Sticking with local equities over cash rewards smart investors
Market’s slow-motion crash provided a perfect opportunity to buy cheap high-value shares
After three years of disappointing equity returns, the JSE has come back in 2017 to return nearly 20% to the end of October on a total return basis with dividends included. This strong performance, particularly over the past three months, appears to have caught many investors by surprise. I wrote previously how we observed many investors moving their savings from equity unit trusts to money market funds. Even conservative multiasset portfolios with exposure to South African equities did not escape these outflows: statistics from the Association for Savings and Investment SA show its multiasset low-equity category suffered higher outflows than any other category for the first three-quarters of 2017. This was clearly a knee-jerk reaction by investors in response to lower short-term returns delivered by equity funds up to the middle of 2017. In line with single-digit returns from the JSE, equity funds generally underperformed money market funds over the preceding three years and had no...
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