SPOTLIGHT: Did you know?

In this article I wish to point out a couple of interesting facts that I came across while reading financial magazines over the past couple of days.

• If we look at the product mix of domestic collective investments, we see that multi-asset funds such as funds combining equities, bonds and other assets, represent 49% of total assets, followed by interest-bearing funds such as money market, short term and variable-term funds, with 25%, and by-equity funds by 23% of assets.

• Secondly, if we break down the assets administered on linked investment service prov iders platforms (unit trusts administrators), we see that over 60% are retirement related.

• China’s growth domestic product (GDP) growth rate is slowing, and its commodity demand is slowing even faster as its economy moves away from a model of infrastructure and consumption-driven growth towards one that is internally focussed on local consumer growth higher up the value chain.

• South-Africa’s GDP growth depends heavily on the growth of its largest trading partners, China and the Europian Union.

• The rand has lost between half and two thirds of its value against the US dollar (USD) every decade going back to the 1980s. In the early 1980s the rand was around three ZAR to one USD.

• Not all are equal: there are approximately 190 countries in the world, of which some 25 are developed. This leaves 165 countries that are potential emerging market investments. The picture is similar in the currency market; there are essentially 12 developed market currencies and over 80 different emerging market currencies. The challenge is to identify the markets that really are attractive.

• According to the latest annual report of the Registrar of Pension Funds at the Financial Services Board, some R20 billion in unclaimed benefits is owed to around R3,5 million beneficiaries.

•Insurance fraud by policyholders costs the short-term insurance industry some R4 billion a year. This amounts to between 7% and 15% of gross written premiums.

• Warren Buffet said one should be “fearful when others are greedy and greedy when others are fearful”. While other investors think it is time to head for the door with their cash, others reckon it is best to stay the course and even use the drop in asset prices as an opportunity to add quality to their portfolios at lower prices. The short term doesn’t look rosy – especially after world markets lost billions on China’s “Black Monday”. The reality is that the government there is trying to move the economy away from investment and exports to a more consumer orientated market this could take a while.

• Investors must ensure that their portfolios are properly diversified by geography, industrial sector and asset class, in order to manage risk and navigate the growing volatility.

Regards till next time.

Koos de Wet