Monthly Investment Insights - June 2021 - PSG Wealth
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Monthly Investment Insights June 2021
Contents
1. The monthly interview – Ravi Bhatia, director of sovereign and IPF ratings at S&P Global Ratings 3
2. Tactical asset allocation preference 5
3. Market commentary 6
4. Local unit trust solutions 8
5. Offshore unit trust solutions 12
6. PSG Wealth house view equity portfolios 18
7. Other publications 23
PSG Wealth | Monthly Insights - June 2021 2The monthly interview Contents
In our latest edition of the Monthly Investment Insights, we bring you highlights from a recent S&P Global
Ratings webinar hosted by Ravi Bhatia, director of sovereign & IPF ratings at S&P Global Ratings on the
factors that shape South Africa’s economic and rating outlook.
four years. Debt servicing costs are also expected to surge to
over 20% of fiscal revenue by 2024. Consumer price inflation
also plays a significant role in shaping our outlook. Inflation is
set to rise above 4% this year, led by higher food, electricity,
oil, and transport prices. The annual consumer price inflation
rate currently stands at 4.40% as of April 2021, and we expect
private sector credit to remain subdued for the remainder
of the year, due to risk aversion by financial institutions, and
consumers’ disinterest in taking out more credit.
Economic outlook
Ravi Bhatia Foreign and local currency ratings remain stable thanks to
the country’s credit strengths mentioned below. While the
SA’s key measures of economic performance over the short- GDP growth rate remains uninspiring on a per capita basis
term and current account are upbeat amid expectations over the long term, we expect the economy to rebound from
of a rebound in 2021, thanks to the easing of lockdown this year onwards, due to the improvements in terms of
regulations, a resumption in economic activity, and a hike in trade. However, the poor investment expenditure, a stringent
commodity prices labour market and an unreliable power supply are a cause for
S&P Global Ratings maintained South Africa’s long-term concern.
sovereign credit rating on 21 May 2021 at BB (below
investment-grade) with a stable outlook. The transfer and External outlook
convertibility (T&C) assessment also remains unchanged The country’s external outlook is strengthened by moderate
at ‘BB+’. We expect GDP to improve to 3.60% in 2021, levels of external debt. Foreign direct investment (FDI)
before normalising to 2.50% next year and below 2% in the potential outflows are not expected to present any external
subsequent years. With the resumption of economic activity, financing risks, given the low levels of average current account
imports and exports are also set to recover this year, buoyed deficits over the medium term. Moreover, foreign investors
by high external demand, while the current account surplus continue to be the net buyers of local government bonds.
is set to narrow to 1.20% of GDP in 2021. Our assessment
mirrors the extensive analysis we conducted into SA’s Fiscal outlook
institutional framework, which includes an independent SA’s public fiscus remains feeble with high and growing
judiciary, an autonomous central bank, and free media. fiscal deficits, mounting government debt (on) substantial
However, we feel that SA continues to grapple with challenges contingent liabilities. However, near-term fiscal deficits are
related to extreme poverty, high unemployment, and declining much faster than we had anticipated, thanks to
inequality. As a result, SA’s public finances remain structurally higher-than-expected revenue collected.
feeble. We expect fiscal deficits of at least 7% over the next
four years and a debt-to-GDP ratio of about 85% on average
over the next four years. We also anticipate a fiscal deficit of Credit strengths
less than 9% of GDP over the next two years (with a decrease) • Exchange rate flexibility
to about 6% by 2023/2024. • Credible monetary policy
• Well-regulated financial sector
South Africa’s contingent liabilities are moderate and will • Deep capital markets
likely weigh on the country’s distressed fiscus • Moderate external debt
This view is underpinned by the significant support
government provides to SOEs with poor fundamentals. Credit weaknesses
Risks stemming from SOEs such as Eskom and South African • Weak economic growth
Airways (SAA) could include higher financing needs than what • Poverty, unemployment, and inequality
is currently budgeted for, or the direct incorporation of the • Large fiscal deficits and debt burden
SOE’s debt into government’s balance sheet. Furthermore, • Large contingent liabilities linked to SOEs
we expect government’s debt-to-GDP ratio to continue on
an upward trajectory, reaching just below 90% over the next
The opinions expressed in this interview are the opinions of the interviewee and not necessarily those of PSG and do not constitute advice. Although the utmost care has
been taken in the research and preparation of this document, no responsibility can be taken for actions taken on information in this interview.
PSG Wealth | Monthly Insights - June 2021 3Key risks to the 2021 budget: Looking ahead, we could downgrade SA’s credit rating if the
economy does not recover during the forecast period and if
Sluggish economic growth Revenues could fall below
external pressures increase
expectations if nominal GDP
declines; for instance, if the This could be in the form of financing risks stemming from
country grapples to contain liabilities such as Eskom or tightening monetary policy which
the spread of Covid-19 would increase government’s interest burden. Conversely, we
or if vaccine distribution could upgrade SA’s credit rating if economic growth is stronger
is disrupted by supply than what we currently project for the medium and longer
shortages. term, and if we see a notable improvement in government’s
debt-to-GDP ratio. The next ratings review from S&P Global
Ratings for South Africa is scheduled for 21 November 2021.
Commodity price hikes A plunge in key commodity
export prices, notably gold,
platinum and coal could “South Africa’s near-term economic performance and
reinforce lower incomes and current account are experiencing a cyclical uplift, as
Value Added Tax. a result of a combination of base effects, following a
large economic contraction in 2020 and improving
Mismanaged SOEs The rising debt burden of terms of trade from higher commodity prices.”
SOEs, notably Eskom and – S&P Global Ratings
SAA, could propel hikes in
government spending higher
than what was provisioned
for previously. “Nevertheless, structural constraints, a weak pace
of economic reforms, and low vaccination rates will
continue to constrain medium-term economic growth
and limit the government’s ability to contain the debt-
to-GDP ratio.” – S&P Global Ratings
The opinions expressed in this interview are the opinions of the interviewee and not necessarily those of PSG and do not constitute advice. Although the utmost care has
been taken in the research and preparation of this document, no responsibility can be taken for actions taken on information in this interview.
PSG Wealth | Monthly Insights - June 2021 4Tactical asset allocation preferences Contents
We remain optimistic on the outlook
Emerging EQUITY Developed We remain more optimistic on
for cyclical equities, with the South Africa UIT
Y Global defensive counters than some
exception of commodity counters. EQ PR
OP cyclical ones that are pricing in
However, here we think there are ER
ve Cyclical Defensive TY perpetual growth.
opportunities with valuation risks nsi Reta
Defe il
lower than other cyclical counters. l
clica Of
fice
Cy
l Re
Challenging economic conditions tia sid Although there are still structural
TY
n
persist. Liquidity in the event of ide en
concerns around new trends
R
es tia
PE
another market shock remains a R l
in consumer behaviour, like the
O
Go
concern.
