Archive for the Investments Category

US interest rates: how they’ll affect SA

As long term investors, we need to ignore high-frequency economic data and short term forecasts. There will always be market or media pundits predicting or forecasting the next big crash or stock market meltdown. And in the words of the Oracle of Omaha, aka Warren Buffet – “market forecasters will fill your ear but will never fill your wallet”.

One of the major business cycle drivers in the world is the US GDP growth and the US interest rate cycle. It is well known and publicised that the US is growing (albeit below its long term average) and the prospect of higher interest rates in the world’s largest economy could come this year has already sent the dollar surging against most currencies, including the South African Rand.

The question is, what will happen to South African interest rates when the US Fed starts to raise interest rates?  Read on …. 

The search for yield becomes order of the day

The low interest rate environment is not helpful to people who are dependent on income, plus a high degree of capital stability.  A favorable alternative to money market funds, i.e. Cash Plus Funds, could possibly be considered for providing stable income or stable yield to investors seeking returns in excess of money market funds without taking on much more risk.  “The search for yield becomes order of the day” is food for thought offered by Arno Lawrenz, one of our Industry’s respected experts in managing cash-type and income generating funds.  For further discussion and appropriate advice that will suit your needs, give us a call on 041-365 1303. Continue reading The search for yield becomes order of the day

Retirement Fund Deductions: One door closes, another opens

According to the 2011 Budget Review, 1 March 2012 will see the introduction of a new dispensation for permissible deductions towards retirement funds. There is a clear twofold message behind these changes, particularly when read together with the taxation of lump sum benefits:

- higher income earners will have to make additional provision for retirement outside of tax incentivised retirement funds; and

- retirement fund benefits are intended to provide annuities at retirement and not tax free lump sum benefits on withdrawal and retirement.

Read On …

Money Marketing Newsletter – Inflation – how to interpret it……

Inflation – how to interpret it – how to measure it – how to combat it – how to relate to it in our own financial plans?  These are questions we often ask.  This week’s Money Marketing offers an easy-to-relate-to view on Inflation/CPI worth reading.  In my own office I have an interesting visual aid that has been up on my wall for many years illustrating the effect of inflation. When you visit my office, make sure you take a look at it. The basic story: In 1972, for example, the following mode of transport could be purchased (new) for only one thousand rand (R1 000): a Motor Car. Today it is not uncommon to pay R1 000 or more for a pair of shoes or for your child’s roller skates.  We know the story!  But what are we doing about it?  Continue reading Money Marketing Newsletter – Inflation – how to interpret it……

Money Marketing Newsletter – Where is the Rand Headed?

By Dr Simon Pearse, Marriott Asset Management CEO

The hottest question in the investment industry right now is “where is the rand going to go?” The answer, of course, is not simple.

There are numerous factors influencing the currency at present, not least the attempts by many countries to weaken their currencies in order to export their way out of recession. With much of the developed world having opted for this path, their currencies, and notably the dollar, have seen value erosion. Continue reading Money Marketing Newsletter – Where is the Rand Headed?

Money Marketing Newsletter – The length of the recovery

In today’s newsletter we take a look at the recovery and share some economic and equity investment thoughts; and we look at savings for the youth. In this exceptionally cold and yet happy time for the country we need to remember that in three weeks we will again return to the real world where financial matters need to be faced and conquered.   
We wish Bafana Bafana the best of luck in their final group stage match next Tuesday and will be blowing the Vuvuzela in support of the national side.

The length of the recovery  

In the latest Cadiz Asset Management Market View, portfolio manager Matt Brenzel provides some insightful comments.   Continue reading Money Marketing Newsletter – The length of the recovery

Money Marketing 10 Trends for 2010

The global environment is changing faster and more drastically than we could ever have forecast and MoneyMarketing raises some very interesting thoughts to ponder. 

Continue reading Money Marketing 10 Trends for 2010

Money Marketing


In today’s newsletter we feature an article from Adrian Saville. How have we dealt with the crisis – what is the real debt situation and where are the places for investors in the future are just some of the issues Saville addresses.  

A Changed Global Fabric: Investing in the Post-Crisis Era  

Dr Adrian Saville, CIO of Cannon Asset Managers, assesses the post-crisis investment landscape and suggests the best investment avenues  

Measured by economic and financial criteria, the global economic meltdown of the past two years is unprecedented.  Commodity prices collapsed; international trade fell 10 percent between 2007 and 2009; and the world economy went into recession for the first time since the end of World War II.    

