February monthly commentary from our friends at Retirement Investments and Savings for Everyone (RISE).
A word from RISE's Portfolio Manager (Duane Gilbert) on the need for a diversified portfolio.
"The events of February highlight the need to hold a diversified portfolio. We believe the Russia-Ukraine war will largely remain confined to its borders with limited impact on global growth. As a result, our portfolios remain positioned for a cyclical recovery. In contrast to our positioning in 2021, we are now shifting some of our risk to emerging markets as China embarks on a fresh stimulus program and global inflation creates a tailwind for commodity prices. We believe that the rand is likely to strengthen as commodity prices improve and the dollar weakens from overbought territory.
We believe that inflationary pressures are higher than what the market expects and that central banks do not have the tools to deal with it. As a result, we are increasing our exposure to inflation-protected instruments. South African equities are particularly cheap; however, one needs to carefully pick companies that can grow their earnings in a low growth environment. Our portfolios have a high allocation to SA Bonds (where longer- dated instruments are still offering double-digit yields) and an exposure to dollar- denominated African sovereign bonds. Finally, we have introduced a position in renewable energy infrastructure projects, which are not only attractive from an IRR perspective but will meaningfully increase electricity production and reduce carbon emissions in South Africa."
To read why Duane feels this way, please read the rest of RISE's February commentary below, which is broken down under the following headings:
- Energy prices skyrocket as Russia-Ukraine war outbreaks
- Risk assets fall with flight-to-safety
- Inflation continues to rise in the US; FED's resolve is unmoved
- Local equities had a strong performance in February
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