BO
increase in online shopping; we
PR
ce
ve
ffi
do believe traditional retail spaces
r
N
nm
O
DS
Oversupply and lagging demand should be supported as economies
en
t
are causing headwinds in the retail open up and as vaccine programmes
Cre
l
tai
property space. Here we are very intensifies.
Re
d
cautious with our allocations.
it
Particularly in the US, stronger
dit
We were optimistic about local bonds growth favours credit over
USD
S
Cre
following the Covid-19 pullback governments bonds, although
BOND
and especially after South Africa a caveat exists for high quality,
CURRENC
investment grade exposure through
nt
was downgraded to non-investment
Governme
grade. As expected, bonds have selective buying.
GBP
rallied subsequent to these events.
We now trim the holding to slightly
Y
ahead of neutral. Yields remain on The USD seems too strong, while
CASH
the higher end but so do risks. the GBP and EUR seems too weak in
ZAR
EUR
relation to the USD.
Interest rates are currently at Strategic asset allocation
50-year lows. Tactical asset allocation
Changes this month
Overweight: Neutral: Underweight:
Tactical recommendation to Tactical recommendation to Tactical recommendation to
hold more of the asset class hold the asset class in line hold less of the asset class
than specified in the with its weight in the than specified in the
strategic asset allocation strategic asset allocation strategic asset allocation
Bottom line
• Tactically, we remain bullish on equities, on both the • We are marginally negative on domestic property • We are neutral on domestic government can reduce. At the same time, this can reduce the
domestic and international fronts. Domestically, at this stage. The fundamentals truly look dire, but bonds, because their yield is broadly in line with excess return (relative to cash) the domestic bonds
we think the market is offering value, but only many counters are also trading at levels that seem fundamentals. Although interest rate fears also apply generate, which means a medium-term transition
when you adjust valuations to remove some of to have included most of the bad news. Everything here, by staying short on the curve, it’s possible to from flexible fixed income assets to cash seems
the more expensive rand hedges. We think there considered, we recognise the higher yields, but manage the potential impact effectively. sensible as rate hikes near.
is value in selected small and mid-cap stocks if remain cautious about the asset class as funding
attended to carefully. We caution against counters pressure could well accelerate in an increasing
• Domestic cash remains unattractive from a long- • For similar reasons, we feel that domestic property
which have been significant beneficiaries of severe interest rate environment.
term wealth creation perspective, although the may face even greater headwinds considering
rand weakness over preceding years, especially
diversification and risk management benefits remain contractions in monetary policy. Additional
in cases where the outlook for earnings growth
• Our view on global property remains negative, attractive. With markets anticipating hikes on the concerns regarding liquidity in this space reinforce
is more uncertain. Equities still offer the greatest
especially as the potential for rate hikes could be a horizon, the significant trade-offs of holdings in cash our cautious stance on this asset class.
opportunity set for longer-term investments.
substantial deterrent to bond proxy investments
like property.
PSG Wealth | Monthly Insights - June 2021 5Market commentary Contents
Global markets were mostly positive in May 2021, boosted by on-going vaccine rollouts and accommodative monetary policies, which
lightened emerging inflation jitters and gave rise to optimism over the economic and business outlook. The Organization for Economic
Cooperation and Development (OECD) reported that the global economy is expected to grow by 5.80% in 2021 and by 4.40% in
2022, further boosting market sentiment. Better-than-expected economic data in the US, a strong corporate earnings season in the
Eurozone and an exceptional performance by sectors that are sensitive to the economic cycle all boded well for developed market
(DM) equities, with the MSCI World Index returning 1.50% for the month. Emerging market (EM) equities outperformed their DM
peers amid a weaker US dollar environment, while firmer commodity prices boosted EMs that relied on exports. The MSCI Emerging
Markets Index delivered 2.30% for the month. Government bond yields were largely unmoved with the US 10-year Treasury yield
falling three basis points (bps) lower at 1.59%, while the UK’s 10-year dropped 5bps to 0.80%. Commodities prices also rose in May
2021 as the global economic recovery strengthened demand for metals, food and energy; however, gains were capped by growing
concerns over inflation.
ALSI performance during May 2021
69 000
1.35% -1.86%
68 500
The ALSI closed in the green
The ALSI closed in the red as investors
ahead of Moody’s latest credit
remained cautious amid rising inflation
review for South Africa, with
and speculation that the US Federal
68 000 most analysts expecting the
Reserve (Fed) could raise interest rates
ratings agency to retain SA’s
sooner-than-expected.
Ba2 rating.
67 500
67 000
66 500
1.77%
66 000
The ALSI closed higher, lifted by hopes
-2.08%
for a quick economic recovery and
upbeat earnings reports from leading The ALSI followed global markets
65 500 global markets. lower as investors discarded riskier
assets due to inflationary concerns
in the world’s largest economy.
65 000
30-April 03-May 06-May 09-May 12-May 15-May 18-May 21-May 24-May 27-May 30-May
Source: Bloomberg
PSG Wealth | Monthly Insights - June 2021 6Market commentary
MAY
Market events
The Bank of England announced plans to slow down Global credit rating agency Fitch reaffirmed
6
its bond-buying programme from £4.4 billion per
week to £3.4 billion, as the economy continues to 21 SA’s long-term sovereign credit rating at BB-,
citing an improvement in near-term economic
recover. performance and improved public finances as
primary contributors. Moody’s Investors Services
deferred its review on the country, which is
US inflation rose to 4.20% y/y in April 2021 from currently at Ba2 with a negative outlook.
12 a year earlier, marking the sharpest incline since
September 2008. However, Fed officials said: “the US President Joe Biden proposed a $6 trillion
budget for 2022 that would enable more
current rise is temporary and not likely to influence
policy.” 28 spending on infrastructure and education. He
also called for total spending to increase to $8.2
The Fed further emphasised that Personal trillion by 2031, with deficits running above $1.3
Consumption Expenditure (PCE) inflation would trillion throughout the next decade.
rise above 2% as a result of coming from a very low
base and transitory effects. The Organization for Economic Cooperation and
Development (OECD) reported that the global
South Africa’s annualised inflation rate 30 economy is expected to expand 5.80% in 2021
and 4.40% in 2022.
