The Navigator is Anchor’s quarterly review of the major themes affecting markets and gives an overview of our current strategy and asset allocation. Click here for the full document.
The Navigator provides our clients with insight into Anchor’s thoughts on various asset classes and our near-term market outlook.
Fortune continues to favour the brave as the most unloved bull market in recent memory persists despite a steady stream of reasons for investors to turn cautious. Tariffs, US election uncertainty, ongoing geopolitical tensions, China’s property bubbles, and stubborn inflation have all threatened to derail sentiment. Yet, markets have continued to climb. Strong earnings momentum, especially in the US, has been a key driver behind this resilience, propelling markets to all-time highs. The rise of artificial intelligence (AI) has further sparked efficiency gains, a trend that is likely to support markets for some time yet.
Those investors who have been able to look through the noise and remain invested have been rewarded with meaningful growth in their portfolios, underscoring the value of a long-term perspective in navigating uncertain markets.
You will see in this document that the momentum propelling markets is expected to continue. Although prices are high and volatility is likely to remain elevated, we believe that earnings growth will also remain robust. We expect the US interest rate-cutting cycle to continue, which will provide further impetus to investors’ risk appetite.
We are supporters of alternative assets (including hedge funds, protected equity structured products, physical property, etc.) with better defensive characteristics during volatile periods. This is a new asset class for most South Africans, even though it commands a significant share of the investment wallet for family offices abroad. We expect most domestic investors to benefit by increasing their exposure to this asset class over time. As interest rates come down through the rate-cutting cycle, we expect that the attractiveness of alternatives will increase.
Anchor is a proponent of balanced portfolios and diversified risks. We believe it is crucial for investors to have a long-term plan for what they seek to achieve with their investments and that the year ahead will likely see them move towards their eventual desired outcome. In our view, this is an excellent time to take a pro-risk stance in your portfolio. We advocate that a healthy portion of your investment portfolio should be offshore to leverage diverse opportunities and return profiles while mitigating SA-specific risk.
We think the current rand levels vs the US dollar are reasonable to externalise a portion of your portfolio. Although we expect the rand to hover at around current levels over time, we find that the investment opportunities abroad are compelling.
The key to successfully managing your wealth is understanding the changes to the world in which we live and adjusting (when necessary) your investment portfolios accordingly. As a boutique asset manager, we can more readily navigate these twists and turns of global developments. Our team of experienced investment professionals is ideally suited to understanding and reacting to a rapidly changing environment as we pursue exceptional investment outcomes for our clients.
