Glacier Quarterly 4 - 2018

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INVESTMENTS words, a diversified portfolio. Questions to ask before making short-term tactical changes ‘The little incidents and accidents of every day fill us with emotion, anxiety, annoyance, passion, as long as they are close to us… they were big only because they were near’, wrote Arthur Schopenhauer in Studies In Pessimism. His point is that when we’re unable to take a step back to gain perspective, our short-term experiences are challenging because we experience them intimately. However, when we do take that step back and gain perspective, we might look at risk differently. We might see that things move in cycles, the rand depreciates but also appreciates, shares become expensive, but also become cheap, and bond yields blow out and then come back down again. We might even see opportunity. A wise man might lead a powerful nation, followed by a clown – and then vice versa. So, ask yourself whether you’re 100% sure of your convictions. Are you 100% sure South Africa is going to become a failed state? Are you 100% sure about when the next market correction might happen? Are you 6
100% sure that cash is your best alternative? If you’re honest with yourself and you’re not sure, then you should be careful of short-term tactical decisions. To build portfolios that are futureproof, investors need to have a longterm investment plan with a welldiversified investment portfolio and stick to this plan. Enlisting the help of a qualified financial adviser provides an objective voice of reason, which can provide invaluable guidance during times of increased market volatility. What about new investments? What about new investments, especially for those investors who are transitioning from pre-retirement to post-retirement? This is a particularly vulnerable period, where the sequence of returns can have a powerful impact on the sustainability of their retirement savings pot. Here they can use a variety of strategies: 1. Use the Sanlam Monthly Bonus Fund as part of their investment strategy (Sequencing-of-returns risk) 2. Phasing-in – I know about all the literature out there that points to the negative aspects of this strategy, but this research very rarely specifically addresses sequence-of-return risk and the accompanying behavioural benefits. It’s much better assisting a client to get their strategic asset allocation right than a client who avoids risk by staying invested in cash. 3. Multi-asset income funds also provide a good alternative to pure cash, especially in terms of more diversified risk exposures, while offering good yields. Should the client be totally unwilling to take on equity risk, these funds can be utilised, and risk can be slowly introduced as the client becomes more comfortable with additional risk exposure in future. Conclusion From a balance of probabilities perspective, considering the long, extended bull market we’ve experienced, it makes sense to be cognisant of risk inherent in the markets. The difficult part, though, is getting the exact time of both the drawdown and recovery correct. The focus should therefore be on the long term, together with a welldiversified portfolio and prudent financial advice from a qualified financial adviser, which can go a long way in mitigating these risks. If the investor is, however, transitioning into the post-retirement phase of their life, a long-term investment plan together with some smart risk management techniques and uniquely positioned products might be the best way to go. Francis Marais, Head of Research at <strong>Glacier</strong> by Sanlam 7
Page 1: GLACIER QUARTERLY NOVEMBER 2018 QUA
Page 4 and 5: INVESTMENTS Finding balance in a wo
Page 6 and 7: INVESTMENTS We as South Africans so
Page 10 and 11: INVESTMENTS EQUITIES: is it time to
Page 12 and 13: INVESTMENTS There’s a saying in f
Page 14 and 15: 12
Page 16 and 17: INVESTMENT INSIGHTS URGENT NEED for
Page 18 and 19: INVESTMENT INSIGHTS • An inverse
Page 20 and 21: SA 2019 STICK AROUND: SA turnaround
Page 22 and 23: SA 2019 campaigning, we’re probab
Page 24 and 25: SCENARIO PLANNING Breaking the late
Page 26 and 27: SCENARIO PLANNING Quality of Infras
Page 28 and 29: TRENDS SOUTH AFRICA 2019: investing
Page 30 and 31: economic growth stagnates - perhaps
Page 32: The information in this document is

Glacier Quarterly 4 - 2018

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