Greetings from us here at Perspective Advisory and we do wish you success and happiness as this year unfolds in front of us.
I was recently reminded of how each year starts with such promise even in the face of complete uncertainty as to what may be around any corner. If 2020 taught us anything it has to be that nothing is guaranteed, and change is inevitable. Something we, as long-term investors, are all too familiar and although one’s comfort levels are often tested, we get certainty from engaging in our financial plan and continuously educating ourselves on what it entails.
Purpose of this emailer is to do exactly that – update and educate. We include an update on financial markets, some information on what is happening at Perspective Advisory and other highlights deemed relevant at this time. All linked below and aimed to carry through on a core value of placing you, as our client, at the centre of all that we do.
Investment & Market Update
Our client portal, discussed under ‘Office Update’ sends out a weekly update that includes a summarised overview of local and international markets. Including interesting stats on currencies, interest rates and returns on other asset classes you may find appealing. If, for whatever reason, you are not getting these, please check your junk mail inbox and or get in touch as there may be another error that we can then fix.
Click here to read an update from me based on all our reading these summaries as well as information from our DFM’s.
If you would prefer, you can watch the below video which summarises some of the points raised in this article focusing on investing in general and WHY we do this!
Overall, we, as investors, have had a torrid time in trying to make sense of the noise emanating from daily media around markets, currencies, and politics. We do this to try and make rational decisions around one’s portfolio. Defaulting to the tried and tested mantra of it being time in the markets and not timing the market is valid and powerful. By trying to get in and out of the markets one loses out on lots of opportunities to gain when the rebounds happen. One also never gets out at the actual top and/or back in at the bottom. As such you, once again, lose out on both points.
Focus points over the next year are the following:
COVID
Although this is spiking in China there appears to be less concern as they have NOT imposed their zero-covid strategy.
I do believe that the pressure brought about by their own population encouraged this turn around recently.
My view is that there is unlikely to be a ‘lockdown’ of any sort soon (or ever) based on how inconsistent the lockdown strategies successes were globally. Once there have been definitive research into successes/failures of them will we truly tell who’s was more beneficial than not.
Inflation & Interest rates worldwide
Inflation targeting from all Reserve banks has been the focus.
US Fed is still targeting higher rates as labour markets still show resilience. Highest in its history even though there were signs of inflation settling it was still to early to call.
Expectations are that inflation is likely to continue to be high for at least this year and possibly into 2024. Current rates are around 9 % in Eurozone and around 4.5 % in US. SA is projected around the 5 % in 2023.
All these high inflation rates are then countered by Reserve Banks through increased interest rates. Some western countries are sitting at their highest rates in decades – reflecting their inflation rates. Good for those holding cash not so much for those paying debt.
China & Taiwan
This possible conflict is one to keep an eye on.
As with Russia’s invasion of Ukraine this will increase uncertainty and as such volatility. Scarier for most is the possibility of pitting USA (Ally of Taiwan) against China…
Politics and politicking
Watch the US and how they are in-fighting on many fronts in their drive to elections in 2024. Fascinating to see how this, once glorified bastion of Democracy, is finally reaping its denial of a truly factionalised and massively divided nation.
In SA it is much the same as the US. Much to happen between now and our own elections in 2024. My hope is for our President to show no favour nor fear and truly push to tear down the corruption, nepotism and graft that really impacts those that really need this country to work for them.
There are loads of other conflicts and political manoeuvring worldwide – pick a country and you will see this playing out, fascinating time in our globalised world.
After all this what about markets?
Well, it does seem that things are going to be tough as detailed above, and recession talk has not quite ended both locally (SA) and abroad. Saying that we are seeing buoyancy in markets and even foreign exchanges are showing resilience. So expect another bumpy ride however I do feel that there is some direction (upwards) notwithstanding any unforeseen shocks that may hit us, of which there are threats. Once again I refer back to where I started and encourage those in the markets to continue to stick to their plans made and time frames included in these. Ignore the noise but stay in touch with what is going on, if only for interest sake, as some of the news is interesting if not meaningless in our human history that we create daily.
Loadshedding & South Africa
It was an interesting month one with the WEF descending on Davos for the annual talk shop that is this event. Some interesting and good news with positive spin from it around SA and this is all based on the fact that the whole world is in a terribly difficult place. Then this week there is the terrible earthquakes in Turkey, Syria and surrounds, adding to global instability, literally. Economies globally are suffering and hence, our struggles are expected however loadshedding is an own goal we could have avoided.
This reality with be with SA for at least the next 2 years and is likely to worsen over Winter. This is similar to the dire consequences of Europe’s energy reliance because of the war and plans were made. I feel the same will be made here as it is already with solar and battery solutions becoming part of everyday life. Linbro Park in Johannesburg (a whole suburb) may be off-Eskoms-grid soon as well – completely self-sufficient through a Gas-turbine generator.
