A time to be optimistic about your investments

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12 August 2019

When one talks about a “robo-advisor”, there is often a perception that technology has replaced the human element in financial markets. This is far from the truth and many people are surprised when they discover that OUTvest has a highly experienced Investment Advisory Committee which meets quarterly to analyse the performance of our investment portfolios.


For the OUTvest team, these meetings serve as a sanity check and allow us to get input from a variety of industry experts who have seen different market cycles and to get a sense of sentiment across the industry.

Earlier this week our Investment Advisory Committee met and it was pleasing to hear that there was some quiet confidence starting to come back.

Some of the highlights from our economic report included:  

  • Improved manufacturing data – StatsSA data for April 2019 showed a 4.6% increase in manufacturing production compared to April 2018. Metals, machinery, motor vehicles and food and beverage manufacturing all climbed

  • Foreign Direct Investment (FDI) is up with R11.7bn coming into SA in the first quarter – this is a sign of future economic growth

  • Retail and wholesale trade numbers are improving, albeit off a low base

  • Inflation is stable and with the US hinting at interest rate cuts and the Rand improving against the US dollar, there are signs that local interest rates might come down

  • South Africans enjoyed some welcome relief at the petrol pump in July with the petrol price down 95c/litre

  • The Purchasing Manager Index (PMI) compiled by Absa (Bureau of Economic Research) had nudged up again in June to 46.2 points versus 45.4 in May. The PMI surveys supply chain managers around their confidence in future economic activity within their own companies. We use it as a leading indicator for economic growth.

Despite a lot of the doom and gloom that is being highlighted in the media, very few people have pointed out that the JSE All Share Index is up 12.2% in the first 6 months of 2019. The South African All Bond Index rose 7.6% for the 6 months to end June while JSE-listed property rose 6% and the S&P Global Property index delivered 12.7% over the same period of time. The S&P Emerging Market Core index rose 9.7%.

It also worth mentioning that we have generated these returns while the two economic superpowers (US and China) are slugging it out in a trade war. While we have to be cognizant of the fact that South Africa will not be immune to any trade tensions, signs that the local economy is beginning to stabilize, will be welcomed.

For the 6 months ending 30 June 2019, your OUTvest portfolios have performed as follows:  

  • Coreshares OUTmoderate Index Fund +8.9% beating 88% of peer group
  • Coreshares OUTstable Index Fund +7.9% beating 83% of peer group

  • Coreshares OUTcautious Index Fund  +6.7% beating 82% of peer group

  • Coreshares OUTaggressive Index Fund  +10.4% beating 87% of peer group

  • Granate SCI Money Market +3.7% beating 57% of peer group 

For the 2 years ending 30 June 2019, your OUTvest portfolios have performed as follows (returns are annualised):  

  • Coreshares OUTmoderate Index Fund +8.0% beating 94% of peer group
  • Coreshares OUTstable Index Fund +7.7% beating 91% of peer group

  • Coreshares OUTcautious Index Fund  +7.2% beating 82% of peer group

  • Coreshares OUTaggressive Index Fund  +9.0% beating 89% of peer group

  • Granate SCI Money Market +7.6% beating 67% of peer group 

 Source: Morningstar, performance is net of fees, distributions reinvested. Past performance is not guaranteed. For the OUTaggressive Index Fund we have used the SA Equity General Peer group rather than the World Equity General Peer group, as we feel this is more representative of the fund’s strategy.

Warren Buffett is often quoted as saying investors should be “fearful when others are greedy and greedy when others are fearful” … While South Africa is certainly not out of the investment woods yet, it is encouraging to hear our Investment Advisory Committee feeling more optimistic and pointing that for the first time in a long while, investment returns are back on the JSE.

Marc Ashton 

OUTvest is an Authorised FSP.  Past performance is not indicative of future performance.

www.outvest.co.za

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