Funds on Friday

A topical discussion on developments in the industry, often incorporating comments from leading fund managers or asset management houses.

Comfortably Numb

In this article, Megan Fraser, Head of Business Development & Marketing, and Reuben Beelders, Chief Investment Officer & Portfolio Manager at Gryphon Asset Management, explore the concept of entropy and its impact on life and investing, emphasising the inevitability of disorder. It highlights the importance of understanding and preparing for risk through real-life examples.

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Is it Just Me?

In this article, Megan Fraser, Head of Business Development & Marketing at Gryphon Asset Management, explores the paradox of individuality versus conformity in human behaviour. Drawing from Charlie Munger's insights on cognitive biases, Fraser examines how our pursuit of uniqueness can conflict with our inclination to conform to group thinking. The article provides examples from politics, investments, and daily life to illustrate how group dynamics shape individual decisions.

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SA Equities: Chasing the Sun 3

In this article, Dwayne Dippenaar, CA (SA) CFA, Co-Portfolio Manager and Analyst at Laurium Capital, discusses how South African investors favour fixed income over equities due to volatility. However, with SA equities undervalued, there's room for reconsideration. Key market factors, including loadshedding, logistics challenges, and forthcoming elections, are further discussed, highlighting initiatives aimed at resolving these issues, which potentially may stimulate GDP growth and offer benefits to investors.

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Invest like you're Denmark

In their article, Megan Fraser, Head of Business Development & Marketing, and Casparus Treurnicht, Portfolio Manager at Gryphon Asset Management, explore Denmark's celebrated happiness and its connection to indexation in investing. They highlight how Denmark's values align with the simplicity, stability, and long-term well-being promoted by indexation. Moreover, they challenge conventional investor expectations, advocating for the embrace of average returns through indexation for potentially better financial results.

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Above the curve: A case for hedge funds in the current rate environment

In this article, Kurt van der Walt, Multi-Strategy Portfolio Manager, and Michael-John Dippenaar, Multi-Strategy Analyst at Fairtree, make a case for hedge funds, highlighting their resilience in turbulent markets by effectively employing a variety of investment tools and strategies. Given the current macroeconomic landscape marked by inflation, rising interest rates, and geopolitical shifts, the authors propose that hedge funds offer potential for alpha generation and portfolio diversification, making them a compelling consideration for inclusion in diversified investment portfolios.

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Looking under the hood at SA Inflation

In this article, Melanie Stockigt, Portfolio Manager at Laurium Capital, takes a closer look at SA inflation and how it is a critical input into the investment process. She highlights the importance of understanding the South African Reserve Bank’s thinking and how the central bank sets interest rates over time to align with its inflation targeting mandate. The author also explores the drivers and nuances of our inflation basket and how SA differs from peers in both the developed and emerging worlds, underscoring the importance of this knowledge in analysing the central bank's reaction function to meet its mandate effectively now and in the future.

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Linking Performance and Investor Behaviour

In this article, Brendan de Jongh, SA Head of Research at PortfolioMetrix, links performance to investor behaviour by examining how relative returns can drive investor happiness and success. He points out that volatility, whether framed absolutely or relatively, impacts investor satisfaction. The author concludes by stating that asset managers must acknowledge their role in shaping investor behaviour throughout the investment journey and ensure quality journeys, necessitating a thorough understanding and mitigation of the impact of volatility on investor satisfaction for mutual success.

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Global Equity Outlook – a prudent way to invest offshore

In this article, Anthony Ginsberg, Managing Director at GinsGlobal Index Funds, highlights the driving factors behind the US stock market's continued rally in the first quarter of 2024. Subsequently, he conducts a brief analysis shedding light on the unfortunate reality that many investors fail to achieve such gains, attributed to numerous US and global fund managers continuing to underperform well-known index benchmarks like the S&P 500 and MSCI World. The author concludes by stating that exposure to offshore stock markets through broadly diversified mutual funds remains an effective Rand hedge and that investing in lower-cost funds offers investors a greater chance of outperforming the market.

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Information Deluge or Delusion?

In this article, Sam Houlie, Co-CIO: Fundamentals at Differential Capital, discusses the use superior information in gaining an edge in investing, emphasizing the rapid availability and gathering of data in the technological advanced world we find ourselves in. the author further highlights the challenges and opportunities of data harvesting with using key examples, inflation and load-shedding.

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Gold and Black Gold in the frame

In this article, Sam Houlie, Co-CIO: Fundamentals at Differential Capital, explores the dynamic landscape of equity markets, marked by a continuous stream of unanswered questions. The author underscores the vital link between posing the right questions and making informed investment decisions, emphasising the significance of grasping evolving narratives and adjusting to changing signals. Additionally, Houlie delves into four key questions within the current South African market context: the outlook for AI-driven companies, the path of South African resource shares, the sustainability of the gold price rally, and the likelihood of another surge in oil prices and its repercussions for Sasol.

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The Luxury of Winning

In this article, Sam Houlie, Co-CIO: Fundamentals at Differential Capital, examines key developments in the luxury goods sector and reiterates the importance of adapting to changing signals. The author further delves into bullish sentiment in October 2023, subsequent divergences and resurgences, the role of Richemont in the South African market, and the ongoing debate surrounding its valuation.

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Navigating the New Frontier: AI's Expanding Role in Portfolio Management

In this article, Musa Malwandla (Co-CIO: Data Science) and William Wright (Lead Data Scientist) at Differential Capital sheds light on the global competition in AI development and its evolving terrain in portfolio management. The conversation delves into the influence of Large Language Models (LLMs) on client engagement, analysts' information analysis, and the creation of trading strategies.

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What can catalyse a structural re-rating in SA equities

In this article, Ann Sebastian (Head of Equities and Senior Portfolio Manager) and Athenkosi Mjebeza, Equity Analyst, at Terebinth Capital discuss the current state of the South African equity market, highlighting its cheapest valuations since the Global Financial Crisis. They stress the role of investor sentiment and fundamentals, especially earnings growth, in determining equity valuations. The article points to the need for addressing the domestic energy crisis and logistics challenges as crucial catalysts for structural re-rating in South African companies.

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What can catalyse a structural re-rating in SA bonds

In this article, Nomathibana Matshoba (MD/Senior Portfolio Manager) and Oyena Mtuzula (Head of Credit and ESG Analyst) at Terebinth Capital discuss the factors influencing the pricing of South African government bonds (SAGBs) compared to US Treasury bonds (USTs). They emphasise the need for structural growth improvements, where GDP growth exceeds government interest costs, and highlight obstacles like political factors, rail constraints, and electricity supply issues. The upcoming elections are identified as a key determinant of economic prospects and bond market volatility.

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The macros that matter: South Africa’s politics, structural challenges, and ratings outlook

In this article, Kanyane Matlou, Senior Portfolio Manager, at Terebinth Capital, discusses South Africa's upcoming 2024 elections and their significance against the backdrop of economic challenges, structural constraints, and a declining rand. It highlights issues such as insufficient power supply, constrained infrastructure, and slow-paced structural reforms affecting GDP growth.

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Fear versus FOMO: a perspective on missing out

In this article, Carmen Nel, Head of Multi-Asset, and Dumisani Ngwenz, Junior Portfolio Manager and Quantitative analyst at Terebinth Capital, explore the impact of fear and the fear of missing out (FOMO) on investment portfolio performance, focusing on the trade-off between return and risk management. The analysis covers four major South African asset classes over the past decade: equities, listed property, bonds, and inflation-linked bonds.

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How to be a winner in a volatile market

In this article, Teneille Troskie, Junior Research and Investment Analyst at Glacier by Sanlam, highlights the importance in understanding the fundamental factors in the face of uncertainties. She examines inflation and monetary tightening, and how economic cycles impact different asset classes, emphasising the role of skilled fund managers in navigating market complexities.

