“In the midst of chaos, there is also opportunity”― Sun-Tzu
Since the start of Covid, chaos and uncertainly has become part of our lives. Some might
argue that chaos existed before then, but the waves of Covid have made uncertainty an
everyday reality. Unfortunately our investments have not been spared by the impact of
uncertainly and therein lie the opportunities.
Below is the one year returns as supplied by Ninety One. South Africa equities exceeded
expectations and performed close to 30% this past year, bonds and cash were more
suppressed. SA Property has come off a very low base and may take longer to fully recover
given the impact of Covid.
Last year saw many investors send their Rands offshore given the uncertainly of the local
economy, civil and political unrest. But the JSE exceeded our wildest expectations and gave
us excellent returns. If it had not, South Africa would be looking at 5 years of negative
returns on the JSE.
We do not foresee South African equities giving us such high returns next year, but there is
still value to be had. We are revisiting at our clients’ portfolios ensuring the investment
manager’s investment physiology lines up with the investment horizon, management fees
and 1-and 5-year returns. We believe that consistent, above inflation returns wins the long
game, rather than a few quick wins.
If we are not expecting the JSE to yield the same returns as 2021 in 2022, where should
investors invest? We are advising our clients to diversity locally and offshore, either through
asset swap or direct investment. To diversity in asset allocation and investment managers.
To review the tax efficiency of investments; to maximise retirement annuity contributions
and tax-free savings account. Now is a good time to capitalise on the gains of the past year
and ensure we are well positioned for the certainty of chaos in 2022.
“I will tell you how to become rich. Close the doors. Be fearful when others
are greedy. Be greedy when others are fearful.” — Warren Buffett