At Investonline we believe a long term investment horizon will yield you the best returns over time. Equity markets have provided an average annual return of 17% p.a. over the last 50 years. However, over this time there have been periods of flat and negative returns, which have returned back to positive over time.
After 3 years of strong equity returns of 22% p.a. we believe we are entering a period of more muted returns and therefore we are positioning our portfolios more conservatively.
Our view is supported by the following two portfolio managers:
Dave Foord, Investment Manager of the Nedgroup Investments Stable and Value Fund, recently wrote an article where he analyzes past returns and the reasons behind this, and questions whether or not we can expect the same or better returns going forward.
The analysis shows that even though investors of financial assets have had exceptional returns, these types of returns are unlikely to be repeated in the foreseeable future. Patience and persistence, investing for the long term is key and investors need to have realistic return expectations.
Click here to read the full article: Asset Class Returns – The Past and the Future
Omri Thomas, Investment Manager of the Nedgroup Investments Opportunity and Rainmaker fund, has similar view. His opinion is that it will be very difficult to repeat the fantastic returns investors have received in the past.
The South African equity market has reached new highs and valuations have become less attractive.
Local bonds offer reasonable value while inflation-linked bonds are expensive. The belief is that there is the continued risk of rand weakness, and therefore the rand being undervalued. This volatility offers an opportunity of advanced offshore asset returns.
Please contact us for investment advice or questions.
- 021 001 2323
- info@investonline.co.za
