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.
“Politicians promise stability, then legislate chaos“, a phrase used to critique an economy’s mismanagement, seems particularly apt today. Global markets have been roiled by the on-again, off-again, exempt today, back tomorrow, temporarily suspended tariffs that the US president has admitted are based on his “instinct more than anything else”.
Domestically, it has not been much better as National Treasury was woefully ineffective in managing spending pressures and found itself coming to take more from productive citizens through tax. This was met with dismay from the economically active and strong resistance from other political parties. The combination of no real plan of action by the government to manage spending and a fracturing of the Government of National Unity (GNU) has been a roller-coaster ride for the local economy.
The outcome is that politicians behaving badly means we have halved our economic growth forecast for South Africa (SA) to just 1% in 2025. The national budget is not even fully approved yet, and its assumptions are clearly unrealistic for 2025.
The more immediate impact was that the values of investment portfolios were easily up or down by c. 6% on any given day. At this stage, most portfolios are still in reasonably good shape, and our advice to “sit on your hands” rather than make knee-jerk wholesale changes has proven correct.
It is important to remember that we have been here before; significant market declines occur roughly once every half-decade. However, over time, markets recover, risk assets pay off, and even extreme market declines bounce back. Investors who diversified their asset classes and geographies, heeding our advice, have found that while the recent days were unpleasant, they were very tolerable. If the market impacts were terrifying, it might be time to reconsider your asset allocation. But remember, history shows us that the market always bounces back, which should give you reason to be optimistic.
During market turbulence, it is crucial to maintain faith in your long-term investment plan and align your actions with your objectives. Your asset allocation, if well-planned, should serve as a reliable guide. At Anchor, we are now neutral on all asset classes, advocating against tactical shifts to your asset allocation in these volatile and uncertain times. Instead, we encourage you to trust your long-term strategy. We have seen time and time again that those investors with a long-term plan and strategic patience come out ahead.
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.
