The Navigator: Anchor’s Strategy and Asset Allocation, 4Q23
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.
Inflation has dominated the investment landscape since 2021 and is finally beginning to subside. Central banks are weary of their experiences in the 1970s when cutting interest rates prematurely necessitated a second round of rate hikes a couple of months later as inflation resurfaced. We are seeing tough talk from the US Federal Reserve (Fed) and the South African Reserve Bank (SARB) on keeping interest rates higher for longer. Accordingly, yields on income instruments are now at levels not seen for many decades. The investment world has changed.
Anchor is favouring global bonds for the first time as we adapt to changing global opportunities. You can lock in attractive real yields, which are compelling compared to other investment opportunities. We think that investing in high-quality bonds at these yields comes with an attractive risk/return profile for now. Over the medium term, we remain bullish on equities, which should outperform other asset classes over time.
While there are several changes to our asset allocation recommendations, we remain aware of world events rapidly developing around us. Geopolitical tensions are flaring up in Israel while Russia’s war on Ukraine is dragging on. On the more positive side, the artificial intelligence (AI) revolution has the potential to be a big game changer in terms of enhancing productivity and disrupting old economic paradigms.
Overall, now is a good time to upweight your investments. Anchor strives to help you achieve the best outcomes within your risk tolerances and objectives. We currently see opportunities in all asset classes, and in this document, we highlight some of the best investment options 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.