To the 22 May 2020, we saw the market continue to rebound. With much volatility still abound our managers have been taking advantage of opportunities as they have presented themselves. Some interesting quotes which come to mind are that of the Contrarian Investor: “The worse off the market is, the better the opportunities are to profit” and from Warren Buffet: "Be fearful when others are greedy, and greedy when others are fearful". In our Global Multi-Asset (Global Balanced) section, we have introduced the “Global LMW Median” as an indicator and have credited Alexander Forbes Manager Watch. We are truly living through extraordinary times. Please stay safe and stay calm. Mark Davids Investme

Smoothed bonus portfolios are investment portfolios, offered by life insurers, that provide a guarantee on the money invested into the portfolio and the returns passed on to investors in the form of bonuses declared by the insurer. Sometimes these portfolios only provide a partial (less than 100%) guarantee. Generally, people who invest in smoothed bonus portfolios are conservative investors, who expect to be shielded from negative returns, especially in times of market stress like we have experienced recently. The recent unexpected negative bonus declarations in April 2020 by Old Mutual and concerns around a number of smoothed bonus portfolio funding levels dropping to as low as 80% and 85%

As if the threat of a large-scale outbreak of an infectious disease isn’t enough to worry about, coronavirus has financial implications too. You might have read about the virtual shutdown of industries in some parts of the world and large falls in global stock markets and in the price of commodities such as oil. It feels like there’s been no shortage of alarming twists. For millennials and younger investors, it’s not all cause for darkness and despondency. A market correction can even be a good thing in the long run. Why does coronavirus affect stock markets? There are a few reasons. The first is because it is impacting the ability of companies to produce goods. For example, Apple has alread

At first glance, it may seem that the coronavirus pandemic has derailed the global environmental agenda – certainly in the short term. While economies are closed, the massive investment required to decarbonise the way we produce and consume has been delayed. However, as the world emerges from the crisis, we see increasing evidence that the transition may accelerate. Fiscal stimulus will accelerate climate-related policy The level of stimulus put in place by governments around the world is unprecedented. It has been implemented multiple times faster than it was in the Global Financial Crisis and its size, as a percentage of GDP, is also unprecedented. In the eurozone, monetary stimulus is 30%

The market turmoil of the first quarter of 2020 has given rise to opportunities in the South African fixed income market. In an environment of low economic growth and inflation, there are good opportunities to lock in high real yields for investors. This is according to Ian Scott, the head of fixed income at Momentum Investments, who spoke at the first virtual Outcome Matters event for 2020. Scott said it was important to understand the macroeconomic drivers of these opportunities. “March 2020 was not a repeat of 2008, which was a solvency event. Valuations simply got too expensive, and the market corrected. In contrast, March 2020 was a liquidity event – the US bond market and, to a greater

The best news often follows the worst. But the best news may take some time to arrive. The worst news in financial markets often comes from unexpected events, such as the international 2008/10 meltdown as a result of the American sub-prime property crash. This has now been followed by the Covid-19 pandemic, which is expected to have a much larger and longer financial impact. Pensioners are particularly at risk in times of volatile markets, not only in South Africa but around the world. The market crashes have affected both those starting their retirement and those already in it. While markets have recovered more recently, they have not fully recovered and further risks remain. Too often in t

The full impact of the COVID-19 pandemic is as yet unknown, but individuals have already begun to have their lives disrupted by the country’s economic shutdown, with retrenchments, salary cuts and forced unpaid leave making them take stock of their financial position. The basic principles of financial planning are especially relevant at this time, but in the short term, cash flow is more important to many people. To help safeguard you and your family’s financial security, here are some tips to follow to make sure you’re making your money work hard for you: Draw up a budget – this is especially relevant if you’re worried about possible retrenchment of yourself or your partner. This will help

The second wave of Stats SA’s COVID-19 business impact survey provides an update on how South African businesses are currently faring under lockdown. The first impact survey covered the period 30 March to 13 April 2020, and the results were published on 21 April.1 The survey asked firms in the formal sector how the COVID-19 crisis was affecting their operations in terms of turnover, trading, workforce, imports and exports, purchases, prices, and business survival. Stats SA quickly followed up with a second survey, covering the period 14 April to 30 April 2020. The number of responses for the second round was much larger, covering 2 182 businesses compared with the first survey’s tally of 707

The Financial Sector Conduct Authority (FSCA) warns the public against doing any financial services business with Eagle iMarkets (Pty) Ltd. This is due to suspected breaches of financial sector laws and allegedly offering financial services to its clients without a financial services provider (FSP) licence. It was brought to the attention of the FSCA that Eagle iMarkets advertises that it is a licensed and regulated juristic representative by the Financial Services Board (FSP number 46156). The quoted FSP number belongs to Tokoloho Financial Services (Pty) Ltd, which is an authorised FSP. Tokoloho Financial Services is licensed to provide intermediary and advisory services for long-term insu

As the COVID-19 crisis developed and panic gripped markets, growth asset classes sold off aggressively in March, with a flight to cash and perceived safe haven asset classes such as US treasuries. “The pace and magnitude of the selloff, moving from a bull to bear market, was unprecedented. It took the S&P 500 index a mere 16 days for the market to lose more than 20%,” said Jako De Jager, head of retail portfolio solutions at Momentum Investments. Momentum Investments held its first virtual Outcome Matters event for 2020 on 13 May 2020, and De Jager provided an overview of how the investment team positioned their multi-asset-class funds to weather the economic storm. “This led to global risk