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Long-Term Wealth Creation in REITs: Yielders vs Growers

In this article, James Tucker, Global REIT Analyst, Reitway Global, points out that in the realm of real estate investment, the pursuit of consistent income has led many to consider Real Estate Investment Trusts (REITs), with a focus on high dividend yields. However, a decade-long analysis shows that REITs prioritising sustainable dividend growth, despite lower initial yields, deliver more attractive total returns than those focused on high dividend yields, highlighting the significance of favouring long-term growth over immediate gains in real estate investment.

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Real Estate's Great Divide

In this article, Hubert Weyers, Global REIT Analyst, Reitway Global, explores the notion of a sea change in real estate investing. The article highlights the end of a period of cheap money due to inflation, challenging investors to reconsider their strategies and portfolios. It explores inflation drivers like labour shortages, clean energy transitions, climate effects, and geopolitical shifts, emphasising the importance of adapting to the changing investment landscape. In the context of real estate, the author underscores the crucial role of public market liquidity and effective risk management to navigate uncertainties and potential disruptions associated with elevated inflation.

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Unlocking Opportunities: Delving into Global Listed Real Estate

In this article, Olivia Teek, Business Development Manager, Reitway Global, discusses a few key insights that might be flying under the radar for many investors, shedding light on the factors that make the global listed real estate sector the likely underdog. The author asserts that the sector's strong fundamentals, sound capital structures, appealing valuations, and diverse opportunities make it an attractive option for investors seeking long-term growth and stability, a sentiment some argue is particularly relevant at present.

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Absolute Return Funds

In this article, Fernando Durrell, Portfolio Manager at Sanlam Investments, delves into the brief history of the absolute return concept. He further reiterates that tactical asset allocation and actively managing risk is key for absolute return funds.

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Portfolio construction and adaptions in an ever-changing investment environment

In this article, Melville du Plessis, Portfolio Manager at Sanlam Investments, explores the recent diverse investment options arising from global financial challenges, influenced by shifts in global interest rates that impact allocation decisions across various asset classes. Despite acknowledging the unwavering foundations of fund management and investing, the author emphasises the dynamic nature of the landscape, necessitating continual adjustments to portfolio allocations.

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Being Contrite with Contrarians: a Misquote for the Ages

In this article, Nico Katzke, Head of Portfolio Solutions and Kingsley Williams, CIO at Satrix, analyse Warren Buffet's 2004 shareholder letter, advocating for investors to opt for a straightforward index-tracking approach. The authors explore the significance of steering clear of elevated costs, resisting impulsive reactions, and strategically timing entry and exit points. The main insights highlight that, while contrarianism may seem enticing, sustained success in investing lies in a steady and disciplined approach, especially when employing low-cost index strategies.

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Factoring geopolitical risks into equity portfolios

In this article, Andrew Kingston, Head of Equities at Sanlam Investment Management, emphasises the importance of experience in navigating the complexities of equity investing. He also delves into the potential impact of rising interest rates, the breakdown of globalisation and environmental factors on inflation. Lastly, it offers insights into safeguarding equity portfolios amidst current geopolitical risks.

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Receivables Finance as a Rising Asset Class

In this article, Colm Devine, Chief Sales Officer at Teybridge Capital, highlights the attractiveness of receivables finance as an investment opportunity for funders, emphasising higher yields, risk management, diversification benefits, and the influence of technology-driven platforms.

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Unlocking the Power of Structured Trade Finance

In this article, Peter Martin, Trade Finance Specialist and Director of Teybridge Capital discusses the concept of structured trade finance and its vital role in global commerce, particularly in agricultural and primary commodity trade. It highlights how this financial tool provides short-term working capital to various players in the supply chain, facilitating the movement of goods from producers to end consumers.

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Understanding Private Debt and Credit

In this article, Karl Engelhard, Portfolio Manager and Alexander Engelhard, Senior Investment Analyst & Co-Portfolio Manager at Skybound Capital, explore Private Debt (Private Credit) as an alternative capital source beyond traditional banks. They note the substantial growth in the Private Debt market post the 2008/2009 Global Financial Crisis. Private Debt is now integral to capital markets, offering solutions for borrowers and attractive risk-adjusted returns for investors amidst regulatory changes. The article underscores the importance of choosing the right manager for successful Private Debt investments.

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Private Market Investments

In this article, Theodore Qi Shou, Chief Investment Officer at Skybound Capital, closely examines the growing popularity of private market investments, which involve raising capital from a network of investors beyond personal connections. Factors such as the Yale Model and the Canada Model have played a role in the surge of private market investments. Importantly, these investments are no longer confined to institutional investors; they are now accessible through various channels to a more extensive investor base.

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Listed Property Investing A long short approach

In this article, John Hawinkels, Investment Analyst at Catalyst Fund Managers, highlights the remarkable growth of assets managed by long/short equity hedge funds over the past two decades, with an impressive annual increase of approximately 10%. This ascent has positioned long/short equity funds as the most rapidly expanding strategy within the hedge fund industry, surpassing global macro funds in terms of total assets under management. This growth can be attributed, in part, to market performance, but it also underscores the skill of the managers themselves. The author proceeds to outline a range of strategies at one’s disposal to try to maximize risk-adjusted returns while also protecting capital in down markets.

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Unlocking value through M&A

In this article, Mvula Seroto, Executive Director & Portfolio Manager at Catalyst Fund Managers, discusses the role of mergers and acquisitions (M&A) in unlocking value in the real estate sector. The focus is particularly directed toward Real Estate Investment Trusts (REITs), highlighting how public REITs can close the gap between the perceived value of their real estate assets and their stock market prices through M&A transactions. These transactions may encompass, privatization or strategic mergers.

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A Cost-Benefit Analysis of Efficient Real Estate Assets through a South African and Global Lense

In this article, Ofentse Thlabi, Investment Analyst, Gugu Ndlangisa, Investment Analyst, and Zinathi Mafumana, an ESG Specialist, at Catalyst Fund Managers, briefly explain what sustainable real estate is and emphasize that the goal behind this theme is to reduce the negative environmental impact of real estate projects while also providing economic and social benefits. The authors then explore the cost-benefit analysis of investing in efficient real estate assets from a South African and Global real estate market perspective.

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Risks and Opportunities in Global Listed Real Estate

In this article, Theodore Freysen, a Senior Investment Analyst at Catalyst Fund Managers, makes a case for global listed real estate. The author refers to the Chinese symbol for crisis, which is a combination of the symbol of danger and the symbol of opportunity. Although there isn’t a crisis in the real estate sector presently, he drives his point home by saying that the pace and magnitude of interest rate increases have been a drag on real estate returns and continue to be a headwind, yet opportunities remain. He points out the risks and opportunities that come with the global listed real estate market, contrasting them to the private real estate market.

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The case for listed real estate and its place in a diversified portfolio

In this article, Marcus Erlank, a Director & Portfolio Manager at Catalyst Fund Managers, highlights the importance of real estate and lists the benefits of investing in listed real estate instead of direct real estate. The author also highlights the evolution of the real estate universe overtime, with new and rapidly growing sub-sectors, gaining institutional recognition; thus, allowing for an outsized portion of the investor’s total investment return to come from growth, rather than the dividend income. Additionally, the article considers the impact of the macro environment, discussing its performance during periods of tightening and loosening monetary policy cycles.

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Return of the cost of Capital: back to fundamentals

In this article, Richard Clode, a Portfolio Manager at Janus Henderson Investors, discusses the impact of changing cost of capital over the last few years, specifically on capital allocation decisions and stock picking within the technological sector.

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Risk and Return: Choosing your trade-offs

In this article, Madalet Sessions, Head of Multi-Asset at Denker Capital, examines risk and returns data of various asset classes during the period of 1960 to 2023. The article illustrates that capital losses and return variability can be substantially mitigated through owning a diversified portfolio of assets. Notwithstanding, trade-offs do exist and investors ultimately need to be comfortable taking risk when they have a clear investment goal in mind.

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What is the optimal offshore equity allocation?

