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THE NAVIGATOR – ANCHOR’S STRATEGY AND ASSET ALLOCATION, 1Q25

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.

For many of us, 2024 ended with a familiar countdown, the pop of a champagne cork and a jolly festive party. A fortnight later, as South Africans dust off our work computers and try to recall our office passwords, we take some time to reflect. The year was a lot better for investors than we had initially anticipated – 2024 was a year when there were many reasons to be fearful, yet everything worked out.  

A year ago, we were concerned about high asset prices, and the global political landscape was uncertain with numerous elections on the horizon globally, including in South Africa (SA), where the ANC stood to lose its majority. We advised caution, patience, and, most importantly, diversification. Looking back, those investors who diversified their portfolios and patiently navigated the risks have fared better than we would have expected. There were moments of market volatility where portfolio values were down, but ultimately, diversification and patience (and investors) were rewarded.

Heading into the new year, it does feel like things are upside down. Domestic politics are relatively calm, while the US is poised for a period of policy uncertainty as President Donald Trump seeks to shift the country’s direction. SA is the low inflation jurisdiction, while the US sees inflation that remains higher than desired. Emerging markets (EMs) seem to be low economic growth destinations, while US exceptionalism is expected to continue. Equity markets seem expensive, particularly in the US, while bonds are arguably appealing. Some things, however, are unchanged. We believe that patience with investments is called for and that patience when making new investments will be rewarded. We continue to advocate for diversification across asset classes and investment geographies.

We continue to believe that the bulk of your wealth should be invested abroad and that there are opportunities in all offshore asset classes. Nevertheless, recent robust gains in US equities are making us cautious; still, the momentum is strong, and the projected US earnings growth is high.

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 expect the rand to recover slightly vs the US dollar, however, do not delay externalising your savings for too long.

Overall, Anchor strives to help you achieve the best outcomes within your risk tolerances and investment objectives. We see opportunities in all asset classes, and in this report, we highlight 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 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.

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WEBINAR | The Navigator – Anchor’s Strategy and Asset Allocation, 2Q24

Anchor CEO and Co-CIO Peter Armitage will host the webinar, provide an introduction to current global and local market conditions and give his thoughts on offshore equities. Together with Head of Fixed Income and Co-CIO Nolan Wapenaar, Pete will also discuss Anchor’s strategy and asset allocation for 2Q24, focusing on global equities and bonds. In addition, Fund Manager Liam Hechter will provide insights into local equities, highlighting some investment ideas; Global Equities Analyst James Bennet will discuss Ferrari and give an update on Tesla, and finally, Analyst Thomas Hendricks will participate in a Q&A with Peter, explaining the 10-year US Treasury to attendees.