19 unexpectedly rose to 4.40% y/y in April 2021 from
3.20% in the previous month, with the primary
contributors being an increase in “food and non- President Cyril Ramaphosa announced the
alcoholic beverages prices, housing and utilities, reintroduction of a national level 2 lockdown in
transport, and miscellaneous goods and services.” a bid to curb a third wave amid rising infection
numbers in the country.
The South African Reserve Bank (SARB) left its
A record jump in manufacturing activity in Britain,
20 benchmark interest rate unchanged at a record
the US and the Eurozone boosted global stock
low of 3.50%. SARB Governor Lesetja Kganyago
cited emerging inflation risks and warned that 31 markets and reaffirmed positive sentiment over
sluggish vaccine distribution, constrained energy the pace of the global economic recovery.
supply, and policy uncertainty will continue to
weigh on the economy’s outlook.
*Data taken from Trading Economics as at 15 June 2021
PSG Wealth | Monthly Insights - June 2021 7PSG Wealth Fund of Funds Solutions Contents
Local fund’s performance table
Fund 6-Months 1-Year 2-Years 3-Years 4-Years 5-Years
PSG Wealth Enhanced Interest FoF D 2.09% 4.43% 6.00% 6.66% 7.00% 7.25%
PSG Wealth Income FoF D 3.65% 7.69% 6.46% 6.84% 7.10% 7.44%
PSG Wealth Preserver FoF D 8.25% 14.21% 7.42% 6.56% 6.30% 5.87%
PSG Wealth Moderate FoF D 13.61% 24.33% 9.93% 7.53% 6.83% 6.00%
PSG Wealth Creator FoF D 23.23% 44.44% 15.23% 9.64% 8.46% 7.52%
Source: PSG Wealth research team
Local
50.0% fund performance
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
6-Months 1-Year 2-Years 3-Years 5-Years
PSG Wealth Enhanced Interest D PSG Wealth Income FoF D PSG Wealth Preserver FoF D PSG Wealth Moderate FoF D
Source: PSG Wealth research team data as at 31 May 2021 *Dots represent the relevant benchmark
PSG Wealth Local Fund of Funds bubble chart
15.0 Global Creator FF D, 1.28
Returns (5yr)
Income FoF D, 0.84
SA MA Income, 0.89 Global Moderate FF D, 1.37
10.0 Preserver FoF D, 1.16 Global Equity General, 1.33
Global MA Flexible, 1.63
Creator FoF D, 1.23
Enhanced Interest D, 0.49
5.0
SA IB Money Market, 0.40
SA MA Low Equity, 1.38
Moderate FoF D, 1.14
0.0
-2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0
SA MA High Equity, 1.41 SA Equity General, 1.13
-5.0
Downside Deviation (5yr)
Source: PSG Wealth research team
-10.0
How to read the bubble charts
Shows TER which is an indication of cost. The
Vertical axis Shows the return of each fund Size of the bubble TERs for the fund benchmarks are assumed to
-15.0 be 1.14% including VAT.
Horizontal axis Shows the downside deviation which is a measure of Grey bubbles Indicate relevant fund benchmarks
downside risk that focuses on returns that fall below a
Gold bubbles
Downside Devia�on (5yr)
Represent PSG Wealth EB solutions
minimum threshold or minimum acceptable return (MAR)
Disclaimer: All performance is reported in ZAR unless specified otherwise
PSG Wealth | Monthly Insights - June 2021 8PSG Wealth Domestic Solutions
PSG Wealth Enhanced Interest FoF PSG Wealth Income FoF
• The FoF delivered a return of 0.37% for May 2021, • The FoF delivered a return of 0.77% for May 2021,
compared with the 0.33% of its benchmark, the South Africa compared to the 0.34% of its benchmark, the SteFI 12
IB Money Market sector average. Months NCD ZAR.
• It has an investment horizon of one year and has • It has an investment horizon of two years, and it has
outperformed its benchmark comfortably with 4.43% underperformed its sector with 6.46% against 6.59% over
against 4.17% over the one-year period. the two-year period and is ranked 49th out of 91 funds over
• The fund has also outperformed its benchmark over all this period.
measurement periods, • This fund also delivered first or second quartile
performances for all measurement periods longer than five
Asset allocation years and less than two years.
Asset allocation
Domes�c cash and money market, 24.13
Domes�c bonds, 60.41
Domes�c bonds, 0.61
Domes�c cash and money market, 99.39 Foreign bonds, 9.21
Domes�c property, 1.28
Foreign cash and money market, 2.08
Domes�c equity, 0.88
Domes�c other, 1.41
Foreign equity, 0.35
Source: PSG Wealth research team Foreign other, 0
Foreign property, 0.25
Risk and expectations: We are confident the fund will Source: PSG Wealth research team
continue to deliver returns in excess of money market
rates to reduce the negative effects of inflation on cash.
The fund remains conservatively positioned in very short Risk and expectations: The primary risk for the Income
dated money market instruments, which provides stable FoF given its high allocation to fixed interest instruments
consistent returns over the short term. However, the (specifically nominal bonds) remains any unexpected
conservative positioning of the fund does mean that it increase in interest rates, however the likelihood of this
will not be able to generate the same level of long-term has decreased significantly over the past 12 months due
inflation beating returns of our more growth orientated to the current low level of inflation in South African and
portfolios. the global trend with regards to low interest rates and
further rate cuts (although muted) from select developed
Radar: No funds on the radar screen. market countries. As a multi-asset fund, the Income FoF
Changes: There are no changes to the underlying funds. can have exposure to equities, property and offshore
assets, however this exposure is limited to a combined
risk budget of 25%. Over the long term, these positions
has boosted the absolute and relative performance of the
FoF, however they add some volatility to the short term
returns of the FoF and can, as experienced over the last
12 to 24 months result in the FoF lagging behind more
conservative peers. We are, however, confident that
the fund will deliver positive returns over the preferred
investment period of two years and longer, and that it will
continue to deliver above-average returns with below-
average risk.
Radar: Ninety One Diversified Income is added onto the
quantitative radar screen.
Changes: None.
PSG Wealth | Monthly Insights - June 2021 9PSG Wealth Domestic Solutions
PSG Wealth Preserver FoF PSG Wealth Moderate FoF
• The FoF delivered a return of 0.80% for May 2021 compared • The FoF delivered a return of 1.04% for May 2021,
with the 0.41% of its benchmark, the South African MA Low compared with the 0.36% of its benchmark, the South
Equity sector average. African MA High Equity sector average.
