After the worst December since the Great Depression in US markets in 2018, January 2019 was the best opening month in 65 years; those that forgot that it is time in the market that matters, and who moved to cash at the end of last year, have paid a heavy price.
The JSE lagged its global peers in 2018, falling 11.37% during the course of the year, compared to the Dow’s fall of 2.45%. The MSCI World Equities Index — which tracks 47 markets — fell 10.44%.
As I write this letter (19/3/19) the JSE is up 7.8% from January 2019, long may it run!
Investec expects the JSE’s annualised performance to match those of foreign markets in the next five years, after almost a decade of under performance. For the next five years “Investec is targeting a return of 15% per year on local equities over the period, in line with foreign equities, Investec portfolio manager Clyde Rossouw said.” This return would require active management rather than passive investment, and returns on the local bourse would at best average 11% per annum, said Rossouw, should investors just track indices. What does it mean if my investment is held by Investec or Allan Gray? I often get asked if all my eggs are in one basket if I only have an Investec or Allan Gray investment. The short answer is NO. If you are in a Megafin Fund of Funds, it means that your Investment is diversified into different many different hand-selected funds. Investec or Allan Gray are the custodians of your funds which is made up of different Asset Managers like Coronation, PSG, Investec or Allan Gray. This means that you DO NOT HAVE ALL YOUR EGGS IN ONE BASKET and your portfolio is diversified. Investec or Allan Gray hold the funds on your behalf as they are the administrators, thus there is no risk if Investec or Allan Gray got into trouble as your Investment is not on their balance sheets.