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THE NAVIGATOR – ANCHOR’S STRATEGY & ASSET ALLOCATION, 1ST QUARTER OF 2020

16 January 2020

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by Anchor

The purpose of The Navigator is to provide our clients with insight into Anchor’s thoughts on different asset classes and our near-term market outlook.

We start the new decade cautiously optimistic on the outlook for our future. The global economic expansion has surpassed what many expected and fears of a recession have receded. However, not all countries are benefitting equally, and it appears that this year will see greater gains in emerging markets (EMs) than in developed nations. A continued supportive global environment is clearly what South Africa (SA) needs at the moment.

Domestically, things are better than they were a few years ago, although they are far from good. We see some green shoots of recovery with changes afoot at SAA, Eskom and other state-owned enterprises and with developments at the National Prosecuting Authority, which is likely to see prosecutions for corruption start this year. These developments are two important puzzle pieces in fixing SA. Clearly the puzzle consists of a multitude of pieces that haven’t been addressed yet, but the process of rebuilding has started. Risks will remain at the forefront of investor’s minds and more corrective action is required both on the policy front and on the political messaging of economic priorities.

We are cautiously optimistic and advocate for a balanced and diversified approach across both domestic and global assets and different asset classes. There will always be storm clouds (Middle East tensions, riots in Hong Kong, domestic politics and credit rating agency risks etc.) but over time almost all storm clouds pass, causing nothing but a fleeting wobble in investment returns. If we reacted to every storm cloud, then portfolios would sit in cash and the great gains of the past would never have materialised. A diversified, patient and sensible approach towards investing has paid off over time and will do so again. We remain concerned about SA-focused equities and maintain our underweight stance on these, instead preferring global exposures. Nevertheless, possible upside remains, and we advocate some exposure, albeit less than in the past. We are working for you to find opportunities in every asset class and in every environment. We see most asset classes as delivering returns that are in-line with their historic norms and we are therefore taking a balanced and diversified approach towards investing your money.

The key to successful management of your wealth is an ability to understand the changes to the world in which we live and to adjust (when necessary) your investment portfolios accordingly. As a boutique asset manager, we can navigate these twists and turns of global developments more readily and our team of experienced investment professionals are ideally suited to understand and react to a rapidly changing environment as we pursue exceptional investment outcomes for our clients.

For the full report and our views on each asset class, click here.

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