The current market volatility is making investment decisions rather difficult, and the situation becomes a little more complicated when investment clients begin asking what they should be doing.
This confusion was highlighted in a recent survey conducted on 2711, which asked respondents what they would be advising their clients to be doing in these market conditions. It was an even split between switching portfolios, holding onto the portfolio, or clarifying what the clients investment objectives were and are.
Are clients asking you which sectors on the markets they should be looking at? Well, without talking up a ‘book’ we spoke to an asset manager, who shall remain anonymous.
Essentially he is saying that if a client is already exposed to the markets, depending on the time of the exposure, it is likely that they should remain with their chosen strategy, assuming of course that it’s a long-term strategy.
His gut feel for so-called new money is telling him however that investors should be running for the hills, as money market rates are now a good bet, at around 11%, with very little associated risk.
Alternatively our investment icon says that investors should be looking at sectors that have taken a recent ‘hit’, like the listed property area. He suggests however that gilts remain a no-go zone until we have a better idea of where CPI and interest rates are headed. Generally however it doesn’t look that good right now.
He suggests however that one area that has surprised recently is the defensive offshore funds. While the rand:dollar remains in the 8 range, the rapid decrease in US interest rates has meant that these funds, which by their very nature have large bond holdings, do exceptionally well in the current market turmoil.
Offshore exposure is no longer an option, it’s a must have. Consider for a moment that are generally down around 20%, with some even flirting with levels last seen in 2002, which equates to 0% growth in six years.
Locally, his thoughts are that if investors stripped out the Resources sector, the JSE is not a pretty place to be, and this market should best be left to the “professionals”.
If truth be told he admits that he doesn’t really want to hazard a guess as investment professionals haven’t seen this kind of volatility for such a prolonged period.