• It underperformed the South African MA Low Equity sector • It has an investment horizon of five years and has
average over the three-year period with 6.56% against 6.74% outperformed its benchmark with 6.00% against 5.21%
and is ranked 78th out of 134 funds over this period. over the five-year period. It is ranked 45th out of 145 funds
• This fund also delivered first or second quartile performances over this period.
over all measurement periods except three and four years. • It also delivered first or second quartile performances for
all measurement periods.
Asset allocation
Asset allocation
Domes�c bonds, 36.85
Domes�c cash and money market, 16.85 Domes�c equity, 43.89
Domes�c equity, 21.7 Foreign equity, 23.89
Foreign equity, 15.72 Domes�c bonds, 18.95
Domes�c property, 2.48 Domes�c cash and money market, 6.6
Foreign bonds, 3.75 Domes�c property, 2.72
Foreign cash and money market, 1.57 Foreign cash and money market, 1.08
Foreign property, 0.79 Foreign property, 1.6
Foreign other, 0.3 Foreign bonds, 0.86
Domes�c other, 0
Domes�c other, 0
Foreign other, 0.42
Source: PSG Wealth research team
Source: PSG Wealth research team
Risk and expectations: The PSG Wealth Preserver
FoF can hold up to a total of 40% in domestic and Risk and expectations: The PSG Wealth Moderate
offshore equities and may deliver negative short-term FoF may hold up to a total of 75% in domestic and
performances in sharp equity corrections or equity bear offshore equities and could deliver negative short-term
markets. We are confident that the fund will continue to performances in sharp equity corrections or equity bear
deliver above-average returns with below-average risk markets. We are confident that the fund will continue to
over its minimum recommended investment period of deliver above-average returns with below-average risk
three years. Additionally, the fund remains positioned over its recommended minimum investment period of
to protect the capital of clients over 12-month periods five years.
during severe negative equity market corrections.
Radar: The SIM Balanced fund remains on the
Radar: The SIM Inflation Plus to remain on the quantitative quantitative radar screen, while Ninety One Opportunity
radar screen. has been added on to the quantitative radar screen.
Changes: None. Changes: None.
PSG Wealth | Monthly Insights - June 2021 10PSG Wealth Domestic Solutions
PSG Wealth Creator FoF
• The FoF delivered a return of 2.22% for May 2021,
compared with the 1.84% of its benchmark, the South Risk and expectations: Although the outlook for equities
African EQ General Sector Average. is still uncertain, we are confident that the relative
• It has an investment horizon of five years and longer and performance of the underlying managers in the fund will
has outperformed its benchmark with 7.52% against the continue to improve in the near future. The managers are
4.56% over the five-year period while also outperforming all active managers that have demonstrated the ability
over the seven-year period with 7.04% compared to 4.74% to add alpha through careful stock selection, particularly
of the benchmark. It is ranked 26th out of 111 funds over the during turbulent equity markets. This fund will always
five-year period and 21st out of 85 funds over the seven-year maintain an exposure of close to 100% in domestic and
period. offshore equities. It will deliver negative performances in
sharp equity corrections or equity bear markets. We are
• The fund also delivered first or second quartile
confident that the fund will continue to deliver above-
performances for all measurement
PSG WEALTH CREATOR periods.
FOF average long-term returns with below-average risk.
Asset allocation Radar: None.
Changes: No changes to underlying funds.
Domes�c equity, 80.32
Foreign equity, 14.41
Domes�c property, 1.23
Domes�c cash and money market, 3.4
Foreign property, 0.46
Foreign cash and money market, 0.17
Source: PSG Wealth research team
PSG Wealth | Monthly Insights - June 2021 11PSG Wealth Offshore Solutions Contents
Offshore fund’s performance table
Reported in USD
Fund 6-Months 1-Year 2-Years 3-Years 4-Years 5-Years
PSG Wealth Global Preserver FoF D USD 5.61% 14.23% 6.52% 5.31% 4.37% 5.20%
PSG Wealth Global Moderate FoF D USD 9.76% 26.33% 13.42% 8.03% 7.27% 7.46%
PSG Wealth Global Flexible FoF D USD 9.81% 28.87% 17.46% 12.94% 11.67% 12.57%
PSG Wealth Global Creator FoF D 14.55% 38.82% 23.54% 16.06% 14.90% 15.12%
Reported in GBP
Fund 6-Months 1-Year 2-Years 3-Years 4-Years 5-Years
PSG Wealth Global Preserver FoF D GBP 0.54% 2.28% 1.44% 3.08% 2.26% 5.21%
PSG Wealth Global Flexible FoF D GBP 3.38% 12.35% 11.06% 10.49% 8.63% 12.43%
Source: PSG Wealth research team
Offshore funds performance
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
3-Months 6-Months 1-Year 2-Years 3-Years 5-Years
PSG Wealth Global Preserver FoF D USD PSG Wealth Global Moderate FoF D USD PSG Wealth Flexible FoF D USD PSG Wealth Global Creator FoF D
Source: PSG Wealth research team data as at 31 May 2021 *Dots represent the relevant benchmark
All performance is reported in USD unless specified otherwise.
PSG Wealth | Monthly Insights - June 2021 12PSG Wealth Offshore Solutions
PSG Wealth Offshore Fund of Funds (USD)
20.0
Returns (5yr)
15.0
EAA Fund Global Large-Cap Blend
Equity, 1.35 Global Creator FoF D, 1.46
EAA Fund USD Flexible Alloca�on, 1.30
10.0
EAA Fund USD Cau�ous
Alloca�on, 1.48
5.0
Global Moderate FoF D, 1.55 Global Flexible (USD) D, 1.33
0.0
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Global Preserver (USD) D, 1.44
-5.0
EAA Fund USD Moderate Alloca�on, 1.40
-10.0
Downside Devia�on (5yr)
Source: PSG Wealth research team
PSG Wealth Offshore Fund of Funds (GBP)
Returns (5yr)
14.0
9.0
Global Preserver (GBP) D, 1.50
EAA Fund GBP Cau�ous Alloca�on, EAA Fund GBP Flexible Alloca�on,
0.73 1.10
4.0
Global Flexible (GBP) D, 1.38
-1.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
-6.0
Source: PSG Wealth research team
Downside Devia�on (5yr)
How to read the bubble charts
Vertical axis Shows the return of each fund Size of the bubble Shows TER which is an indication of cost
Horizontal axis Shows the downside deviation which is a measure of Grey bubbles Indicate fund peers
downside risk that focuses on returns that fall below a
minimum threshold or minimum acceptable return (MAR) Gold bubbles Represent PSG Wealth solutions
PSG Wealth | Monthly Insights - June 2021 13PSG Wealth Offshore Solutions
PSG Wealth Global Preserver FoF (USD) PSG Wealth Global Preserver FoF (GBP)
• The FoF delivered a return of 0.80% in USD for May 2021, • The FoF made a negative return of 1.34% in GBP for May
outperforming the benchmark Morningstar EAA Funds USD 2021, underperforming the benchmark Morningstar EAA
Cautious Allocation sector average, which delivered 0.57%. Funds GBP Cautious allocation sector average, which
• It ranked in the first or second quartile of its global sector over delivered 0.09%.
all measurement periods, except two year and four year, and it • It ranked in the first and second quartile of its global sector
is ranked 24th out of 79 funds over the past five years. The FoF over measurement periods longer than four years, is ranked
has delivered 0.84% per annum above the benchmark sector 8th out of 35 funds over the past five years. The FoF has
average over five years.
