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.
The South African Government of National Unity (GNU) was unexpectedly born out of need following the outcome of South Africa’s (SA) National and Provincial Elections (NPEs) four months ago. Few gave it much prospect of success, yet here we are, it has held together. The smaller parties have shifted toward a collaborative stance (albeit with a few bumps along the way), and the GNU seems to have delivered its first few achievements. The visa backlog at the Department of Home Affairs is dealt with. We have also seen a more accommodating stance with a compromise on the Basic Education Laws Amendment (BELA) Bill signed into law but with many contentious clauses removed and the implementation of two controversial clauses paused for a three-month consultation period. Perhaps the most outstanding achievement of establishing the GNU is that we have seen a maturity in our politics that we never thought possible. Indeed, from the small and unexpected opportunity for our politicians to work together, a few are beginning to believe that great achievements might be possible.
Financial markets have boomed over 3Q24, with equities and bonds celebrating the start of the interest rate cutting cycle, more positive sentiment towards emerging markets (EMs) after China unveiled a massive economic stimulus package in late September and a generally strong global economy. We start the year’s final quarter with significant returns achieved in most asset classes and the belief that while risks are rising, there is scope for further gains.
Investing is a long-term game – think of it as a marathon, not a sprint. Although we are more optimistic about the outlook for domestic assets, the path forward is seldom a straight line. The point is that our conviction is growing, the next five years look better than the past five, and SA should be on your investment radar when constructing your portfolios.
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 will continue to hover around current levels vs the US dollar. Therefore, this is an ideal time to externalise a portion of your portfolio if you have not already done so.
Overall, it is also an excellent time to upweight your investments. Anchor strives to help you achieve the best outcomes within your risk tolerances and investment 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 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.
