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The Navigator – Anchor’s Strategy & Asset Allocation, 3rd Quarter of 2019

10 July 2019

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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. Readers will note that 2Q19 was marked by a continued slowdown in the growth rate of the global economy. However, we believe a global recession will be avoided and, instead, a slower new normal will establish itself. The quarter was characterised by a policy shift in global central banks as, overall, policy continues to pivot to a more accommodative stance, with the US Federal Reserve (Fed) opening the door for possible rate cuts this year.

The slow growth, low rates environment will be relevant to investors for a while and we advocate a more balanced approach to investing. Yield product in SA is attractive as the dependable generation of returns is appealing in an environment where equity investing is more difficult. Globally, lower yields are going to push investors into taking more risks to achieve return objectives. We think domestic equity could return c. 12.5% for the next year and, while this sounds low vs distant history, it is a return of CPI + 8%, which is quite compelling. On a risk-adjusted basis, we find the CPI +4% available from fixed income to be equally enticing. We are projecting moderate returns for most asset classes and recommend a more balanced approach to investing, favouring a slight tilt towards yield in SA and selected growth equities globally.

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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