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Welcome to Taking Stock

Download Taking Stock PDF

Sangeeth Sewnath
Deputy Managing Director
We anticipate 2017 to be a year in which economics finally plays a more meaningful role in driving returns

We will remember 2016 as the year that even the bookies could not have called right. From Brexit to Trump, the world as we know it was not only challenged, but turned on its head. Even here in South Africa, having started the year in shock after the surprise removal of Finance Minister Nhlanhla Nene, few would have predicted that we would end 2016 having avoided – albeit narrowly – two credit rating downgrades.

Even if you knew with 100% certainty that Donald Trump would win the US election, you would not have expected markets to rally. Ironically, those who positioned their portfolios for a Clinton win would have fared better in the aftermath!

Local markets also delivered their share of surprises, with massive sector rotation taking place:

  • The rand gained nearly 13%, catching many on the back foot. By all accounts the rand was expected to be weak having started the year with political uncertainty following Nenegate.
  • In terms of asset allocation, rand strength meant that offshore assets had a dismal year, while SA bonds delivered a stellar 15%.
  • It also turned out to be the year for value investing, with the Investec Value strategy delivering a return in excess of 60% relative to the paltry 2.6% return of the FTSE/JSE All Share Index. After four years of underperformance, most investors would have been ready to write off value as an investment style.

This year brings the Dutch, French and German elections, the Brexit deadline, Donald Trump’s first G20 meeting and the ANC conference. With a news line-up like this, we expect politics to continue weighing heavily on markets. However, we anticipate 2017 to be a year in which economics finally plays a more meaningful role in driving returns.

While we don’t expect seismic political shifts of the order of 2016, we would urge investors to separate fact from opinion. When you make a decision, make sure you have the evidence to back it up. Our Taking Stock event, planned for the end of February with Jeremy Gardiner and Rob Forsyth, aims to provide you with as much information as possible to assist with decision-making.

We have all witnessed how quickly things can change and how difficult it is to get market, asset allocation and currency calls right. Once again, I would like to reiterate a key message: constructing portfolios for the long term remains critical in securing your clients’ financial future.

We trust you enjoy the read and, as always, wish to thank you for your continued support.

Kind regards

Jeremy Gardiner’s A to Z

Important information

All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such information or opinion without appropriate professional advice after a thorough examination of a particular situation. We endeavour to provide accurate and timely information but we make no representation or warranty, express or implied, with respect to the correctness, accuracy or completeness of the information and opinions. We do not undertake to update, modify or amend the information on a frequent basis or to advise any person if such information subsequently becomes inaccurate. Any representation or opinion is provided for information purposes only. This is the copyright of Investec and its contents may not be re-used without Investec’s prior permission. Investec Asset Management is an authorised Financial Services Provider. Issued by Investec Asset Management, February 2017.