October Rebound

After the quarterly results for the period June to September, most of our clients were disappointed with the returns in their portfolios.

For this reason the October Rebound couldn’t have come at a better time. The gain of 7.61% in the JSE was the biggest monthly gain since October 2011.

The Resources shares saw a turnaround after a very disappointing September. However, even after the strong run, Resources is still negative for the year to date and is still down 20.3% for the year.

 

Is it all smooth sailing from here?

The uncertainties in the market still remain, with doubts about the extent of China’s growth and the extent and timing of the USA interest rates hike. Uncertain markets will lead to Volatility (movement).

It is important to discuss your portfolio with your financial advisor at Bovest to ensure that you remain invested in line with your personal risk profile. There are still growth opportunities out there – you just need to have a long term view and a stomach for volatility. If you want high long-term returns, it is vital that you learn to live with volatility as a feature of your portfolio.

Equipped with a clear investment objective, an ability to maintain emotional discipline and a willingness to take a longer-term view, volatility is definitely your friend.

 

Looking to the future for opportunities:

Based on historical data South African Equities remain expensive, especially after the good run we had in October. We expect that local earnings will come under pressure in the future. Our funds are therefore underweight in local equities.

Relative to history the valuation of local bonds are looking fairly valued. Bonds play an important role in constructing our Conservative and Managed Funds.

We are still of the opinion that there are more opportunities offshore. This is why we have retained maximum offshore allocation in all of our funds.

The Rebound is a good indication to stick to you risk profile. If you opted out to get out of the market in the beginning of October, you would have missed out on all the upside.

Please let us now if you have any specific questions or need any further information.

PJ Botha

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