The last 5 years have been very disappointing for investors on the JSE. They have always been led to believe that equities outperform other asset classes and they must buy “stocks for the long-run.” Unfortunately, this has not happened, and the JSE All Share Index, like the fabled hare, has been soundly beaten again by the tortoise-like cash and bonds. At first glance, Aesop’s fable, The Tortoise and the Hare, seems like moralistic propaganda. Slow and steady and is a good approach, but in real life, few would bet their money on the tortoise against the hare? However, this fable is probably best applied to investing where “getting to the finish line” is far more important than “getting the

South African households’ real net wealth decreased by an estimated R828.2 billion from the fourth quarter of 2019 (Q4 2019) to the first quarter of 2020 (Q1 2020), according to the latest results from the Momentum/Unisa South African Household Wealth Index, which were released today. Johann van Tonder, researcher and economist at Momentum, notes that this estimated real quarterly decline is 52.5% more than the previous largest estimated quarterly decline of R542.9 billion, which was registered during the Great Recession (Q3 2008). “The recent plummet in household real net wealth – from an estimated R7 043.6 billion in Q4 2019 to R6 215.4 billion in Q1 2020 – can be largely attributed to a s

COVID-19 -continues to demand changes to banks’ established ways of working, as not only do they have an instrumental role in supporting all sectors of the economy through the crisis, but they are also at the epicentre of the new demands of a more virtual world. From the well-being of their own staff to ensuring business continuity and controlling costs, banks have been agile in managing through the crisis so far. Most have successfully navigated the operational transition to remote working. In the main, resilience plans kicked in effectively and banks are finding rhythm in the new normal. And much more is needed. As South Africa starts to ease lock-downs and move away from the initial phase

Planning for retirement is a complicated business. You need to save enough while earning, and make sure you get good returns on your investments so that your money will last for your entire retirement. There’s no magic formula, though, and no one-size-fits-all solution, but here six factors that drive better retirement outcomes. 'The “secret sauce” of retirement investing is compound interest' ‘We think of them as levers,’ says Old Mutual Corporate Consultants Head of Advice Andrew Davison. ‘They’re intertwined, and we want our clients to be able to play with all six. For instance, if you pull one lever, what will the impact be on the other five?’ ‘There are combinations that make sense and

The Top 10 Largest asset managers in South Africa by AUM make up approximately 80% of the industry (as an indicator, Investec manage R592 Billion). Did you know that there are approximately 44 majority Black owned asset managers in the South African asset management industry. Most of them are in the “Start-Up” phase, which is not to say that they are all less than 2 years old. In fact, the average age of these “start-up” businesses are 5 years. How Motswedi sees the universe of Transformed asset managers: Why are these businesses not growing as fast as would have been anticipated..? Motswedi have identified two potential reasons Asset owners fear of change Asset owners comfort with status q

What’s special about Italy? How Covid-19 could impact Italy’s position in the Eurozone. It’s the third largest member state of the EU and one of the most heavily indebted. So it went into the coronavirus crisis in a vulnerable position. “Debt as a share of GDP was at 134%, and that’s now expected to rise to over 150% of GDP by the end of 2020,” says Azad. What problems is Italy facing? Along with Spain and Greece, it is already finding it more expensive to borrow. “That, of course, is reflecting the higher degree of credit risk attached to these bonds going forward,” says Azad. As it’s a highly indebted nation, he highlights two key problems. “Number one: how are they going to service that

Commentary from the Momentum Macro Research team following the interest rate cut. Please see below the highlights and click on the icon to download the full document in PDF. HIGHLIGHTS: The South African Reserve Bank (Sarb) Monetary Policy Committee (MPC) reduced interest rates by an expected 50 basis points to 3.75% at the scheduled May 2020 interest rate-setting meeting. The Sarb downgraded its expectation of growth in SA’s main trading partners due to the outbreak and spread of COVID-19 from negative 2.8% to negative 3.4% in 2020, but increased its growth assumption for 2021 from 4.0% to 4.3%. The Sarb’s growth forecast for the local economy weakened further to negative 7.0% for 2020 from

Tracey Davies, Executive Director of Just Share NPC says in the foreword to the report: "This review identifies two key gaps in the South African responsible investment landscape: Firstly, limited understanding and integration of environmental and social factors into investment decision-making (i.e. the main focus is on corporate governance, or the “G” in ESG). This limitation is reflected in the finding that “most responsible investment policies did not acknowledge the Paris Agreement nor hint at any goal to align portfolios with future climate change scenarios”. We can extrapolate from this gap that there is also a lack of understanding of the relationship between climate change and inequa

As a young man, I fell in love with the Alfa GT Junior sportscar. To me, there was no car more beautiful. It didn’t matter to me that technology, luxury and handling had improved over the years, I believed that if you were lucky enough to find one of these beauties, it would be the last car you own. About 15 years later, I finally managed to buy a 1976 model and I could hardly contain my excitement. Make no mistake, I enjoyed this car immensely, but what I imagined I would be driving, and what I actually ended up driving, were two very different cars. Compared to modern cars, the 1976 Alfa was a bumpy ride, it was uncomfortable and, in many ways, highly impractical. What does this have to do

Many South African employees rely on group insurance benefits through their employer to meet their household’s financial needs in the event of death, disability or critical illness. And in most cases it could be likely the only or the majority of the insurance benefits these employees have. This is according to Rudi van Rooyen, Head of Specialised Pricing in Group Insurance at Momentum Corporate who says that we tend to take a raincoat for granted, except when we’re caught in the middle of a rain storm. “And the same applies to group insurance. The current times are a sharp reminder of the tremendous value that group insurance benefits offer employees,” says van Rooyen. He continues that de