1 July 2025
It’s natural for investors to want to de-risk their portfolios during periods of market uncertainty. However, reacting emotionally during volatile markets often does more harm than good. De-risking can lock in underperformance, meaning that investors won’t benefit from the eventual market recovery. When markets recover, they tend to do so quickly.
Instead, volatility should be viewed as the "ticket to the investment game." Experienced fund managers use these turbulent periods to position portfolios for future growth. This is why we prioritise selecting fund managers who have the skills, knowledge and track records to make the most of challenging markets – to their clients’ advantage.
Tariffs and inflation
With ongoing discussions around tariffs, advisers are naturally considering their inflationary effects – both from a broader economic perspective, and the resultant effect on their clients’ portfolios.
Firstly, we know that tariffs increase the cost of imported goods. For example, if a chocolate bar costs R5 to import, and a R2 tariff is imposed on that item, it will therefore cost an extra R2 to purchase. Whether the company passes this cost on to consumers depends largely on the pricing power of the company, and how price sensitive its customer base is.
What follows is slightly more complex. If the price is increased, consumers can either reject the higher price or reduce their consumption. Applied broadly across many items, tariffs could reduce consumer spending, thereby potentially slowing economic growth. Some economists predict that this potential widespread economic slowdown could overshadow the effect of the tariffs, even having a recessionary effect.
What should investors do?
The key message for clients is to remain invested and not try to time the market. Trust in your long-term investment strategy that you’ve crafted together with your financial adviser. If your personal circumstances haven’t changed, there’s no need for your investment strategy to change.
