Quantitative easing around the world has driven global bond yields to all-time lows while credit spreads have narrowed dramatically. Such is the extent of QE that overnight European bank deposits attract a negative yield, effectively costing the investor money. Prescient Investment Management’s Qualified Foreign Institutional Investor (QFII) license in China creates a unique opportunity to […]
Commentary from Eugene du Plessis, Partner and Head of Tax, Grant Thornton Johannesburg says: “Overall ...
Commentary from Kay Walsh, Deloitte Executive Lead in Economics Facing the low-growth reality – additional ...
Comment by Dr Kenneth Creamer, economist in the Wits School of Economic and Business Sciences: ...
Saving is very often a matter of not spending With more than half of all ...
1. Quality basic education 2. A long and healthy life for all South Africans 3. ...
- Q: How did you get involved in financial services? Was it always something you wanted to do?
- A: I always wanted to do this. It’s exciting. My job changes every day as there is always something new happening in global markets. I have always had a passion for big-picture issues driven by macroeconomic events and trends. This interest predisposes me to work in fund management as these are the main drivers of asset allocation and market performance. Big-picture strategies often underpin my approach to an asset class or sector. For example, in recent years many core holdings in the flagship Imara Equity Fund were selected because macroeconomic themes such as consumer market growth, industrialisation and urbanisation highlighted growth potential within sectors such as resources, construction, retail and financial services. My job at Imara Asset Management SA allows me to put my fascination with major trends to work as the investment process here is characterised by a strong top-down or macroeconomic overlay. Thinking long term and considering major strategic drivers as well as fundamental bottom up research have been the main drivers of consistent above average performance for the Imara Met Equity Fund which has achieved a one-year return of 15.7% and annualised three-year returns of 23.4%.
- Q: There's a lot of talk about equity markets being overvalued, at fair-value or under-valued. Is this real investment issue and does it affect individual investment decisions?
- A: Clearly, one’s assessment of value and risk are the overriding issues no matter what the state of the market. That assessment influences all decisions. Markets as a whole are high, but they are not in bubble territory yet. At a time like this, it is important to focus on stock selection. The weaker rand is supporting stellar earnings growth in certain local stocks. The local equity markets is trading on a forward price-earnings ratio of 14.5x, which is spot on its long-term mean, so the JSE is not that over-valued on a 12-month rolling forward basis. The biggest risk is the timing of interest rate hikes in the US as we will also be forced to hike rates locally in order to maintain the foreign funding of our current account deficit. A local rate hike may affect JSE values, but this need not be a major concern for investors with a strategic mind-set who take a three to five year view.
- Q: What makes a good investment and when do you know it is time to exit an investment?
- A: I focus on stocks with excellent management through various business cycles, high returns on invested capital and strong, sustainable free cash flows. Once a stock reaches my fair value or target price, fundamentals are reassessed. I often take profits rather than sell a good company outright. However, if the investment case no longer holds, the stock will be sold. For the average retail investor in unit trusts, the focus falls more on portfolio composition rather than the sale or disposal of one specific holding. The issue here is what makes a good fund investment. In general, the client is looking for a well-diversified portfolio across various economic sectors as an effective mechanism for managing risk. Diversification and time in the market make good risk managers. We do not invest in one single theme at a time. A good portfolio will deliver consistent returns over various investment cycles at a reasonable level of risk. A good portfolio should also deliver a high Sharpe Ratio – an indication of excess return per unit of risk.
- Q: What has been your best – and worst – investment experience?
- A: My best was identifying the emergence of the growing middleclass in emerging markets as a sustained driver of consumer expenditure and GDP growth, particularly in Asia, India and sub-Saharan Africa. My worst experience was being overly optimistic on commodity stocks on the back of growth in China. Commodities are still in oversupply, so this sector might take a while to recover.
I watched the Medium Term Budget Speech from the comfort of the couch. At one point I was shouting at the Minister – say something about wages! Then I realised I could have been a heckler in parliament and found more productive things to do. The speech and policy statement is a bit light on […]
By Sanisha Packirisamy: Economist at Momentum Asset Management Fiscal slippage likely given deterioration in growth outlook Economic conditions, both globally and locally, have deteriorated since National Treasury last published their real GDP growth projections for South Africa of 2.7% in 2014 and 3.2% in 2015. Treasury is likely to downgrade real GDP estimates for this […]
By Paolo Senatore, Chief Investment Officer, Ashburton Investments One of the attractive features of listed property as an income generating asset class is the consistent and stable above-inflation distribution growth generated by the sector. Assuming a constant yield spread between listed property and long-term bonds and barring any movement in long-term bonds, this asset class […]
Taxpayers must prepare to further tighten their belts following the first Medium Term Budget Policy Statement from Finance Minister Nhlanhla Nene. Izak Odendaal, Investment Analyst at Old Mutual Wealth, says while there could be some feedback from the Davies tax committee on Wednesday, actual changes to tax rates are unlikely to be announced during the […]
The announcement by National Treasury end of last week to delay the implementation of proposed retirement reforms has been met with shock and disappointment by key players in the retirement industry. The reforms are widely considered to be crucial in assisting funds to structure good retirement outcomes for their members. Trade union federation Cosatu has, […]
By Nazmeera Moola, economist and strategist, Investec Asset Management Finance Minister Nhlanhla Nene has his work cut out for him ahead of this week’s medium-term budget policy statement (MTBPS) and controlling expenditure will be his first big test. The economic outlook is all but encouraging: we expect growth to be much weaker than the Treasury […]
In light of recent comments by Finance Minister Nhlanhla Nene regarding the possible broadening of the tax base for South Africa, the SAIT (South African Institute of Tax Professionals) looks to provide a deeper understanding of what these proposals mean to South Africa. Broadening the tax base is a possible solution, although the room for […]
In recent months, the Master of the High Court (the Master) has often refused to register newly created family trusts if an independent trustee has not been appointed. Although it isn’t a legal requirement, the Master often applies it as such. The Master adopted this practice following the judgement in the well-known Parker case where […]
By Keith McLachlan, fund manager, AlphaWealth A ‘ten bagger’ is colloquial for a share price that rises a thousand percent or, in other words, makes you ten times your money. In some ways the Holy Grail of investments, the key consideration is how do you go about finding a ten bagger? Firstly, you are never […]
The importance of comprehensive public liability cover has again been highlighted following the recent cases of armed robbery at Canal Walk Shopping Centre in Cape Town which resulted in the theft of an estimated R1m worth of Apple products last week as well as R2m worth of diamonds, rings and watches on Saturday – despite […]
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Newsletter 23 October 2014: Five best and worst things to spend your money on
As we dissect the finances and spending plans for the country – we thought it […]
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