In this article, Claude van Cuyck, Executive Director and Portfolio Manager at Denker Capital, provides a detailed 50-year analysis tracking the ALSI and MSCI World index to determine what the optimal allocation would have been in the past. Whilst diversification benefits do exist, the author noted variegated outcomes for an optimal offshore allocation. Essentially, the decision to increase offshore exposure relies solely on an investor’s time horizon and risk appetite. Evidently, the past is not necessarily a guide to the future. But, as Mark Twain said, “history never repeats itself, but it often rhymes”.

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US video streaming: have we come full circle?

In this article, Ryno Truter, Equity Analyst at Denker Capital, analyses the video entertainment industry and how it has progressed over time, with specific reference to improved internet access, which has enabled streaming services. Whilst streaming has created opportunities for media companies, increased competition and difficulties with monetising content has brought about challenges to the ever-evolving industry.

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The value of hedge funds in a diversified portfolio

In this article, Renier de Bruyn, Head of Asset Allocation at Sanlam Private Wealth, examines the value of hedge funds in a diversified investment portfolio. He highlights the unique strategies of hedge funds, which are independent of market forces, that can significantly enhance returns and reduce overall portfolio risk.

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The impact of loadshedding on investment portfolios

In this article, David Lerche, Chief Investment Officer at Sanlam Private Wealth, delves into the effects of loadshedding in South Africa on investment portfolios. The impact of loadshedding varies across different businesses, affecting manufacturers, retailers, and service companies to varying degrees. Investors are urged to keenly assess pricing factors and remain vigilant for potential market opportunities arising from the ongoing power crisis.

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Our beleaguered rand: might it return to ‘fair value’ over time?

In this article, Renier de Bruyn, Head of Asset Allocation at Sanlam Private Wealth, examines the decline of the South African rand against the US dollar and analyses the factors influencing its value. Furthermore, the article distinguishes between external global factors and internal issues specific to South Africa. While global events and commodity prices impact the rand, domestic factors can also play a role.

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Outlook for global oil markets

In this article, Christiaan Bothma, Investment Analyst at Sanlam Private Wealth, examines the outlook for global oil markets over the medium term. He highlights the lack of new investments in the oil industry, coupled with resilient and growing demand, that led to higher prices following Russia's invasion of Ukraine. The article suggests that oil demand is likely to continue rising until the end of the decade and possibly beyond, driven by population growth in emerging markets.

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The crude oil conundrum

In this article, JD Hayward, global equity analyst at Flagship Asset Management, highlights the importance of crude oil and OPEC’s powerful stance in global oil production and reserves. Furthermore, the article explores the broad implications of oil price moves in the near and longer term, with reference to oil supply cuts which have been used as a tool to stabilise prices. The author suggests that favourable market conditions such as persistent demand and underinvestment in oil supply may benefit oil service companies in the future.

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Waiting for a catalyst

In this article, Gerhard Janse van Vuuren, global equity analyst at Flagship Asset Management, points out why timing is everything in the realm of investing; and he explains why there is considerable value in exercising patience and awaiting a catalyst within the investment case.

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Investing in an uncertain economic environment

In this article, Gerhard Janse van Vuuren, global equity analyst at Flagship Asset Management, points out that, in times of economic uncertainty, investors often turn to top-down investment strategies that attempt to predict the direction of the economy, which may seem logical, but are not always the most effective way to achieve investment success. He gives reasons why bottom-up investing is a better investment strategy.

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Semiconductor wars - identifying the likely winners

In this article, JD Hayward, global equity analyst at Flagship Asset Management, examines how an entire $5 trillion IT and electronics market is underpinned by a more than $500 billion semiconductor industry, briefly highlighting the political dynamics around it. The author points out who the main players are in the different segments of the semiconductor supply chain and the potential winners; ending off with who their preferred player is and why.

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The ghosts of COVID past

In this article, Andrew Vintcent, Director & Portfolio Manager at ClucasGray Asset Management, discusses how in time, fundamentals such as earnings growth, free cash flow generation and dividends will ultimately prove or disprove particular investment narratives. The author focuses on the South African electricity crisis, a notable woe, which has painted the country’s current narrative as overwhelmingly negative. He concludes that even in the face of very strong headwinds over the last couple of years, a combination of steady earnings growth, extremely attractive valuations, and a growing sense of urgency to unlock value, many South African companies have the potential to deliver very attractive returns to patient investors.

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The Energy Transition: A Marathon not a Sprint

In this article, Ryann Dean, Global Equity Analyst at Aylett & Co Fund Managers, discusses the current shift towards renewable energy with an emphasis on the goal to replace energy sources whilst meeting growing demand for energy. The author delves into the process of overcapacity in sources like solar and wind which are prone for variability; the costs related to renewable energy; its physical limitations due to resource-intensive construction requirements; and geopolitical concerns in terms of energy material production.

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Shifts in the Global Monetary Order

In this article, Chantelle Baptiste, Senior Equity Analyst & Portfolio Manager and Siya Mbatha, Equity Analyst at Fairtree, delve into the concept of deglobalisation and argue that geopolitical tension has led to the dispersion of some of the world’s largest economies. The authors explore the impact of a stronger dollar on emerging market economies; how China is trying to reduce dollar dependency and the evolution of reserve currency status; and how the dollar became a dominant reserve currency.

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The flexibility of hedge funds

In this article, Charl Gous, Director, Fund Manager and Co-Portfolio Manager at Bateleur Capital, emphasises the flexibility of hedge funds as various investment strategies may be employed across asset classes and geographies to maximise profit both from long and short positions. He delves into four practical examples of hedge fund strategies.

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Enduring Notes to Self

In this article, Reuben Beelders, Chief Investment Officer & Portfolio Manager and Megan Fraser, Head of Business Development & Marketing at Gryphon Asset Management, discuss the foundation of enduring wisdom and the combination of knowledge, experience, and perspective that creates it. They highlight the practical application of combining science and art to create craft, citing examples such as iconic buildings like the Burj Khalifa, Sydney Opera House, and the Guggenheim Museum Bilbao. The article extends this combination of science and art to investing, and the importance of combining analytical and creative skills to make informed decisions.

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What we learned from the octopus teacher

In this article, Megan Fraser, Head of Business Development & Marketing at Gryphon Asset Management, examines the challenges around incorporating new information or ideas into current investment practices. She uses the example of a documentary filmmaker who changed his cousin's perception of underwater diving by coaching him to have a different mindset. The article explores reasons why people may resist embracing new ideas, including fear of change, cognitive bias, and lack of information, and specifically applies these concepts to investing in index trackers, also known as passive investing. She suggests that some investors may resist it due to a lack of understanding, preference for active investing for a sense of control, trust in investment gurus, and fear of missing out.

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Not Simply Passive - Only dead fish go with the flow

In this article, Casparus Treurnicht, Portfolio Manager and Megan Fraser, Head of Business Development & Marketing at Gryphon Asset Management, examine the dangers of mixing emotion with investment decisions and the benefits of a passive, buy-and-hold approach to investing. They suggest that passive exposure to a broad market index, through index funds or tracker funds, is a simple and cost-effective way to capture the benefits of stock market returns over the long term.

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Fundamental versus Sentimental

In this article, Reuben Beelders, Chief Investment Officer and Portfolio Manager and Megan Fraser, Head of Business Development & Marketing at Gryphon Asset Management, discuss how the traditional definition of investment risk, which involves the possibility of losing money, has been distorted in recent years due to quantitative easing, as many investors now believe that central banks will always step in to prevent major market crashes. This has led to a culture of high-risk/high-return investing. The authors argue that this belief is dangerous and that investors should instead focus on a rules-based approach that prioritises risk management.

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Towards Greater Climate Ambition: The introduction of Carbon Border Adjustment Mechanisms

In this article, Thato Kola, ESG Analyst at Matrix Fund Managers, examines the importance of carbon pricing as a vehicle towards a low-carbon global economy. Current carbon pricing schemes such as emission trading systems and carbon taxes can assist with moving consumption and production from highly carbon-intensive activities towards sustainable alternatives. The European Unions’ Carbon Border Adjustment Mechanism is the first international border scheme to be implemented. Although its objective is for a greater cause, results show that exports from lesser developed markets to the EU will be adversely affected.