PSG WEALTH GLOBAL PRESERVER FOF USD delivered 1.30% per annum above the benchmark sector
average
PSG over five
WEALTH years. PRESERVER FOF GBP
GLOBAL
Asset allocation
Asset allocation
Foreign bonds, 58.73
Foreign equity, 26.43
Foreign bonds, 58.96
Foreign other, 3.57
Foreign equity, 26.54
Foreign cash and money market, 8.07
Foreign other, 3.59
Foreign property, 2.84
Foreign cash and money market, 7.69
Domes�c bonds, 0.54
Foreign property, 2.85
Domes�c bonds, 0.54
Source: PSG Wealth research team
Source: PSG Wealth research team
Risk and expectation: The portfolio has a high equity
allocation relative to peers and could underperform
during periods of strong equity market declines, Risk and expectation: The portfolio has a high equity
conversely the portfolio will perform well when equity allocation relative to peers and could underperform
markets outperform other asset classes. Rising global during periods of strong equity market declines,
interest rates could also result in capital losses on the conversely the portfolio will perform well when equity
fixed interest and property portions of the portfolio. markets outperform other asset classes. Rising global
However, this impact is limited due to the FoF’s low bond interest rates could also result in capital losses on the
duration. Additionally, sufficient diversification through fixed interest and property portions of the portfolio.
its overweight allocation to equities to provide some However, this impact is limited due to the FoF’s low bond
protection to the portfolio in the event of any unexpected duration. Additionally, sufficient diversification through
interest rate increases. its overweight allocation to equities to provide some
protection to the portfolio in the event of any unexpected
Radar: Ninety One GSF Glb MA Inc A Acc USD remains
interest rate increases.
on the quantitative screen.
Radar: Ninety One GSF Glb MA Inc A Acc USD remains
Changes: Note on benchmark: Morningstar has replaced
on to the quantitative radar screen, while Fidelity Global
the GIFS sector, as previously used as our benchmark,
Mlt Ast Inc I-Acc-GBP is added to the quantitative radar
with the Morningstar EAA Fund categories. The
screen.
Morningstar categories and the GIF sectors have been
aligned for many years and are identical for funds, the GIF Changes: Note on benchmark: Morningstar has
averages are now switched to the Morningstar Category replaced the GIFS sector, as previously used as our
averages. Although the constituents of these two benchmark, with the Morningstar EAA Fund categories.
categories are now identical, differences in calculation The Morningstar categories and the GIF sectors have
and historical constituents may lead to the returns being been aligned for many years and are identical for funds,
marginally different. the GIF averages are now switched to the Morningstar
Category averages. Although the constituents of
these two categories are now identical, differences in
calculation and historical constituents may lead to the
returns being marginally different.
All performance is reported in USD unless specified otherwise.
PSG Wealth | Monthly Insights - June 2021 14PSG Wealth Offshore Solutions
PSG Wealth Global Moderate FoF (USD) PSG Wealth Global Moderate FF (ZAR)
• The FoF delivered a return of 1.24% in USD for May • The FF delivered a negative return of 3.44% in rand-terms
2021, underperforming the Custom Moderate Allocation for May 2021, outperforming the Morningstar EAA Funds
Benchmark, which delivered 2.06%. USD Moderate allocation sector average, which delivered
• It is ranked in the second quartile of its Custom Investment -4.53%.
PSG WEALTH
Universe GLOBAL MODERATE
for all measurement periods longer FOF
than four years. • The rand increased by approximately 4.69% against the
US dollar over May 2021, thus decreasing global portfolio
Asset allocation returns reported in rand.
• The fund is ranked in the second and third quartile of
the ASISA Global Multi Asset Flexible sector over all
Foreign equity, 61.33
PSG WEALTH
measurement periods.GLOBAL MODERATE FF
Foreign bonds, 18.56
Asset allocation
Foreign cash and money market, 13.24
Foreign other, 4.66
Foreign property, 2.15
Domes�c bonds, 0.15 Foreign equity, 61.07
Domes�c equity, 0.05 Foreign bonds, 18.48
Domes�c cash and money market, -0.15 Foreign cash and money market, 13.18
Foreign other, 4.64
Foreign property, 2.15
Source: PSG Wealth research team
Domes�c cash and money market, 0.28
Domes�c bonds, 0.15
Risk: The portfolio is defensively positioned with a Domes�c equity, 0.05
developed market overweight and performance will likely
be muted during periods of positive market sentiment Source: PSG Wealth research team
when risky assets such as emerging markets outperform.
The portfolio currently has 18.71% in bonds, which could
be negatively impacted by unexpected interest rate Risk and expectation: We expect increased volatility
increases. However, this risk is mitigated to an extent by in the rand over the short term, which could have a
relatively large equity allocation, 61.38%. significant impact on rand returns for our global funds.
Expectation: We expect volatility to remain high in the However, over longer periods (seven years +) we expect
short term with fluctuating market sentiment in global the currency effect will be relatively flat and given the
equity markets, the cash position provides a buffer relative valuation of global assets, especially equities, we
against market downturns. Our underlying managers still believe the fund offers good opportunities.
are also able to deploy this cash when they find more
attractive opportunities in the market. Interest rate risk is
actively managed by our underlying managers, with most
positioned on the shorter end of the yield curve.
Radar: None.
Changes: Note on benchmark: Morningstar has replaced
the GIFS sector, as previously used as our benchmark, with
the Morningstar EAA Fund categories. The Morningstar
categories and the GIF sectors have been aligned for many
years and are identical for funds, the GIF averages are now
switched to the Morningstar Category averages. Although
the constituents of these two categories are now identical,
differences in calculation and historical constituents may
lead to the returns being marginally different.
