High-quality global equities and local bonds are good prospects
Muted returns generated by the JSE all share index over the past few years are hard to stomach, but markets work in cycles
Last year proved to be the antithesis of 2017. Whereas in 2017 almost every asset class globally generated a positive return, 2018 ended with almost every asset class in the red. Other than cash, there was nowhere to hide: developed market equities, emerging market equities, commodities and global credit, to mention a few, generated negative US-dollar-returns. It was the first negative year for global equity markets since the financial crisis, despite the fiscal stimulus in the US. The muted returns generated by the JSE all share index over the past few years, although not altogether surprising given the stretched valuations at the beginning of this period, are hard to stomach. Over the past three years to the end of December, the total return from the all share was a mere 4.3%; over five years, the total return was only 5.8%. Equities are commonly referred to as “real” assets, meaning they are supposed to provide an inflation-beating return and are the main weapon in the arsenal of...
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