest expected return over the medium to long term. Given the divergence in performance coinciding with the reduction in investor risk appetite, we prefer emerging market to developed market equities. We have, however, used the extreme rand weakness to hedge some of our US dollar exposure back into rands in our asset allocation funds, but even so, we remain close to the full offshore weighting in our balanced portfolios.
Domestic equities, in general, remain fully valued. We continue to favour the quality global stocks that derive a large portion of their earnings offshore, such as MTN, British American Tobacco and SABMiller.
In the bond space, US 10-year Treasuries have started to normalise, but remain well below fair value and as such we remain underweight. Domestic bonds have, however, produced a few bouts of weakness which has provided some buying opportunities. We continue to hold a significant position in inflation-linked bonds and also maintain a healthy exposure to local corporate bonds.
In the listed property space, we have found one or two opportunities; however, we believe property yields, in general, are too low and do not offer substantial value.
Coronation Fund Managers
www.coronation.com
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