All performance is reported in USD unless specified otherwise.
PSG Wealth | Monthly Insights - June 2021 15PSG Wealth Offshore Solutions
PSG Wealth Global Flexible FoF (USD) PSG Wealth Global Flexible FoF (GBP)
• The FoF delivered a return of 1.33% in USD for May 2021, • The FoF delivered a negative return of 1.35% in GBP for
outperforming the Morningstar EAA Funds USD Flexible May 2021, underperforming the benchmark Morningstar
allocation sector, which returned 0.94%. EAA Funds GBP Flexible allocation sector average, which
• It ranked in the first quartile of its global sector over all delivered 0.40%.
measurement periods greater than six months. • It ranked in the first quartile of its global sector over all
• The FoF has delivered excess returns of 6.67% per annum measurement periods longer than 1 year, and is ranked
above theWEALTH
sector average over the past FOF
five years. 5th out of 98 funds over the past five years. The FoF has
PSG GLOBAL FLEXIBLE USD
delivered excess returns of 6.14% per annum above the
PSG WEALTH GLOBAL FLEXIBLE FOF GBP
sector average over this period.
Asset allocation
Asset allocation
Foreign equity, 70.26
Foreign bonds, 14.74
Foreign equity, 70.67
Foreign cash and money market, 10.26
Foreign bonds, 14.73
Foreign other, 3.26
Foreign cash and money market, 9.89
Foreign other, 1.47
Foreign property, 3.25
Foreign other, 1.46
Source: PSG Wealth research team
Source: PSG Wealth research team
Risk and expectation: The portfolio currently has an
equity allocation of 70.26%, which is above the average
in the global flexible sector. Thus, the portfolio will likely Risk and expectation: The portfolio currently has an
underperform should there be a significant correction equity allocation of 70.67%, which is above the average
in global equity markets. We expect volatility to remain in the global flexible sector. Thus, the portfolio will likely
high in the short term with fluctuating market sentiment underperform should there be a significant correction
in global equity markets. However, we are confident that in global equity markets. We expect volatility to remain
our underlying managers will adjust the positioning of high in the short term with fluctuating market sentiment
their portfolios as they find opportunities that offer good in global equity markets. However, we are confident that
returns relative to the risk taken. our underlying managers will adjust the positioning of
Radar: MFS Meridian Prudent Capital I1 USD is removed their portfolios as they find opportunities that offer good
from the quantitative radar screen. returns relative to the risk taken.
Changes: Note on benchmark: Morningstar has replaced Radar: MFS Meridian Prudent Capital I1 USD remains
the GIFS sector, as previously used as our benchmark, with on to the quantitative radar screen, while UBS (Lux) SF
the Morningstar EAA Fund categories. The Morningstar Growth $ P-acc was added to the quantitative radar
categories and the GIF sectors have been aligned for many screen.
years and are identical for funds, the GIF averages are now
switched to the Morningstar Category averages. Although Changes: Note on benchmark: Morningstar has replaced
the constituents of these two categories are now identical, the GIFS sector, as previously used as our benchmark,
differences in calculation and historical constituents may with the Morningstar EAA Fund categories. The
lead to the returns being marginally different. Morningstar categories and the GIF sectors have been
aligned for many years and are identical for funds, the GIF
averages are now switched to the Morningstar Category
averages. Although the constituents of these two
categories are now identical, differences in calculation
and historical constituents may lead to the returns being
marginally different.
All performance is reported in USD unless specified otherwise.
PSG Wealth | Monthly Insights - June 2021 16PSG Wealth Offshore Solutions
PSG Wealth Global Creator FoF (USD) PSG Wealth Global Creator FF (ZAR)
• The FoF delivered a return of 0.58% in USD for May 2021, • The FF delivered a negative return of 3.70% for May 2021
underperforming the benchmark Morningstar EAA Funds in rand terms, underperforming the global sector average,
Global Large-Cap Blend equity sector, which delivered which returned -3.72% and outperforming the ASISA Global
1.68%. Equity General sector, which returned -4.24%.
• It is ranked in the first and second quartile of global equity • The rand increased by approximately 4.69% against the
funds over all measurement periods, except for periods less US dollar over May 2021, thus decreasing global portfolio
than two years. The ranking universe is not restricted to returns reported in rand.
only funds registered for sale in South Africa and includes • The fund delivered first quartile returns for all measurement
PSGfullWEALTH
the GLOBAL
range of global CREATOR
open-ended FOF
funds falling within the periods, greater than one year. Over the past five years, the
Morningstar GIFS Global Large Cap Blend sector. FF outperformed the ASISA Global Equity General sector
PSG WEALTH GLOBAL CREATOR FF
average by 3.35% per annum.
Asset allocation
Asset allocation
Foreign equity, 96.49
Foreign cash and money market, 2.25 Foreign equity, 97.23
Foreign other, 0 Foreign cash and money market, 2.27
Foreign property, 1.23 Foreign other, 0
Foreign property, 1.24
Domes�c cash and money market, -0.76
Source: PSG Wealth research team
Source: PSG Wealth research team
Risk: Most of our underlying managers remain relatively
defensively positioned, with a preference for high-quality
stocks with very strong balance sheets, strong moats Risk and expectation: We expect increased volatility
and steady earnings outlooks. Given the high allocation in the rand over the short term, which could have a
to quality large caps, mostly in developed markets, we significant impact on rand returns for our global funds.
expect to underperform global markets when sentiment However, over longer periods (seven years +) we expect
is very positive and relatively risky assets, such as the currency effect will be relatively flat and given the
emerging market equities, perform strongly (risk-on relative valuation of global equities we still believe the
trade). fund offers good opportunities.
Expectation: We are confident that our underlying
managers will adjust the positioning of their portfolios
(including exposure to emerging markets) as they find
opportunities that offer good returns relative to the
risk taken. We expect volatility to remain high in the
short term with fluctuating market sentiment in global
equity markets, thus we are comfortable with the overall
defensive positioning of our fund.
Radar: Nedgroup Inv Funds Global Equity A Acc and
Threadneedle (Lux) Global Select 8U USD were added to
the quantitative radar screen.
Changes: Note on benchmark: Morningstar has replaced
the GIFS sector, as previously used as our benchmark,
with the Morningstar EAA Fund categories. The
Morningstar categories and the GIF sectors have been
aligned for many years and are identical for funds, the GIF
averages are now switched to the Morningstar Category
averages. Although the constituents of these two
categories are now identical, differences in calculation
and historical constituents may lead to the returns being
marginally different.
All performance is reported in USD unless specified otherwise.