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Cash is king: The merit of including money market instruments in a diversified portfolio

In this article, Lourens Pretorius, head of Fixed Income at Matrix Fund Managers examines the functionality of including South African money market instruments, distinctly 12-month negotiable certificates of deposits (NCDs), to achieve stable real returns in a diversified portfolio. The author illustrates this by comparing returns of different investment options since 2000 and indicates that an NCD strategy yields a nominal return of 9.0% p.a., exceeding inflation by 3.4% pa, with dimmed volatility. Furthermore, the article also evaluates monetary policy expectations, accentuating the notion that premiums paid by South African banks for stable funding contributes to superior investment returns.

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The long and short of leverage and VAR Providing context to hedge fund risk limits

In this article, Jean-Pierre Matthews, Head of Product at Matrix Find Managers, discusses the risks associated with hedge funds and the regulatory framework for hedge fund investments in South Africa. Hedge funds focus on extracting relative value between assets through long and short positions, with leverage used to amplify relative value returns. The article provides a guide to contextualise hedge fund risks and discusses the regulatory framework for hedge funds in South Africa, including exposure limits and other restrictions.

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Is coal making a comeback

In this article, Bruce Mommsen, CIO, and Head of Equities at Matrix Fund Managers, discusses the impact of the coal crisis in Europe. This crisis commenced with the onset of the Russia-Ukraine war and Russia’s impeding gas supply to Europe. Subsequently, the demand and price of coal surged, and it rapidly became an alternative energy source. The article probes into factors leading to the crisis, the interdependence of Russian gas and the migration away from nuclear power. Although it is arguably risky to rely too much on a single energy source, this article indicates the importance of maintaining a diverse energy conglomerate.

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From abundance to scarcity - Implications of higher real rates and lower liquidity

In this article, Carmen Nel, Portfolio Manager at Matrix Find Managers, discusses the probability of a regime shift in inflation, monetary policy, and financial markets, particularly in the US. This shift may steer sustained positive real rates and yields, which could impact economic growth, spending, and investment. South Africa and emerging markets might be affected as they may need to "pay up" for foreign inflows, which would increase the cost of capital. Overall, the article suggests that fundamentals may play a greater role in determining returns in a less abundant world.

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How to think about SA Inc

In this article, Dirk Jooste, Fund Manager at PSG Asset Management, discusses the challenges facing South African investors and why many fund managers still choose to invest in local stocks. The article suggests that investors should approach SA Inc. investments cautiously, but highlights the resilience of some companies, the potential for returns due to limited competition, and the current cheap valuations as reasons to consider such investments.

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A fully integrated process is key to achieving optimal outcomes in multi-asset funds

In this article, John Gilchrist, Co-Chief Investment Officer at PSG Asset Management, highlights that South African asset managers often do not always integrate processes across all relevant asset classes, resulting in sub-optimal outcomes for clients. Many managers outsource offshore equity, property, and fixed income components, leading to conflicts of interest and poor allocation. Gilchrist suggests that equity within a South African multi-asset fund should consist of the most attractive global equities and SA-listed shares, where local asset managers have the necessary experience in analysing the companies.

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Volatile markets require a balanced approach to risk and return

In this article, Lyle Sankar, Head of Fixed Income at PSG Asset Management, discusses the performance of South African government bonds in 2022 and the factors that affected their yield. Despite the year being one of the worst for bond markets, bonds in South Africa returned 4.3% last year due to their high starting yield. The article argues that a balanced approach to risk and return, smart portfolio construction, and valuations are important in navigating volatile bond markets.

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Correlations and valuations why both matter

In this article, Anet Ahern, CEO of PSG Asset Management, reiterates the importance of valuations. She reminds us that in investments, the price always matters. Given the market gyrations of 2022, it takes faithful adherence to a tried-and-tested investment philosophy, detailed research and robust debate, to see the bigger picture emerging beyond the short-term noise and to question both common wisdom and long-held beliefs, placing the price paid above well-worn patterns.

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The SA bond market – a new era of higher risk and return

In this article, Jean-Pierre Matthews of Matrix Fund Managers explains that SA bond market has undergone significant changes including loss of global sovereign investment grade credit rating and decrease in foreign holdings. SA bond yields offer compelling expected real returns, but with higher expected volatility due to SA sovereign debt being no longer regarded as investment grade on an international scale.

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Outsized returns are wonderful, but don’t risk the investment objective

In this article, Jean-Pierre du Plessis, Head of Fixed Income at Methodical, discusses how investors could be looking at real returns of 3% in very low volatility assets going forward, and therefore should consider how much risk they need to take to achieve higher returns.

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Getting a jump on the Bogeyman

In this article, Hubert Weyers, Global REIT Analyst at Reitway Global, discusses inflation and potential future inflation carriers. He also talks about the effectiveness of investing in real estate as an inflation hedge.

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Seeking the truth behind commodities

In this article, Chantelle Baptiste, Senior Equity Analyst at Fairtree, believes there is opportunity and much alpha generation potential present in the resources market. However, when investing in resources, it is paramount to investigate them individually as they do not have the same drivers.

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The state of the US housing market

In this article, Cornelius Zeeman, Portfolio Manager at Fairtree, contextualises the current state of the US housing market, by looking at various economic indicators and statistics.

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Interesting opportunities in Asian property stocks

In this article, Rob Hart, Portfolio Manager at Fairtree, makes a compelling case for Asian property stocks during the economic slowdown. He points out that that the higher interest rates already present in Hong Kong, combined with attractive stock valuations, provide an attractive opportunity for Hong Kong property stocks in a six- to 12-month outlook.

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Should investors reconsider China

In this article, Jacobus Lacock, Macro Strategist and Portfolio Manager at Fairtree, unpacks the outcomes of the 20th National Congress of the Communist Party of China, focusing on two key elements: political leadership changes and the policy framework set out by the Government Work Report.

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It's Complicated

In this article, Reuben Beelders, CIO & Portfolio Manager, and Megan Fraser, Head of Business Development & Marketing, at Gryphon Asset Management, speak about the importance of understanding the risk one takes on. They also reflect on three critical factors that investors should bear in mind: (1) Know thyself, (2) Manage expectations, and (3) Diversification.

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Know Where to Hide

In this article, Reuben Beelders, CIO & Portfolio Manager, Abri du Plessis, Executive Director & Portfolio Manager, and Megan Fraser, Head of Business Development & Marketing, at Gryphon Asset Management, reflect on the state of equity markets and whether it is a good opportunity to buy into at current levels.

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Talking tracking

In this article, Casparus Treurnicht, Portfolio Manager, and Megan Fraser, Head of Business Development & Marketing at Gryphon Asset Management, delve into the reasons why indexation is a more favourable approach to long-term equity investing.

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Making rules, breaking convention

In this article, Megan Fraser, Head of Business Development & Marketing at Gryphon Asset Management, demystifies the concept of rules-based investing.

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Growing capital as market distortions unwind will require a differentiated approach

In this article, Philipp Wörz at PSG Asset Management, highlights the importance for investors in global equity unit trusts, to choose managers that have truly differentiated strategies. In his view, global markets have become characterised by severe distortions over the past decade. Whilst these distortions continue to unwind, differentiated strategies will help investors navigate the environment now and into the future.

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Navigating a fast-changing fixed income market

In this article, Lyle Sankar and Ané Craig at PSG Asset Management, highlight the importance of a client’s journey in an income fund, evaluating the significant risks in overweighting the most recent market volatility to inform asset allocation or fund selection for the years ahead. In their view, there are smart ways to structure portfolios to ensure clients can enjoy the journey while tipping the odds in their favour to earn attractive inflation-beating returns.

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Attractive opportunities in the current market environment

In this article, Kevin Cousins, Head of Research at PSG Asset Management, highlights the attractive opportunities presented in a challenging economy and what this means for the South African investor. In his view, navigating the storm requires us to look through the noise and focus our analytical efforts on more enduring factors such as supply-side constraints and household balance sheets.