Further, the financial mess has seen many firms disappear, including former icons such as Bear Stearns and Lehman Brothers.  For many others, survivorship has required substantial adjustment by the firm.  In this turbulent environment, the world’s equity markets lost $35 trillion in capitalisation over the 15 months to the end of March 2009.   Continue reading Money Marketing

ZAR – A Volatile Currency

Glacier Research highlights to investors that the extreme volatility in the Rand “can translate into sizeable profits or losses over the short term and in turn increase the risk in a portfolio.  Your asset manager should essentially be able to successfully tap into offshore investing opportunities for better diversification in your portfolio, but at the same time limit the inherent currency risk.”  Read on…

The Weekly Focus

Market Comment

  • The JSE All Share Index gained another 2.4% last week and is trading at a new 2009 high today (Monday 19th October). The market is also back at early September 2008 levels, as well as February 2007 levels.
  • Our market continues to follow the offshore markets, with both the MSCI Emerging Markets Index and the MSCI World Index hitting 2009 highs last week.
  • JP Morgan’s highly experienced and respected SA strategist, Deanne Gordon, continues to recommend an overweight in SA equities, neutral in SA bonds and underweight cash.
  • She recommends overweighting domestic cyclical shares such as banks, general retailers, industrials and media.

BCA View (BCA is a research house based in Canada.  They have researched economies and markets for 50 years).

  • BCA’s view is that a cascading decline in global economic output is giving way to a potentially sharp rebound.
  • They continue to recommend a fully invested position in equities.
  • For equities, we remain at the “sweet” spot, where growth is strengthening while inflation is falling. “Equity investors cannot ask for anything better.”
  • There is still a large bearish/sceptical crowd out there that has not yet capitulated. Further evidence of economic recovery and additional gains in shares will likely compel the underinvested into the market.
  • BCA recommends staying overweight emerging markets and commodities, neutral in the US and Europe and underweight in Japan.  They are scathing on Japan.

Bottom Line

  • STANLIB prefers offshore equities and is overweight in offshore equities, underweight bonds relative to risk profiles and benchmarks.
  • STANLIB is moderately overweight local equities and has turned more positive on local property funds (now moderately overweight from neutral), but remains underweight bonds.

Economic Weekly Review

US retail sales fell by 1.5% m/m, which was better than expected.  Vehicle sales plunged by 10.4% mostly as a result of the ending of the “Cash for clunkers” deal.

  • Excluding motor sales, retail sales rose by a welcome 0.5% and General Merchandise, the largest single category of retail spending, rose an impressive 0.9% m/m. The latest US retail spending data is, after adjusting for the various anomalies, more encouraging.
  • Retail sales in SA fell by a substantial 7% y/y in real terms in August, illustrating that the SA consumer is still under enormous pressure. Read the full report in The Stanlib Weekly Focus. 

Read on….

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A lot of Good News

Charles Snyman of the Efficient Group is well known and never stops to amaze me by his tremendous insight, wisdom and sensitivity to matters concerning the world around us.  Charles is a sharp observer, highly skillful and intelligent, acutely in tune with global realities – pitfalls and opportunities – never over hasty though, but also not found wanting when
opportunities go begging. Charles is an optimist by nature and he revels in his daily task of managing share portfolios.

This time we take a look at what he sights as “Good News” – which, among others, he informs, that of the 70 firms that reported since July 9, only 15 had worse than expected results. This piece of very good news helped motivate markets to achieve very strong runs during the last two weeks of July 2009.  Read on…

TAX DEDUCTIBLE ACCESS TO SHARES THAT PAY MORE DIVIDENDS?

In the previous “Did You Know” we gave you 10 reasons why a RA makes good sense tax wise. Come next year you can add a new reason to the list.  This article explains the present and the future position.

Also remember by having exposure to shares in a RA wrapper you do not pay any capital gains tax when shares are disposed of by the fund unlike if you had owned them in your personal capacity. Again a positive for fund returns.

Having tax deductible exposure to shares that pay more dividends is a new angle to consider going forward which could make RAs, tax wise, an even better prospect. Read on

USING TAX TO BUY FINANCIAL INDEPENDENCE WITH A RETIREMENT ANNUITY(RA)

Most people know that contributions to an RA are tax-deductible up to a certain maximum, but few people realise that an RA may actually provide them with an opportunity to save tax in 10 different ways. (The law also does not force you to retire from an RA fund before reaching age 70 anymore so you can now enjoy these tax benefits for longer. Read on

The Case for Optimism

by John Cassidy

It’s possible that this downturn could end quicker than anyone thinks. 

It could be to our disadvantage at the moment to get trapped in a perpetual negative mindset whilst John Cassidy has a very good case for optimism. Read on

MoneyMarketing Newsletter

Money Marketing

In today’s newsletter we take a look at some of the thoughts around cash. When is cash king and when is it not? With some rather gloomy days in the past week we have a few investment thoughts and comments on the not so pretty economic environment.

The cash and the king

In times of uncertainty and in times of change there is a flight to safety and a flight to quality. Across the globe, investors have passed on pure equity investments and there is an abundance of money sitting in cash and money market funds. Given the returns of last year this is of course hardly surprising. Cash has become safe, it has become a preserver and it has become a favoured asset class. The asset class with the least amount of risk. Continue reading MoneyMarketing Newsletter