Quarterly Publication - January 2017
Notes from my inbox - January 2017
A new year traditionally heralds new beginnings, but there is no denying that we will not close the chapter on 2016 any time soon. The events of last year will reverberate through modern history, and have upended the status quo, probably irreversibly.
Apart from Brexit and the election of Donald Trump as US president, the year that saw the highest global temperatures on record also gave us presidential impeachments in Brazil and South Korea, the rise of populism, unremitting terror attacks, the death of the Trans-Pacific Partnership and a bloody civil war in Syria, the effects of which were felt far beyond the region. In South Africa, the political ground shifted below our feet as power relations changed, the electorate switched allegiances and civil unrest intensified. At times, amid the constant flow of new allegations and shocking developments, a single day proved to be a long time in local politics.
The political volatility across the world was matched by market movements. After some stops and starts, developed market equities reached record highs in the final quarter of the year, just as US bond yields finally started falling apart. Commodities and the oil price gained ground and, despite a couple of lethal blows, the predicted demise of the rand was greatly exaggerated – while the almighty sterling lost 16% against the dollar.
As you know, we do not invest on daily newsflow or market gyrations. We are solely focused on achieving long-term investment growth and the risk-adjusted valuation of an asset remains the single most important consideration when investing our clients’ savings. Events in a year like 2016 will not change our investment approach, and we continue to focus on finding opportunities as the market overreacts and misprices investments. That said, there is an undeniable sense that the international environment is changing, creating more moving parts to take into account. Not only are we carefully considering the impact of the shifting status quo on investments, but we also have a greater awareness of our own responsibility to maintain rigour in a post-truth world.
Fake news, amplified by social media, has been swaying debate and sowing mistrust, and it has been disconcerting to see how a blatant lie, tweeted in the early morning hours, can get halfway around the world before the truth has a chance to get its pants on, to paraphrase a saying attributed to Winston Churchill. Amid an oversupply of information, there is a scarcity of verified fact, and even less real wisdom. Now more than ever, we are all required to demand the highest standards from our information sources and to be judicious in who and what we trust. Trust should be earned, after all.
This especially holds true for investing. In recent years, we have seen an increase in imprudent rhetoric and easy promises in the asset management industry. But there is no shortcut in delivering real, market-beating investment growth over the long term – rigorous research and domain knowledge are required, along with the broad shoulders and discipline to make the unpopular decisions that may impact short-term performance, but will ultimately grow your investment in the long run.
Our 23-year track record of superior performance and of always putting clients first should anchor our investors in a time where integrity and truth are in short supply. With a singular focus on fund management, we strive to earn your trust through the highest ethical standards and strong investment performance. Our culture of being owner-managed, independent and performance-driven has helped us to consistently deliver market-beating returns for our investors over the long term. When looking at our institutional clients:
- More than 95% of those clients who have been invested with us for more than ten years have outperformed their benchmarks.
- 100% of clients have outperformed their benchmarks over 20 years.
It has now been almost five years since our SA equity product range has been closed to new investors, and more than four years since we closed our balanced and absolute return strategies. As an investment-led firm, we value our investment track record far more than our company profitability or our market share.
IN THIS EDITION
In an exclusive article written for our readers, the Financial Times chief foreign affairs commentator Gideon Rachman explores the new ‘Trumpian world’. He believes president Trump could trigger a revolution in global politics, with the potential of upsetting trade relations and other relationships. You will find Gideon’s guide to the main issues to watch out for in 2017.
Political analyst Simon Freemantle gives his assessment of where SA politics may be heading this year. After the bruising events of 2016, he expects a different kind of drama to play out in the coming months ahead of the ANC leadership election in December.
Amid the volatility, we continue to find good long-term opportunities across the globe, and in this edition, we outline the investment cases for international consumer staple companies, frontier cement companies and the UK property group Hammerson.
Our economist Marie Antelme assesses the improved prospects for economic growth in SA this year, and you will find our regular commentaries on the local and international markets elsewhere in the publication. We also review the performance of our funds for the year and profile our Coronation Global Managed Strategy in this issue.
We hope you enjoy the read.