Report back from the Investment Committee

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2 September 2020
The OUTvest Investment Committee meets every quarter and is led by senior individuals within OUTvest joined by external industry experts, including professional fund managers.

The role of the Committee is to ensure that we, as OUTvest, are actively monitoring our funds to ensure that they remain appropriate and relevant in helping our clients reach their investment outcomes.  

We do this by creating a detailed investment pack that seeks to summarise what’s happening in our economy, the investment markets and our fund performance. The Committee is chaired by the Head of OUTvest, Grant Locke.

Are our funds performing as expected?

There is no doubt that the market crash in February, and the low returns from the local equity markets have struggled to deliver inflation beating returns over the past few years, however the Investment Committee is comfortable with the funds’ performance against peers and especially in the face of the sharp market correction and subsequent recovery in April.

All the funds, other than the Granate Money Market Fund have found it very difficult to beat an inflation plus target over 3 years, yet, the funds are performing well relative to competitors. For example, the CoreShares OUTaggressive Index Fund has outperformed 87% of all its competitors (623 ranked investments) over 3 years to the end of June. 

The below table provides some insights into how our funds have performed on an annualized basis over the last 3 years:


What’s happening in the SA economy?
  • From a COVID perspective we are now starting to see a reduction in the number of new cases and a recovery rate of more than 80%.
  • The economic impact of the lockdown won’t start to be understood until we see economic information come out for the second quarter (31 March to 30 June 2020). We expect the data to show record rise in unemployment, up from a previous record of 30%, and a massive contraction in our Gross Domestic Product (GDP). This is where we will understand the real economic damage brought about by COVID-19 and the subsequent lockdown.
  • The Reserve Bank has done all it can by reducing interest rates to historical lows, which, unfortunately will make cash investments unattractive over the short and medium term. However with lower interest rates there is great opportunity to make good inroads towards reducing the debt burden where possible.
  • Government finances are stretched very thin, and the recent budget speech shows that national treasury is trying to limit borrowing as much as possible, which is politically, very unpalatable to many stakeholders including unions fighting for wage increases for government employees.
  • Investment markets are extremely volatile similar to most global equity markets, even in Rand terms.
 Some interesting points of discussion from the investment markets.

There has been a very strong recovery in equity markets over the last three months and it demonstrates clearly how difficult it can be to time the markets.

For example, between February and March, the South African listed equity market was down over 30%, and by June, the market was only down 3%.  This shows you just how volatile the market can be over short periods and is very difficult to predict. 


This recovery was echoed in listed equity markets around the globe, including other well-known developed and emerging equity markets. The difficult question to ask is, what could cause this recovery to continue?

 South African equity markets and their peers continue to just get cheaper and cheaper while investors focus assets on developed markets such as the US. For example, the US equity market is extremely expensive and South Africa, and other emerging markets, cheap by comparison. But we have not seen a catalyst that would drive flows toward emerging market equities.

South African companies seem to offer an income that is attractive when compared to their share price and the shares are not expensive relative to their earnings. In other words, South African equity market looks like good value.  



The full impact of the COVID-19 pandemic and lockdown on the South African economy is yet to be felt, and we will only start to get a glimpse of this once the economic growth and unemployment figures emerge in the near future.

That said, the equity markets do seem to be relatively well-priced if we see an easing of the lockdown and a recovery in economic growth. 

There remains much uncertainty in the world at the moment, sometimes the best approach when times are uncertain is to just wait it out and survive as best as one can until new opportunities emerge.

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