Market Update

In our last update on 14th April 2020, we provided an update on the recent movement of the Johannesburg Stock Exchange All-Share index. As a reminder, on the 23rd March, the JSE All Share Index (JSE ALSI) was down 33.64% since the start of the year. Over the last few weeks, the stock market has recovered +/- 50% of the losses and as of yesterday, the JSE ALSI was down -16.65% for the year. So there has been a steady but gradual improvement. Of course, we have no idea what is going to happen but no doubt the international markets and the JSE ALSI will remain volatile and uncertainty will abound.

The Johannesburg Stock Exchange All-Share index provides an indication of how the overall South African stock market is performing. However, this measurement does not provide an understanding of what is actually happening to investment portfolios since most portfolios are multi-asset portfolios; they typically invest in shares, property, bonds, and cash. Here is a random sample of the performance of some different multi-asset class funds [These figures have been calculated from 2nd January 2020 until 21st April 2020]

Multi-Asset Income Funds: The capital value of these funds has generally declined in value by 0-3%. However, the funds have continued to pay income of approximately 8%

  • Coronation Strategic Income Fund: -3.44%
  • Ninety One Diversified Income Fund: -0.52%
  • Prescient income provider Fund: -2.06%

Multi-Asset Low Equity Funds: The capital value of these funds has generally declined in value by 0-5%.

  • Allan Gray Stable Fund: -5.18%
  • Ninety One Cautious Managed Fund: + 1.79% (increase in value)
  • Nedgroup Investments Stable Fund: +3.12% (increase in value)

Multi-Asset High Equity Funds: The capital value of these funds has generally declined in value by 0-10%.

  • Allan Gray Balanced Fund: -8.96%
  • Foord Balanced Fund -3.96%
  • Ninety One Opportunity Fund: 2.17% (increase in value)

Offshore Funds

  • Allan Gray Orbis Global Equity Fund: +6.3% (increase in value)
  • Allan Gray Orbis Global Fund of Funds: +10.57% (increase in value)
  • Coronation Global Managed Feeder Fund: +14.21% (excellent return!)
  • Ninety One Global Strategic Managed Feeder Fund: +16.51% (excellent return!)

The Coronavirus pandemic and the global economic crisis have created an emotional roller coaster ride for all of us. It is a particularly challenging time for investors. It is critical that we do not allow ourselves to make decisions based on our emotions. With all the bad news, our emotions are naturally skewered towards pessimism.  This removes the balance and moderation in our decision making. The fund managers within your portfolios are making rational investment decisions. Let’s not make any irrational emotional decisions that will ultimately damage our portfolios!

Markets will probably remain volatile and uncertain for some time but this presents exciting investment opportunities. Those who remain invested will reap the long-term rewards!

“The time of maximum pessimism is the best time to buy.” 

Sir John Templeton, British investor, fund manager, and philanthropist. In 1999, Money Magazine named him “arguably the greatest global stock picker of the century.”

“Anyone who is not investing now is missing a tremendous investment opportunity”

Carlos Slim, Mexican business magnate, investor and philanthropist. From 2010 to 2013, Slim was ranked as the richest person in the world by the Forbes business magazine.