PSG Wealth | Monthly Insights - June 2021 17PSG Wealth House View Contents
Equity Portfolios
Performance table
PSG Wealth House View equity portfolios
Since
Fund 1-Month 3-Months 6-Months 12-Months 2-Years 3-Years 4-Years
inception
SA Equity Portfolio 2.70% 4.44% 13.79% 23.91% 2.25% -0.48% 1.74% 3.88%
SA Property Portfolio -3.40% 7.10% 34.74% 45.15% -14.73% -14.06% -10.63% -8.71%
Offshore Equity Portfolio (USD) 1.67% 11.86% 18.42% 36.92% 22.96% 17.91% 16.63% 15.83%
SA Income Growth Equity Portfolio 4.54% 6.07% 16.61% 23.81% -4.64% -4.32% 0.04% 0.12%
Source: PSG Wealth research team
SA Equity Portfolio
Appropriate for investors seeking real Offshore Equity Portfolio
returns in capital that exceed the local equity Appropriate for investors seeking
market returns, but who are comfortable real returns in capital that exceed the
with the capital fluctuations that international benchmark returns.
characterise an investment of this type.
Overview
of equity
portfolios
Income Growth Equity Portfolio
Suitable for investors that require a SA Property Equity Portfolio
regular and growing stream of income For the more risk-averse investor who
derived from dividends with the requires a regular income.
potential for real growth in capital value.
PSG Wealth | Monthly Insights - June 2021 18PSG Wealth House View Equity Portfolios
PSG Wealth House View SA Equity Portfolio
• The portfolio made a return 2.70%, while the composite
benchmark returned 2.93% for May 2021. Expectations:
• Ten (50%) of the 20 stocks in this portfolio ended above its • Stronger global growth to follow the reopening
benchmark last month. of economies boosted by the impact of stimulus
packages.
Performance since inception • This, together with a focus on more sustainable
environmental practices, are likely to serve as a
31% tailwind to cyclical and commodity counters.
• Some alleviation on stained government finances,
25% due to improvements in commodity prices, is likely to
support the local currency.
19%
• Sufficient regulatory reform to support the economy
in the longer term.
13%
• Financial systems sufficiently robust to deal with the
7% current challenges.
• South African equity performance to be correlated to
1% value factor performance in the global value versus
growth theme.
-5%
• Given the diversification of the portfolio, the quality
1-Month 3-Months 6-Months 12-Months 2-Years 3-Years 4-Years Since
incep�on of its chosen investments, and the balance between
PSG Wealth House View SA Equity Por�olio domestic and offshore sectors, we believe the impact
of macro variables on portfolio returns should be
Disclaimer: Annualised for periods greater than one year reduced.
Source: PSG Wealth research team data as at 31 May 2021
*Inception date: 30 August 2015
Risk:
• Government finances and the funding of heavily
Asset allocation indebted SOE remain a material concern.
• Government reforms that are insufficient to restore
international investor confidence and to return the
economy to growth.
Consumer Discre�onary • The inflationary impact of higher demand flowing from
Financials higher economic growth and higher input prices.
Materials • Uncertainty on the shape of the economic recovery.
Consumer Staples • New waves of Covid-19 can translate into renewed
Communica�on Services lockdowns, which can delay any economic recovery.
Real Estate • The effectiveness of vaccines on local strains of the
Cash virus.
• Logistical challenges surrounding vaccine rollout.
• Altered growth trajectories between vaccinated and
Source: PSG Wealth research team
unvaccinated countries.
• The economy remains weak and does not recover to
levels seen before the virus outbreak.
• Poor visibility on the impact of job losses and sector
failures.
• Unreliable electricity supply.
• Changes in the perception of sovereign risk (positive
and negative) and its flow through to exchange and
interest rates can impact portfolio values.
PSG Wealth | Monthly Insights - June 2021 19PSG Wealth House View Equity Portfolios
PSG Wealth House View SA Property Portfolio
• The portfolio made a return of -3.40% during May 2021,
underperforming the FTSE/JSE SA All Property TR, which Expectations:
returned -3.23%. • Capital market that is liquid enough to support funding
• Eight (50%) of the 16 stocks in the portfolio performed needs.
above its benchmark. • Significantly lower earnings growth expectations
translate into lower dividend yields.
Performance since inception • Companies retaining capital to ensure liquidity, which
in some circumstances may place REIT status at risk.
75%
• Significant stress to operating models with some likely
to experience balance sheet crises.
50% • Tough property valuation cycle ahead with weaker
fundamentals not priced into NAV.
• The sluggish economic environment will continue to
25% place pressure on the real estate sector.
• There is generally an oversupply of office space.
0%
• Demand for vacant space will remain muted, placing
further pressure on rentals. Weak economic growth
might result in higher vacancy profiles and rental
-25%
reversions.
1-Month 3-Months 6-Months 12-Months 2-Years 3-Years 4-Years Since
incep�on
• Due to the highly competitive and weak market
PSG Wealth House View SA Property Por�olio
dynamics, attracting and retaining tenants has become
costlier, with retail companies increasing incentives for
Disclaimer: Annualised for periods greater than one year tenants.
Source: PSG Wealth research team data as at 31 May 2021 • Capital market changes generally dominate short-
*Inception date: 1 December 2015 term returns.
Asset allocation
Risk:
• Uncertainty on the shape of the economic recovery.
• The economy remains weak and does not recover to
levels seen before the virus outbreak.
• The fluid situation with poor visibility on the impact of
Diversified REITs
job losses and sector failures.
Real Estate Opera�ng Companies
• Tightening in credit conditions could influence access
Retail REITs
to capital.
Industrial REITs
Cash
• Difficulty to delever balance sheets with falling
property values.
• Liquidity crisis could erode dividends underpinning the
current valuations.
Source: PSG Wealth research team
• Changes in sovereign risk (positive and negative) and its
flow through to capital markets can significantly impact
valuations.
• Liquidity risk could lead to the inability to sell
underperforming assets quickly.
PSG Wealth | Monthly Insights - June 2021 20PSG Wealth House View Equity Portfolios
PSG Wealth House View Offshore Equity Portfolio
• The portfolio returned 1.67% (USD) in May 2021,
outperforming the Dow Jones Global Titans 50 TR that Expectations:
delivered -0.42%. • Successful vaccine rollouts translate into a reopening
of major economies.
• Thirteen (65%) of the 20 stocks in this portfolio ended above
its benchmark. • Global monetary conditions to remain accommodative
in the medium term in order to support economic
recovery.
