Business Day (Johannesburg)
Edward West
3 November 2009
Johannesburg — INVESTEC Asset Management increased its overall bond portfolio weighting to 17% from 10% in the past week and may increase it further as markets face a frustrating period with earnings needing to catch up with the rise in prices over the past few months.
The change in the asset management unit of the international financial services group's investment portfolio signals their belief that the bull run in equities of the past few months may be reaching its zenith .
Investec Balanced Fund portfolio manager Chris Freund said yesterday they had also started reducing their equity weighting to 64% and may lower it to 60% of their portfolio, in line with their expectations of modest returns from equities as well as continued volatility.
Asset managers have held equity weightings of 75% or more of their portfolios "for ages ", he said. Freund did not expect another bear market, but "in the future we expect that there will be a hunt for yield".
South African bond returns were likely to beat cash. He believed the dollar was close to the end of a period of weakness, and alternatively, he did not expect the rand to be "massively weaker" in the next 3-6 months.
Inflation in SA was expected to be 4%-5% by the middle of next year, well within the Reserve Bank's targeted range of 3%-6%.
He said they were not heavily invested in gold - the asset manager was holding some gold investments for risk purposes.
The global economic recovery was likely to continue next year, with economic momentum still strong, "just not surprising on the upside" anymore. Global price: earnings equity valuations were "reasonable and not particularly extended".
For the past six months global investors seemed "to think that it was all fine", but volatility had crept into markets since the first half of last month as the economic data being released was starting to show "mixed" signals of recovery, particularly data on US housing and employment.
Investec Asset Management MD Thabo Khojane said the unit had weathered the financial crisis well. There had been a R50bn dip in assets under management at the worst of the downturn, but "we've more than recovered".
He said fund inflows had been strong this year because clients had moved from cash investments into equities, clients had become more discriminatory, and they preferred more robust, more established operations, as opposed to smaller boutique-type asset managers.
Be the first to Write a Comment!
Copyright © 2009 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com).
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
