THE YEAR IN REVIEW - THE YEAR AHEAD
13 January 2008
And so the 2008 year begins, and it is not a pretty sight at present. As many of you will have picked up already, the past 6 months has been pretty dismal across the board, with all funds not really showing any significant gains. We have seen the broader JSR-Overall Index give us a grand -1.05%, with Financials offering -12.8%!! It also does not look like the debt crisis is over, and with the US potentially heading into recession, we could well see a 12 month return by June 2008 of anything from 0% - 10% (if we are lucky)!
A couple of significant changes happened during 2007, with the first being the Sub-Prime debt crisis hitting world markets, and obviously filtering through to the SA markets as well. We are quite pleased to see that the Brantam funds under management held up quite nicely on the back of this, but still not a very pretty sight.
The 2nd important area to take note of is the changes to M-Cubed (M3) Capital, a company that administered a large section of Brantam clients. Much has been written about this over the past 2 years, so allow me to (once again) try to clarify the situation:
- The original company, being M-Cubed Holdings Ltd., was a registered company on the JSE. They elected to sell off their various divisions during 2006;
- During the course of late 2006, Alternative Channel made an offer which was accepted by the share holders, and this was finally ratified by the competitions board in 2007. Alternative Channel at the time was owned 50/50 by Psg (also listed) and Sanlam;
- Once that was finalised, PSG made an offer to Sanlam to acquire their stake, and this has also now been finalised. The new company has been registered as “PSG Future Wealth”. Please note that, if you do use the “Online Portfolio Access” link
Lastly, I have had quite a few calls already this year (2008) where clients have reviewed their portfolios over the past 4 – 6 months and come to the conclusion that Money market would be a better option. Now we can’t dispute the fact that Money Market would have given you somewhere around 3.5%-4% where a fund like Classic Port only delivered 2.4%. However, now is the time where YOU have to decide whether you are an “INVESTOR” or a “SAVER”, and there is a very distinct difference:
INVESTORS understand that markets are fickle and are thus quite happy to ride through the poor times, as over the longer term they see the benefits. My example on Classic Port is typical of this – yes, the past 4-6 months has not been great, but anyone who has been in for 3-5 years will have seen average returns of 14%-16% VS Money Market over the same period delivering 6% average at best.
SAVERS on the other hand, do not want to entertain any volatility, and will thus opt for that 6% average as it allows them to sleep at night.
Brantam are an investment house, so if you invest with us, by definition you take the first road and go for the ride. We, in turn, have to earn our keep, so work quite hard at squeezing out returns. It does become quite tough in times like we are faced with at present, as it is very difficult to find true value out there. As a result, we are making that Money Market call on your behalf and actually hold large chunks of cash in each portfolio while we search for value. Bottom line is that you may well not do as great over the next 6-9 months with us as you may in a pure Money Market fund, but once these markets start to turn for the better (which they always do), you will be at the cold face instead of trying to “time” your entry back in. |
