March 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 March highlight the inherent uncertainty in investment markets and the need to hold a diversified portfolio. Broadly speaking, risks are rising – escalation in the war between Russia and Ukraine, inflationary pressures, the risk of a US recession and a slowdown in China. For these reasons, we have de-risked our portfolios by increasing our allocation to USD Cash. We believe that the volatility caused by global events will create buying opportunities for patient investors.
Overall, we have also taken a more defensive stance in our portfolios, favouring developed markets over emerging markets, and US quality equities over Europe and Japan. Higher commodity prices and South Africa’s isolation from the war have supported the rand and SA equities. However, risks to the rand remain to the downside and we have used the recent period of rand strength to increase our offshore exposure. 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 nfrastructure 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 March commentary below, which is broken down under the following headings:
- Poor quarter for global equities
- Higher energy prices, global inflation and fears of a recession
- Chinese growth under pressure
- Local equities had a strong performance in March
- The JSE All Bond Composite (ALBI) ended the month up
- Repro Rate increases due to the rise in global oil price
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