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Strategies for surviving in a polycrisis world

In this week’s publication, Anet Ahern, Chief Executive Officer at PSG Asset Management, proposes some strategies that can help investors survive multiple crises that often interact with each other and increase the complexity and volatility of markets. She also highlights the dangers that come with emotional investor responses.

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You dont eat alpha you eat total returns

In this article, Werner Prinsloo, CIO and founder of X-Chequer Fund Management, delves into the complexities of determining fees and investors’ tolerance for fees in investments. How could we compare fees between different products, funds, and asset classes in a more standardised manner? He also sheds light on how to determine whether investors are paying the right price (or even better, the wrong price)?

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Bear bottom

In this article, Nhlakanipho Mncwabe CA (SA), investment analyst at 36ONE Asset Management, tackles the famous question, “Are we in a bear market?”, by examining historical performance of equity indices during past bear markets versus what we are currently seeing.

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Renting the American Dream

In this article, Martin Botha, Chief Investment Officer at Reitway Global, highlights the key drivers that have transformed the US housing market over the last two and a half years.

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The compass that will guide central banks forward

In this article, Melanie Stockigt, head of Fixed Interest at Laurium Capital, reflects on how we got to where we are in terms of high inflation and the difficulty created by “unprecedented” events in forecasting inflation. She further examines market data that influences the Federal Reserve Bank’s moves.

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The property slump that will "end" China?

In this article, Tian Pan, Head of Product at Prescient China explores the investment thesis of the Chinese property market relative to other markets such as Japan's property market. He further provides insights into the Chinese government's plans to revive the sector.

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South African listed property in an inflationary and rising interest rate environment

In this article, Liliane Barnard, CEO & Portfolio Manager and Aimee Glisson, Head of Operations and Performance at Metope Investment Managers, discuss the SA listed property market in an inflationary and rising interest rate environment and whether this is an opportune time to invest in property as a long-term investment.

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Chinese Property - A slow moving trainwreck

In this article, Gary Quinn, Portfolio Manager at BlueAlpha Investment Management, looks at China’s growth while making reference to the Chinese property market.

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The importance of Variant Perception and Investment Edge

In this article, André Steyn CA(SA), CFA, Chief Executive Officer and Chief Investment Officer at Steyn Capital Management, delves into the importance of variant perception and having an investment edge, while making reference to their investment into the casino operators, Tsogo Sun Gaming and Sun International during the hard COVID lockdown.

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Economic forecasts are not likely to dictate market returns

In this article, Vicky Kan & Christopher Brownlee, Research Analysts at High Street Asset Management, evaluates the current macro environment and its impact on global capital markets.

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The outlook for oil prices - is there still opportunity in the sector for investors

In this article, Leandro Gastaldi, Portfolio Manager at Blue Quadrant Capital Management, evaluates the outlook for oil prices and by association, the equity valuations attached to companies producing this key commodity, if oil prices are likely to be sustainable above USD100 per barrel for the foreseeable future and whether there are still opportunities for investors to profit from the sector, despite the large gains the sector has delivered over the past 18 months.

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Redefining and Refining Portfolio Risk

In this article, Dumisani Ngwenza, Junior Portfolio Manager and Quantitative Analyst at Terebinth Capital, highlights the issues concerning risk measurement and assessment in a hedge fund, focusing on the fixed income asset class. A follow-up article will dissect Information Circular No. 25, particularly addressing misconceptions regarding hedge funds and highlighting the benefits of hedge funds as an investment opportunity.

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ESG in Emerging Markets: Social risks and challenges

In this article, Oyena Mtuzula, Credit and ESG Analyst at Terebinth Capital, explores social factors that are important in investing and the associated risks for emerging markets.

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Value vs Growth: What really matters?

In this article, Ann Sebastian, Head of Equities and Senior Portfolio Manager at Terebinth Capital, provides investors with an understanding of the mechanism by which style factors earn their returns by borrowing and applying a tool from the world of fundamental investing, a return decomposition, to classify the source of Value and Growth style returns.

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The Art and Science of Solving the Investment Management Problem

In this article, Nomathibana Matshoba, MD/Snr Portfolio Manager at Terebinth Capital, delves into the art and science of the investment management process, highlighting knowledge sharing as “the art” side of investment management that is defined as a problem to be solved. To ensure that businesses can continue to repeat their overall investment process, there is a need to be systematic in the skills transfer for the “art” element of investment management to ensure a repeatable, sustainable, and consistent client experience.

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Seeking opportunities in the SA equity market

In this Week’s article, Jonathan du Toit, portfolio manager of the Amplify SCI* Managed Equity Retail Hedge Fund, shares some insights on how local managers can gain competitive edge by having an in-depth understanding of the local landscape and how local differs from offshore equity markets.

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No such thing as a free lunch

In this week’s article, Emma Pretorius, business development manager at Amplify Investment Partners, shares some insights about hedge funds and the benefits they may provide within a portfolio, while also cautioning investors against making the mistake of dressing all hedge fund with the same risk-return profile.

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Intelligent decisions which impact investment returns

In this week’s publication, Brian Thomas and Omri Thomas, portfolio managers of the Amplify SCI* Balanced and Amplify SCI* Flexible Equity Funds, respectively, examine the challenge facing South African managers regarding increased offshore allowances. What impact could this have on our economy, once valuation changes in favour of offshore markets?

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FoF-06052022-GLC - Experience in delivering a best investment view as all times

In this article, Erik Nel, CIO and co-portfolio manager at Terebinth Capital, shares insights on how a strategic income fund should be managed to achieve long-term outperformance with the combination of active management and best view.

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Heads up on Regulation 28 changes

In this article, Kyle Wales, Global Portfolio Manager at Flagship Asset Management, expands on the changes in Regulation 28 that allows the offshore limit for pension funds would be raised from an effective 40% (30% Rest of World + 10% Africa) to 45%.

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Are REITs the best place to hide in a 1970s inflation scenario?

In this article, Kyle Wales, Global Portfolio Manager at Flagship Asset Management, draws upon the historical precedent of the 1970s to show how the experience during that decade might suggest that the risk of an outlier scenario of persistent high inflation may be greater than what many think.

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Why is inflation bad for the economy

In this article, Kyle Wales, Global Portfolio Manager at Flagship Asset Management, provides insight to the question, “what level of inflation is bad for the economy and asset prices?”

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Bottom fishing in emerging markets doesn’t always work

In this article, Pieter Hundersmarck, Portfolio Manager at Flagship Asset Management, shares some insightful views on why buying shares on the way down, specifically in emerging markets, don’t always work out. He makes reference to specific stocks as well as touching on Russia and China.

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How sustainable are fast fashion businesses?

In this week’s issue, Charles Somers, portfolio manager and global sector specialist at Schroders, explores the sustainability of some major fashion companies using their inhouse analysis. How do they assess sustainability of businesses in this sector? He shares their metrics and findings.

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Dr Seuss and three types of stocks that could benefit from inflation

In this article, Andrew Lyddon, fund manager at Schroders comforts value investors for being contrarian using the famous quote from Dr Suess “You have to be the odd to be number one”, as value stocks struggle in recent years relative to growth stocks. He also entertains the famous question of inflation despite their inflation-agnostic stance at Schroders.

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What might the future hold for equity markets in 2022 and beyond?

In this article, Katherine Davison, Portfolio Manger at Schroders, expresses some of the issues faced by the equity markets and expectations in the coming months and beyond.

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What's behind values recent renaissance

In this article, value investor Nick Kirrage, Co-head of the Global Value Team at Schroders, explains why investors should be wary of easy narratives to explain market moves.

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The outlook for oil – and Sasol

“Since the oil price crash in April 2020, the recovery of the commodity has been nothing short of remarkable. While we expected oil prices to trend towards more sustainable levels – due to both demand recovery as COVID-19 restrictions eased and a lower level of investment by oil firms in general – the speed and magnitude of the recovery has certainly been surprising. What does this mean for the outlook for oil over the next few years, and how does it impact our investment case for Sasol?.” In this article, Christiaan Bothma, Investment Analyst, Sanlam Private Wealth, delves into the outlook for oil and Sasol.

