America sneezes and the rest of the world catches a cold. In these uncertain times, will there be another run back to developed markets leaving emerging markets stranded? SA has managed its financial position conservatively over the last 16 years, which has placed us in a relatively strong position during this global credit crisis.
Overspending by the developed world countries is driving their debt levels to unprecedented highs, which will become unsustainable. This leads to the question of whether the US, UK or European Union governments have the internal political capacity to make stringent financial changes.
It may be different over the next ten years when investors might shun the “bankrupt” developed world in favour of emerging markets, such as SA, with stronger financial health and growth prospects. In these uncertain times, diversification is key and investors should stick to asset allocation (balanced) funds, where they are watched over by a professional.
Sanlam Investment Managers – Property provides important diversification in these volatile times.
Property has been a fantastic performer over the last eight years and was virtually untouched by the global credit crises. It is taken more seriously now after its strong eight year performance. For now property seems to have stabilised and generally it lags an economic pick-up by 12 months. However, Sanlam Investment Managers (as value investors) are currently cautious of property’s immediate outlook. Listed property generally has sturdier business models and shouldn’t fall prey to over extended debt. Although their yields are lower than bond funds, they offer growth income ranging from 6% to 10%. Hence property is well suited to elderly investors who want their income to keep pace with inflation.
For more investor advice email us at info@investonline.co.za, phone us on 021-794-2469 or visit the fund managers’ comments section on our website.