Point here is that this is going to harm our country and this is, as I see it, already priced into global and local markets. There is not much more damage that Eskom’s woes havent already done (besides a complete blackout) and there are legislative changes being made all the time. Here is President Ramaphosa’s recent writings on it – he grasps the reality of it and is doing what is possible to turn it around. I guess that is all we can ask and I really hope that his SONA speech provides concrete answers and direction.
Perspective’s Client Portal
We have worked hard to find a platform that will provide you with access to all your financial planning tools in one place. We believe what we have now is the beginning to what we envisage is a portal for you to have a full 360-degree view of these tools, your financial life and even somewhere to store your own personal documents.
This is active currently so please send us a response and we will trigger your access thereon. To access this, you use https://portal.perspectiveadvisory.co.za/ – note you have to be an active client to gain access to the functionality hereon.
Office Update – Team changes
Chaante Marshall has recently joined us from GCI Wealth. She is supporting in the Life, Investment, and financial planning side of our business. We are glad to welcome her and wish her an amazing future in her career in financial planning.
We would also like to thank our team for stepping up towards the end of 2022. It was a challenging year for us with many changes to navigate. You guys are amazing, and we appreciate your dedication to our clients and this team.
Tax & Budgets for 2023/2024
A quick reminder that your Tax year ends on Tuesday 28 Feb 2023. This is a reminder to top up your retirement funds and tax-free savings accounts. You will benefit from tax deductions and ongoing tax-free investing by doing this.
Please also get prepared for Budget changes for 2023/2024. President Ramaphosa’s SONA and Finance Minister, Enoch Godongwana, 2nd full budget speech are going to be pivotal in how we look forward to tackle all our challenges this year and beyond. We base this on how critical things are and how much work is being done by many players to resolve them. I am quietly positive with what I have heard on the ground and from many of our clients in the SMME space, Mining, and other industries.
DFM’s & Wealth Strategy
Perspective’s Methodology for Asset & Fund Managers
We work closely with fund managers and DFM’s (Discretionary fund managers) to ensure portfolios provide returns worthy of their investment. We continuously update this methodology and seek ways to manage your monies better. This includes analysing these DFMs and looking at opportunities to enhance returns commensurate with the level of risk taken therein.
Why a DFM?
Their role is to follow a rigorous approach in building risk-adjusted portfolios. By utilising these portfolio’s, we can drive down costs and through effective investment risk management, we should achieve better investment results. By mandating A DFM to do their work it allows them to perform strategic asset allocation and fund changes (or increases) as required. This efficiency enhances the effectiveness of our service offering to you.
By blending asset managers, as our DFM’s do, and mixing these DFM’s up, we provide another layer or diversification and independence to one’s investment approach. Through our independent and critical view of our investment process and these managers, we ensure emotions are not brought into any decision making. This allows transparency and entrenches our value add to this long-term relationship we have with you.
Who is Morningstar Inc?
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. They offer us an extensive line of products and services which we are then able to off you.
Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries. The company has operations in 27 countries and has R 4 trillion under management globally.
Who is Independent Investment Solutions (I²)?
(I²) is a local (SA) independent multi-asset investment solutions provider to Independent Financial Advisors (IFAs). They provide a range of independently compiled wrap fund investment solutions. These solutions are tailor-made to address a diverse range of investment needs. The i² range of solutions is constructed by a professional independent investment committee who is tasked with the selection and ongoing review of the specific underlying funds, thus continually ensuring that the correct blend of unit trust funds is combined to achieve the desired risk adjusted returns.
Who is OMBA Advisory & Investments (OMBA)?
Although, technically not a DFM, we have adopted OMBA as we appreciate their investment approach. OMBA adopts a global macro approach using Exchange Traded Funds at the core of our process. This approach involves using well diversified portfolios across global assets and multiple currency exposure to provide additional diversification benefits as well as using low cost Exchange Traded Funds (ETFs) to keep the fees clients pay down. They are based in London as they believe being in one of the financial capitals of the world provides access to people, service providers and information of the highest calibre.
Podcasts
We also aim to give you things to listen/watch to further your understanding of markets and financial services. I also, occasionally add content on things outside of this that I feel add value to one’s life in general. We are, after all, not one dimensional – thank goodness!
Freakonomics Allan Smith Series –
https://freakonomics.com/podcast-tag/in-search-of-the-real-adam-smith/
I found this fascinating in so many ways. I have read the Wealth of nations and this is a good dive into how his writing has been used to validate both sides of an ongoing argument around capitalism and open/free markets.
Diary of a CEO – this podcast (YouTube Link provided) is a trove of information and fascinating discussions with some amazing personalities and leaders in their fields. Here is one on diet and health that is very useful:
https://youtu.be/66hWntvp0_4%20