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When to include gold in your portfolio

“Whether to own gold in an investment portfolio is always a hotly debated subject among investment professionals and laypersons alike. Gold tends to do well in an environment in which other risky assets struggle, but paying too much for the ‘insurance’ it offers in a diversified portfolio will produce a drag on overall performance. We set out our objective assessment of the investment merits of the precious yellow metal.” In this article, Renier de Bruyn, Senior Investment Analyst, Sanlam Private Wealth, talks about when to include gold in one’s portfolio.

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How we value shares: a useful framework

In this article, David Lerche, Head of Equities at Sanlam Private Wealth, talks about their approach to determining fair value of a company as well as the effectiveness of incorporating Porter’s Five Forces in an analysis.

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Investments: is it time to recalibrate return expectations

"If you’d invested in growth assets, equity and property in 2021, you’d have been richly rewarded with surprisingly good returns. The investment landscape has changed fundamentally since late last year, however, and as we’ve seen over the past few weeks, asset class prices have started to reflect these changes. What can investors expect for the remainder of 2022? Do we need to materially reduce our return expectations? Importantly, how do we structure client portfolios in an environment of increased risk and uncertainty?" In this article Alwyn van der Merwe, Director of Investments at Sanlam Private Wealth delves into the above questions.

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Inflation: The great debate

In this article, Madalet Sessions, Portfolio Manager at Denker Capital, explains that the future of inflation is uncertain. Experts on the subject are divided. To help investors and advisers understand and mitigate the risks that portfolios face if inflation is higher and more persistent than what markets currently believe; she explains what history has taught us, and how any surprises may affect asset prices. Historic evidence supports a wider range of outcomes than is currently being priced into markets, which is why it is prudent to have specific strategies in place to hedge against this risk

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ESG: Forks in the road

In this article, Paul LaCoursiere, Global Head of ESG Investments at Janus Henderson Investors, explores four themes for 2022 that he considers pivotal to the direction of travel for ESG investing

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The South African office conundrum

In this article, Imdaad Nana, senior analyst and portfolio manager at Catalyst Fund Managers, highlights challenges faced by the South African office market, before and during COVID-19. He further provides insights on the sub-sector going forward.

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Things you do not see at the bottom

In this article, Bradley Preston, CIO at Mergence Investment Managers, asks what most investors have been asking themselves: When will the rally subside? What will it take for the bubbles to burst? Have we reached the top of the market?

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Rethinking the approach to investing in fixed income

In this article, Mohamed Ismail, Head of Fixed Income at Mergence Investment Managers discusses why fixed income process should approach portfolio construction from a systematic perspective. To get his point across, he highlights how disruptions have constantly reshaped the investment landscape for investors; recently in the fixed income space systematic approaches are getting attention as a thematic shift in investment process is emerging.

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Data science and machine learning application in investments

In this article, co-authors Vincent Anthonyrajah and Miguel Lacerda from Differential Capital discuss the use of data sciences and machine learning in investments. They start off the discussion with a brief example relating back to 1965, how data subscription provided an investor with a material advantage relative to those who were trying to compile the data themselves.

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Ready for take-off

In this article, Ryann Dean, Global Equity Analyst at Aylett & Co. Fund Managers, reflects on COVID-19’s impact on economies, stock markets and lifestyle shifts while making reference to the travel industry.

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Quants – a difficult pill to swallow

“Quantitative analysis can be used to do a more in-depth analysis of a fund and allows managers to understand what styles the portfolio is exposed to and whether this is in line with the views of the portfolio manager.” In this article, Shaun Van den Berg, Research Analyst at Aeon Investment Management, talks about the benefits of quantitative analysis.

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Acknowledging passive, embracing active

“We believe that truly active funds offer blending benefits to client portfolios and have a role to play in the diversification of risk, and the generation of superior returns.” In this article, Andrew Vintcent, Portfolio Manager at ClucasGray, talks about the exponential growth of the passive investment industry and the benefits of active management.

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SA REITs: Repositioning for the future

Listed property remains below pre-COVID levels and over 50% (in price terms) off the previous peak reached in 2017. In this article, Kelly Ward, Portfolio Manager & Head of Research at Metope Investment Managers, delves into the outlook on the local listed property sector over the long term.

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A good time to consider emerging markets?

In this article, Cornelius Zeeman and Edna Sibanda of Fairtree Asset Management, make a compelling case for investing into emerging markets and the opportunities therein.

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When should you give up on a share

In this article, Pieter Hundersmarck, Global Portfolio Manager at Flagship Asset Management, highlights the importance of a having an investment process as a guide when to buy and sell shares.

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Six typical profit-making strategies for the fundamental investor

In this piece, the author takes us through investment cases that fundamental investors use, with examples.

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A case for indexation in MA portfolio

In this piece, the author discusses the benefits of diversification in a multi-asset (MA) framework achieved through low-cost index products.

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Life after cash

For most South Africans, the success of their financial plan depends on striking a delicate balance between risk and return. In many cases, the precipitous decline in cash yields has disrupted that equilibrium. Gone are the days of comfortable inflation-beating returns for very little risk. Investors now face two choices:

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Active considerations in passive investing

In this article, the author takes us through the construction of the four main SA equity benchmarks and focuses on what drivers their various returns. In the main, index benchmarks are used by the end investor or their financial adviser to keep portfolio managers honest. If actively managed fund returns trail their chosen yardstick for a reasonable length of time, investors have the right to know why.

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Sustainable investing, the asset manager and the client, The South African experience

In this article, the authors take us through navigating this new world of change where we try to create positive outcomes and mitigate or eliminate negative ones. Stating that an asset management lens needs to be more proactive and practical as we mobilise capital toward a greater purpose. In addition, a more proactive approach in the asset management process is required – the implementation of robust responsible, sustainable, and impact investing practices

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Takeout targets - Mind the value trap

Nhlakanipho Mncwabe, Investment Analyst at 36ONE highlights different takeout considerations that may be incorporating into an investment process to identify undervalued stocks and avoid value traps.

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Global property as a portfolio constituent

In this article, Garreth Elston, Chief Investment Officer at Reitway Global demonstrates risk and return benefits of global property as a portfolio constituent. demonstrates risk and return benefits of global property as a portfolio constituent.

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Investment focus: The demise of EV/EBITDA – How accounting standards are messing with valuation metrics

Gary Quinn demonstrates the impact of accounting standards to valuation metrics, using the new lease accounting standard to EV/EBITDA. He ends off with a though provoking question for equity investors.

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Reading the cyclical and structural tea leaves for SA’s fixed income markets

In this article, Melanie Stockigt, head of Fixed Interest at Laurium Capital, critically assess which primary forces that influence the South African fixed income markets are cyclical alterations and which are structural.

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Could reflation lead to a full ‘taper tantrum’ – implications for markets

In this article, Sanveer Hariparsad, Head of Fixed Income at Sentio Capital Management, provides us with his view on reflation and its market implications.

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A scenario-based approach to preparing for all outcomes in an uncertain world

In this article, Madalet Sessions, Portfolio manager at Denker Capital, focuses on a scenario-based approach, which has a long illustrious and proven career in corporate boardrooms all over the world. It enables executives to think about uncertainty and plan for outcomes they cannot control. The manager believes that this approach to risk management belongs at the core of clients’ investment portfolios, to add some form of stability in an uncertain world.

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The economic context for cyclical expansion

In this article, Ryan de Kock, Senior Equity Analyst at Stonehage Fleming Equity Management, talks about business cycles using examples of how cyclical businesses perform during economic expansion and contraction periods. He further emphasises that a more sustainable approach to long-term investing focuses on businesses that possess an ability to compound shareholder value through the cycle.

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Has income disappeared?

In this article, Bronwyn Blood, Investment Analyst and Portfolio Manager at Granate Asset Management, focuses on the difficulty to finding yield in a post COVID world. Particularly, the conditions in fixed income markets which are very different to what they were before the COVID pandemic.

