Dear Investor
While we do not advocate blanket investment advice across all our client portfolios, we feel that it is important to let our clients know when major changes occur within the fund management space.
Part from the extremely concerning political developments of recent days, two important announcements within the fund management space were also announced.
Firstly, Allan Gray has announced that its three Rand denominated overseas feeder funds, which give one Rand-hedged performance, are open to investors again after being closed for the last year and a half or so.
Please have a look at the attached update for more detail. Should you wish to discuss this further, please give your advisor a call.
Secondly, we were notified some days ago that Simon Pearse, 56 years old, the CEO of Marriott in Hillcrest, KZN and one of South Africa’s most highly regarded fund managers, passed away suddenly on his farm in Howick. He was not ill and this was a total surprise to everyone. No foul play was involved. Marriott have issued a statement reassuring clients that, although the income-based investment philosophy, which Marriott are so well-known for, was largely developed by Simon, their investment team is well-versed in the implementation of this approach and they are confident that the client portfolios and unit trust funds which they manage will not be adversely affected by this loss. Simon was a super-fit individual who was famous for taking on the world’s longest and toughest horse race, the Mongol Derby, twice. He will be sorely missed.
How can one write about the investment world without for a minute mentioning the recent shenanigans of our president & his cronies? After recalling Finance Minister Pravin Gordhan and his deputy, Mcebisi Jonas from their overseas investment promotion roadshow to the UK & US last Monday, the president looked to have been blocked in his endeavour to replace Gordhan by at least 3 of the 6 ANC NEC members when they met a day or two after their return to discuss possible cabinet shuffles. It was thought that this might lead to a long overdue revolt from within the ANC itself against Zuma, Duarte et al, especially when Gwede Mantashe & Cyril Ramaphosa publicly denounced Zuma’s actions. Then Standard & Poor’s announced that they were downgrading South Africa’s US$ denominated sovereign debt (about 10% of our total govt debt) and this further heightened overseas investor uncertainty and the Rand started to move more quickly. Unfortunately, both of the ANC NEC leaders who had spoken out against Zuma earlier in the week, retracted their statements yesterday as the ANC closed ranks and MP’s were subtly warned by Mantashe not to vote in support of the impending vote of no confidence in parliament called by the DA and the EFF. The Rand is now starting a gradual slide as (mainly overseas) buyers don’t quite manage to match (both local & overseas) sellers in their enthusiasm to trade the Rand. This growing emotional momentum against the Rand (those who are keen to make a good profit from the generous local interest rate have less conviction than those who fear the Rand will plummet soon) is gaining in strength and sentiment may worsen against the Rand thereby causing the Rand to topple.
Against this backdrop and looking at the uncertain political future in SA, those long term investors (who do not need to use a certain portion of their capital for at least 5 years) and who can therefore afford to convert their Rands into hard currency, are advised to consider doing so after giving careful thought to the risk of a Rand strengthening again in the next few months or years.
Stay safe in this beautiful land
Best wishes
Brian
