We are slowly getting out of lock down but it appears a lot of us are struggling to find our feet. We live in a strange new world and we all look forward to the “new normal”, whatever that will be. Some pundits say that everything will change, that offices will be obsolete, that air travel will die, and that technology will take over. Others say that nothing will change, that things will go back to normal as they did in 1919 after the so-called Spanish Flu. I think the answer will be somewhere between these two extremes.
The wave of webinars continues, and I attend each one as each one adds a bit to the knowledge out there and sometimes they make you stop and think, but no one webinar seems to give sufficient information for a note on its own, so I have summarized the best points from each below.
Allan Gray held a webinar and invited Coronation and Ninety-One (Old Investec) to attend and discuss their balanced funds. All three have added to their equity portfolios, some local and some offshore. All three reinforced the idea of a balanced diversified portfolio of quality assets and to sit tight. Historically this has been the best thing to do and there seems no reason to do otherwise today.
Rezco, a smaller fund run by Rob Spanjaard, whom I have known for ages, decided that this Virus was more serious than the SARS virus at the turn of the century and sold most equities out of his balanced fund and bought SA Bonds. His fund has outperformed due to this but may struggle in the future as he remains underweight equities and missed the rebound in early April. He feels that the markets will correct again and that there will be other buying opportunities. Based on the above, Rezco has a low correlation to other balanced funds so perhaps should be added to a balanced portfolio. Call me if you need additional information.
The above two webinars were summarised in the Business Day today (23rd June 2020), by Laura du Preez, and is worth a read. On the same page, Warren Ingram has his weekly column, and he talks about planning to work longer, reducing your debt, changing where you work, but more importantly, increasing your allocation to shares in a long term portfolio. Also worth a read as always.
Warren touches on a webinar I attended run by Allan Gray discussing living annuity investments. Both Allan Gray and Ingram point out that we will all live longer, and we need more high return and therefore higher risk investments in all portfolios to ensure the success of our portfolios. Allan Gray, of course, went into a lot more depth with a 90-minute webinar, and it was excellent. They had research that showed a portfolio of diversified growth assets was the best for long term growth in living annuities. At least 75% in equities and at least 30% of that offshore. They debated whether you could put more offshore, and that would depend on your personal circumstances. They showed that having a portion of your living annuity in cash for withdrawals was counterproductive. We can discuss this at any time.
Lastly, JP Landman, from Nedbank, discussed something that may have slipped under your radar, the change to our elective process in a judgement handed down by the High Court. He sets out the debate very well, as usual, and points out that even with its faults, our electoral system is hard to beat. Natalie has made a link to this note below. Also worth a read.
A lot to think about, and if you need more information on any of the topics, please drop us a line.