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Is your fund manager taking enough risk?

In this article, Rory Spangenberg, CIO and Director Global Equities at Northstar Asset Management poses the question, “Is your fund manager taking enough risk?” whilst making reference to global flexible funds.

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Drawdown risk rising

In this article, Marthinus van der Nest, Head of Amplify Investment Partners, talks about why drawdown risk, across asset classes, might be on the rise. He then discusses how such a paradigm impacts the retail investor, and what they can do about it.

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Inside an absolute return strategy

In this article, Iain Power, Chief Investment Officer at Truffle Asset Management, takes you inside the workings of an absolute return strategy.

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There is still value in value shares

In this article, Brian Thomas, Co-Portfolio Manager at Laurium Capital, talks about the growth versus value as investment styles and whether there is still upside in value investing.

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Bond funds: who should use them?

In this article, Richard Bray, Head of Strategy at Amplify Investment Partners, talks about the complexity involved in choosing between an income and bond fund from an asset allocator’s point of view.

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Investment opportunities in China best not be ignored

In this article, Pieter Hundersmarck, Fund Manager at Flagship Asset Management, talks about the growing Chinese economy and the boundless equity market opportunities therein.

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S&P valuation - a year on from COVID-19

The author takes us through different measures of valuing the S&P 500 a year from COVID-19 and provides insight on each measures’ predictive power for the index.

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Closure of the Absa Fund – where to next?

In this article, Saleh Jamodien, Junior Research & Investment Analyst at Glacier by Sanlam, talks about money market funds and the benefits of investing in them.

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Beautiful, but boring

In this article, the authors focus on the effectiveness of indexation. Particularly, with all the upheaval and change that the Corona-coaster has brought. Index trackers continue to deliver transparent returns, tracking market performance, and, as it turns out, outperforming many of their active peers.

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How factor-based awareness can improve returns in Shari’ah portfolios

In this article, the author explains how the use of factor-based investing in Shari’ah portfolios could allow a manager to build robust diversified portfolios and deliver better risk-adjusted returns over time.

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How ESG is transforming investing outcomes

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Mind the gap, steep yield curve ahead

In this article the author, attempts to answer the question, "Do long bonds present a buying opportunity?". Given that local inflation is stabilising and sitting at the lower end of the SARB's target band, coupled with the treasury's struggles to maintain fiscal discipline, we've arrived at a point where the yield curve is at the steepest level in recent history.

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Investing in a future that matters

In this article, we explore how the average person on the street can be an “Investor Activist” when it comes to how and where they invest their savings.

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Value and growth – two sides of the same coin

In this article, the author talks about value and growth as investment styles and how they are interlinked.

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The Big Short...Squeeze

In this article, Saleh Jamodien, Junior Research & Investment Analyst at Glacier by Sanlam, demystifies the Reddit vs Wallstreet saga with reference to GameStop.

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USD High Yield in Covid

Corporate bonds are a good reflection of economic stress because people demand a higher yield in these times of heightened risk. In this article, the author delves into the effect of the pandemic on asset classes.

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What moved the markets – a round-up of 2020

In this article, Patrick Mathabeni, Research & Investment Analyst at Glacier by Sanlam, gives a recap of the events that drove the market in 2020 with a particular focus on the local and global macro environment.

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Hedge funds – an alternative strategy in building resilient portfolios

In this article, the author delves into the benefits of using a long/short equity hedge strategy.

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Behaviour Change Creates Opportunity

The gaming and digital payments industries have both benefited from the inexorable digitisation of the economy, and COVID-19 has accelerated the already rapid consumer adoption of these technologies. In this article, the author delves into the importance of adopting new technologies and how digitisation is creating opportunities for businesses.

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Inward listed ETFs

In this opinion piece, the author, Kingsley Williams, discusses the National Treasury’s decision to reclassify all inward-listed debt and derivative instruments as well as exchange-traded funds (ETFs) referencing foreign assets as domestic and what it could mean for investors and their retirement savings.

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A comparative study of passively and actively managed investment approaches in South Africa

Investors should utilise every available investment approach that could positively contribute towards meeting their desired investment goals. In this article, the author conducts a comparative study of passively and actively managed investment approaches in South Africa.

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FoF-27032020-GLC-Are you investing enough offshore

Are you investing enough offshore? The answer to this question has many experts divided. In this article, the author delves into the process of identifying the level of global exposure that is appropriate for you in order to have a well-diversified portfolio.

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FoF-06112020-Why invest in South Africa and why invest now

In this article, the authors delve into why South Africa is cyclically well-positioned for a global recovery with a cheap currency, attractively priced bonds, undervalued equity market and the possibility for continued USD weakness.

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FoF-30102020-Valuing property in a COVID-19 world

In this article, the author provides insight on property valuations within the COVID-19 world and how primary drivers of property valuations have changed. They further provide insight into how the valuer assumptions have been affected by the COVID-19 pandemic.

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FoF-23102020-COVID as a disruptor and enabler of global listed real estate

In this article, the author discusses the disruption and opportunities created by the pandemic within the global listed real estate sector. He also provides insight into how the crisis has reinforced and accelerated pre-existing structural trends in the sector.

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What if there are fewer COVID-19 deaths than predicted

In this article, the author looks at the impact of mortality rate predictions during a pandemic, particularly on insurance companies. He further examines how these predictions may benefit insurance companies if there are fewer deaths than predicted.

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South Africans need safety nets

In this article, the author explores the general lack of ‘safety nets’ and/or ‘shock absorbers’ at both an individual and national level, which has long been an issue in SA.

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Prescribed Assets – No Need To Panic

In this article, the author explores the prospect of a change to Regulation 28 to make prescribed assets a reality, which has left trustees and management committees as well as members of retirement funds with a sense of discomfort and uncertainty about what the future holds.

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Covering every angle

In this article the author, considers an investment approach covering all angles for investing in the JSE, given the fact that many SA investors are busy or thinking about investing offshore.

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Investor strategies need to evolve as the fixed income market does

In this article, the author illustrates that since the start of the COVID-19 pandemic, there have been substantial changes in the fixed income investment landscape, both in terms of the yield on offer in securities available for income funds, as well as the risks that need to be taken to earn these income yields. Specifically, yields closely linked to the repo rate have fallen by close to 3%, whereas sovereign bond yields remain elevated and above pre-crisis levels. As a result, he believes that investors need to be critical of the exposure they take in the fixed income space when seeking appropriate income returns (above cash and inflation).

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Achieving balance is not as easy as 60-40

It has been said that a traditional 60/40 portfolio is the ideal multi-asset allocation to achieve optimal returns. While such an allocation has provided investors with relatively decent returns over the last two decades, alpha sources have become wider and uncorrelated assets paramount. In this article, the author briefly examines some of the dynamics of a traditional 60/40 allocation while also making the case for alternative investments such as commodities and hedge funds.

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Have South Africans missed the US recovery

Global equity markets have seen one of the fastest post-shock recoveries in history with US tech stocks becoming market darlings. As a result, South African investors have been making notable moves in increasing their offshore exposure. In this article, the author demonstrates how and why the South African equity market (indexed by the JSE All Share) performed similarly to the much-coveted S&P 500 after the March lows.

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The market is not absurdly valued

The COVID-19 pandemic led to one of the sharpest sell-offs in decades, however, US tech stocks did not only weather the storm quite comfortably but have been notable drivers of US equity markets. In this article, the author takes a look at some dynamics of US tech stocks and why this pocket of the market is priced at such lofty levels.

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The decline of global banks

Banks have been some of the worst-affected businesses this year, given moves by Central Banks to cut interest rates in the hope of supporting economies hard-hit by COVID-19 lockdowns. In this article, the author looks at the headwinds that banks have faced during this period.

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Is more modified duration risk the answer to attaining a higher fund yield in a low interest rate environment

In this article, the author looks at the current low interest rate environment whilst dissecting possible avenues of attaining higher yields in funds.

