THE NAVIGATOR – ANCHOR’S STRATEGY AND ASSET ALLOCATION, 1Q24

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

2024 has been dubbed the year of elections, with almost half of the globe’s population heading to the polls to elect their leaders. The polarising nature of former US President Donald Trump makes the US presidential election more fractious and more economically significant than usual. The US election is impossible to call, with independent election polling saying that the outcome is still a 50/50 split between Trump and US President Joe Biden. Domestically, the ANC is likely to slip below 50%. However, the party is expected to remain in power. The nature of possible coalitions has South Africa (SA) on edge, and the trepidation heading into this year’s SA general election will likely have a greater impact on markets than the eventual outcome.  

Last year ended on a risk asset boon as the US Federal Reserve (Fed) pivoted toward discussing the timing of interest rate cuts. This means that we start 2024 with financial asset prices reflecting an optimistic outlook. We think all risk assets stand to gain over the year, but high starting prices warrant caution. Overall, we prefer domestic listed property, which should benefit most from interest rate cuts, while we believe that US equities should grind higher on the global stage.

Anchor is a proponent of balanced portfolios and diversifying risks. We believe that investors should have a long-term plan for what they seek to achieve with their investments and that the year ahead will likely see them move toward their eventual desired outcome. This is an excellent time to take a pro-risk stance in your portfolio, and structured products and alternatives are valuable tools for achieving your desired outcomes. In our view, a healthy portion of your investment portfolio should be offshore to take advantage of different opportunities and return profiles while diversifying your SA-specific risk. We expect that the rand will continue around current levels, and therefore, this is a good time to externalise a portion of your portfolio if you have not already done so.

Overall, this is a good time to upweight your investments. Anchor strives to help you achieve the best outcomes within your risk tolerances and objectives. We see opportunities in all asset classes, and this document highlights some of the best opportunities we believe to be available.

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 navigate these twists and turns of global developments more readily. 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.

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