Fluctuations in the markets are one of their defining characteristics. Various factors contribute to the vicissitudes of investor behaviour, both locally and globally, and many of these are psychological factors that are strongly influenced by perceptions – and an interest rate hike will surely shake the boat.
It’s always good to know how your investment portfolio is constructed and variety is important to encourage an overall positive return. When local markets are up, global markets might be down and vice versa.
Here’s a little bit of what’s been happening in the past six weeks.
“Long-term investors should not expect to enjoy this year the spectacular returns they earned last year, but they need not fear the end of the bull market, especially in global equities.” So says IOL Personal Finance writer, Laura du Preez, in her article published in early Feb.
The beginning of February 2014 saw an increase in the interest rate as well as some market sell-off, which made some twitchy, but for those who keep their eyes on the long-term goals of their investment portfolios, this is merely part of the journey that ultimately has an upward trend.
Peter Brooke, head of Old Mutual Investment Group’s MacroSolutions boutique, says that the dips we’re seeing are a result of a general negative sentiment about emerging markets as a whole and the unanticipated interest rate increase combined with the selling off of South African bonds by foreign investors.
Offshore equities performed well last year, partly due to the drop in the Rand, but we’re seeing that it’s most likely that these investments will not carry the same kicker returns as 2013.
Looking beyond 2014, Paul Hansen of Stanlib says that they are expecting a nominal return of between eight and nine percent a year, on average, from equities, and through to the end of this year about five percent each from the bond market and listed property.
Despite the recent month’s market moves, there are still some elephants in the room that no-one seems to be talking about; elephants that potentially hold some really high return value. The best way for you to ensure that your portfolio is on track for your goals is to regularly assess where you are and where you’re headed. Let’s chat soon!