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How to mitigate downside risk and benefit from upside performance - making smart investment choices

A deep dive into the three-year performance numbers of four popular ASISA categories shows how wide the range of returns available to investors can be. To limit the risk of significant capital losses and benefit from the return, potential investors must consider the range of outcomes available and the factors that determine them: asset allocation; the fund manager’s investment philosophy and process; the manager’s approach to risk management; and the investment time horizon.

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The changing nature of balance sheets

In this article, the author looks at how balance sheet reporting has changed and how this has affected the price-to-book (P/B) valuation by comparing four companies (Sasol, Datatec, Pick ‘n Pay and Microsoft).

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Beyond COVID-19

Even though questions arise about the duration of the pandemic-induced lockdown and the most likely glide path towards resumption of economic activity to normality, human and economic costs continue to accumulate to unimaginable levels. Concerns remain on whether the relief measures and programmes announced by authorities and civil society are sufficient to carry us through to some normality beyond COVID-19 given the unfolding and projected scourge.

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Why business confidence may be the only economic indicator that matters

The government needs to show that it can implement the right policies in order to revive business confidence and improve the outlook for local asset prices. In this article, the author talks about the importance of improving business confidence while looking at the poor performance of the local stock and property market over the recent years.

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Three global investing challenges facing SA managers

The author briefly mentions the benefits of global investing thereafter highlights three key challenges faced by South African managers when investing globally and concludes each challenge by describing how at Sentio they overcome these challenges.

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Listed property are the foundations solid enough to endure the COVID storm

The listed property sector has been the hardest hit in the market sell-off brought about by the COVID-19 pandemic. This article examines the short-term steps taken by the sector to see through the storm, as well as some of the current fundamentals and post-COVID outlook for the sector.

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How safe are your deposits at a bank

In the article the author, discuss how secure the SA banking system is and highlight the current positioning of SA banks in light of the COVID-19 pandemic. He also covers the pillars of a bank’s financial credit strength guide, which depositors can use to assess the safety of their deposits in a bank.

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The steepest curve in the world

Yield curves primarily steepen for one of two reasons. Either economic growth prospects look so good that investors switch from long duration bonds (pushing their yields up) into other assets that perform better in periods of growth. Or the short end falls as policymakers lower the base interest rate in the face of growth concerns. In this article, the author unpacks on the reasons for the steepness of South Africa’s yield curve and makes reference of the SA government’s alarming budget deficit.

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There’s more to the global stock indices than meets the eye

In the article the author, unpacks how significantly the S&P 500 benchmark has changed over the last few decades, as well as how it differs from the MSCI Emerging Market index. Through the article he also makes a case for the value in allocating to an investment manager that has the freedom to discriminate between stocks, sectors and countries, instead of just buying the S&P 500 index.

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The impact of earnings recessions – where to now

In the article the author, explores the impact of earnings “recessions” as a way of understanding market downside risk, historic time to recovery and the rating from which the market was able to recover.

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It’s time to get serious about diversifying your assets

In this article the author, makes a case for investing offshore, given the weak returns experienced, as well as the continuing weakening of the rand relative to other currencies for SA investors. While acknowledging that these are factors as a result of corruption, de-industrialisation, the inability to attract capital, emigration and balance of payments and fiscal challenges. In addition, he illustrates that the performance of SA equities vs MSCI ALL World Country Index fails in comparison and that it underperforms inflation.

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GEM - Doom gloom then bloom

Global developed equity markets have gained more traction during this Coronavirus pandemic as developed market central banks stepped in with unprecedented stimuli. In the article, Feroz Basa makes a case for global emerging markets - highlighting some of the key economic and valuation considerations for investors.

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Credit - more risk than is obvious to the naked eye

In 2009, I became the lead manager on a fixed income mandate and have continued to pursue my passion of managing client capital in what I have always perceived as the less-than-captivating area of investments – fixed income. These days, my window to the market is the income fund which I’m responsible for.

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Hedge Funds - an old enemy or new ally

Within the investments industry, it is a tale as old as time: hedge funds are dangerous. Nervousness around the asset class stems all the way from iconic hedge fund blow-ups in the distant past to misconceptions on the relative riskiness and concerns around regulatory oversight.

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The importance of growing wealth

Countries, much like listed companies, aim to grow through time. However, instead of assessing their margin expansion or sales growth, a country’s growth is often measured in gross domestic product (GDP). GDP represents the total value of all goods and services produced in a country over a one-year period. China has been one of the fastest-growing countries in the world, with their latest annual GDP print at 6.1% for 2019. What we don’t know, given that GDP is effectively a revenue number, is whether it has translated into creating wealth.

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Responsible investing during the COVID-19 crisis: seeking opportunity through an ESG lens

At the time of writing, the COVID-19 crisis is wreaking havoc across global markets, interrupting global supply chains, drying up demand and of course taking a massive personal toll on affected families. Given the scale of the devastation, some investors might ask, why worry about responsible investing or environmental, social and governance (ESG) issues at this stage? Surely it makes sense to just focus on the “important” investment numbers and rather leave the soft ESG stuff until after the crisis?

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Fixed income: investing in the new age

Investing in fixed income markets has been extremely challenging ever since the GFC which has unveiled profound structural changes to the fixed income investment landscape. In this article, the authors delve into these structural changes to the macro-economic landscape in the areas of valuation of fixed income markets, credit, volatility management and liquidity management and how it has permanently altered the environment for fixed income investing.

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Is SA corporate credit too expensive?

There is currently a debate over whether SA floating-rate corporate credit (in the form of floating-rate notes or FRNs) has become too expensive, particularly for higher-quality issuers. This would mean that the yield these assets now offer is insufficient for the risk involved. In this article, the author sheds light on the topic

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Who has borrowed my money?

The evolution of credit analysis through the years is linked to the increasing complexity of the underlying debt instruments and the more stringent banking regulation introduced after the global financial crisis. In this article, the author delves into the issuance of Bank Additional Tier 1 (AT1) instruments while looking at the merits and risks of being included in the asset allocation of multi-asset funds.

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Blackstone – Capitalising on a changing industry landscape

A rapidly changing industry landscape has led to growing demand for passive and alternative investment products, at the expense of traditional actively-managed funds and resulting in a fund-raising “super cycle” for large, diversified firms such as Blackstone.

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The Samaritan in your exhaust

Sometimes we know nothing about everyday things. Particularly when they are hidden from view. But when their mechanics are decoded for us, it imparts a new appreciation for them and arms you with information that’ll make you more interesting in conversation.

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Can we (really) time the market? (Part 3 of 3)

The first two parts of this article outlined the additional risks investors face as they approach retirement. In this finale of the three-part article, Darren Burns, Head: Investment Solutions at Glacier by Sanlam, gives insight into longevity risk, life cycle risk, sequence risk, hedge funds and smooth bonus funds.

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Can we (really) time the market? (Part 2 of 3)

Part 1 of this article outlined how significant timing can be to the overall value of your nest egg. It also illustrated how important market performance is the closer you are to retirement. But do these risks still exist after you’ve retired?

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Can we (really) time the market? (Part 1 of 3)

“Can we (really) time the market?” In this three-part series of articles, Darren Burns, Head: Investment Solutions at Glacier by Sanlam, gives insight into the notion of ‘timing the market’ and the impacts thereof.

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A turbulent year with handsome gains - a recap of 2019

“2019 was a turbulent yet rewarding year for equity and local bond investors alike.” In this article, Patrick Mathabeni, Research & Investment Analyst at Glacier by Sanlam, gives a recap of the events that drove the market in 2019 with a particular focus on the local and global macro environment.

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Central banks are equal, but some are more equal than others

In this article, the author explores the role of the central banks- what they do and why they do what they do. The article also touches briefly on what determines the influence of these Banks.

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Tortoises and Hares are investors too

“Rule No. 1, Never lose money. Rule No. 2, Never forget rule No. 1.” – Warren Buffet. In this article, the author delves into the concept of authentic asset allocation with the notion that portfolio managers should actively protect investors from the risk (equities) and move into a holding pattern (cash) until such time as value returns to the market.

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