Performance since inception
• High duration growth stocks to come under pressure
40% should economic stimulus translate into higher
inflation expectations.
35%
• Fading growth outlook for high growth counters could
30%
have an outsized impact on valuations.
25%
• Stronger global growth expectations should support
20% a rotation toward more cyclical and economically
15%
sensitive stocks.
• Overweight portfolio positions towards stable
10%
healthcare and consumer staple counters should
5% reduce volatility.
0 • Given the diversification of the portfolio and the
1-Month 3-Months 6-Months 12-Months 2-Years 3-Years 4-Years Since
incep�on
quality of its chosen investments, we believe the
impact should be reduced.
PSG Wealth House View Offshore Equity Por�olio (USD)
Disclaimer: Annualised for periods greater than one year
Source: PSG Wealth research team data as at 31 May 2021 Risk:
*Inception date: 30 August 2015 • High valuation gap between growth and value
exposures and a rotation to value could negatively
impact portfolio performance.
Asset allocation
• Sustained international monetary stimulus creates
demand for quality, stable and high-yielding equities.
This provides a valuation to underpin investments in
Consumer Discre�onary the portfolio. The portfolio is likely to struggle should
Financials this deteriorate.
Materials • More regulatory headwinds regarding the use of
Consumer Staples personal information is likely to influence technology
Industrials counters to which the portfolio is exposed.
Communica�on Services • The effectiveness of vaccines on new strains of the
Healthcare virus could impact the reopening of economies.
Informa�on Technology
Energy
Source: PSG Wealth research team
PSG Wealth | Monthly Insights - June 2021 21PSG Wealth House View Equity Portfolios
PSG Wealth House View Income Growth Equity
Portfolio
• The portfolio made a return of 4.54% during May 2021,
outperforming its benchmark, the FTSE/JSE Capped SWIX
Expectations:
TR, which made a return of 2.93% over the same period.
• Stronger global growth to follow the reopening
• Ten (56%) of the 18 stocks in this portfolio came in above the of economies boosted by the impact of stimulus
benchmark. packages.
• This, together with a focus on more sustainable
Performance since inception environmental practices, are likely to serve as a
tailwind to cyclical and commodity counters.
30%
• Some alleviation on stained government finances,
25% due to improvements in commodity prices, is likely to
support the local currency.
20%
• Sufficient regulatory reform to support the economy
15% in the longer term.
10% • Financial systems sufficiently robust to deal with the
current challenges.
5%
• South African equity performance to be correlated to
0 value factor performance in the global value versus
growth theme.
-5%
• Given the diversification of the portfolio, the quality
-10% of its chosen investments, and balance between
1-Month 3-Months 6-Months 12-Months 2-Years 3-Years 4-Years Since
incep�on domestic and offshore sectors, we believe that the
PSG Wealth House View Income Growth Equity Por�olio impact of macro variables on portfolio returns should
be reduced.
Disclaimer: Annualised for periods greater than one year (since inception) • Given the portfolio’s exposure to domestically focused
Source: PSG Wealth research team data as at 31 May 2021 stocks, the portfolio should outperform during periods
*Inception date: 29 April 2016 of ZAR and local bond strength.
Asset allocation Risk:
• Government finances and the funding of heavily
indebted SOE remain a material concern.
• Government reforms that are insufficient to restore
Consumer Discre�onary international investor confidence and to return the
Financials economy to growth.
Materials • The inflationary impact of higher demand flowing
Consumer Staples from higher economic growth and higher input prices.
Communica�on Services • Uncertainty on the shape of the economic recovery.
Real Estate • New waves of Covid-19 can translate into renewed
lockdowns, which can delay any economic recovery.
• The effectiveness of vaccines on local strains of the
virus.
Source: PSG Wealth research team
• Logistical challenges surrounding vaccine rollout.
• Altered growth trajectories between vaccinated and
unvaccinated countries.
• The economy remains weak and does not recover to
levels seen before the virus outbreak.
• Poor visibility on the impact of job losses and sector
failures.
• Unreliable electricity supply.
• Changes in the perception of sovereign risk (positive
and negative) and its flow through to exchange and
interest rates can impact portfolio values.
PSG Wealth | Monthly Insights - June 2021 22Other publications Contents
Previous publications
Daily Weekly
30 June 2021 19 May 2021
23 Jun 02 Dec 10 Jun 13 Nov
Weekly Investment Update [WIU]
Insights from our research team
15 Jun 18 Nov 03 Jun 06 Nov
Key market indicators
09 Jun 11 Nov 20 May 16 Oct
02 Jun 04 Nov 13 May 09 Oct
FTSE/JSE All Share TR ZAR FTSE/JSE Financials TR ZAR FTSE/JSE SA Industrials TR ZAR FTSE/JSE Fin&Ind 30 TR ZAR
Level: 10 632.4 Level: 8 524.5 Level: 17 637.3 Level: 13 889.9
-1.70% -0.78% -1.75% -1.85%
R2030 (SA Bond) ZAR S&P 500 TR USD DJ Industrial Ave TR USD FTSE: 100 TR GBP
Level: 93.5 Level: 8 647.6 Level: 79 919.8 Level: 6 818.9
-0.84% -0.56% -1.14% -1.23%
Hang Seng HSI TR HKD USD/ZAR GBP/ZAR EUR/ZAR
19 May 21 Oct 06 May 02 Oct
Level: 10 913.48 Level: 14.10 Level: 19.94 Level: 17.13
-1.36% -0.41% -0.55% -0.56%
Source: Bloomberg
Data as at 17 May 2021. Measurement from Monday 10 May 2021 to Monday 17 May 2021.
Macroeconomics in brief
UK: Britain’s unemployment rate fell to
4.80% y/y in the three months to March
2021, below market predictions of 4.90%.
EU: Eurozone’s trade surplus narrowed to
€15.8 billion in March 2021 after imports
jumped 19.20% y/y to the highest level in
nearly two and a half years. 12 May 14 Oct 29 Apr 18 Sep
IT: Italy’s trade surplus narrowed to €5.19 billion
in March 2021 as exports jumped 28.10% y/y
to the highest level since October 2019. JP: A preliminary estimate showed that
Japan’s economy contracted by 1.30% on
quarter in 1Q21, following a 2.80% advance
in the previous three-month period.
05 May 07 Oct 15 Apr 11 Sep
21 Apr 23 Sep 08 Apr 04 Sep
SA: Local mining production rose by 21.30%
y/y from a year earlier in March 2021, following
a revised 2.30% decline in February 2021 and
marking the sharpest increase since March 2015.
Source: Trading Economics
Data as at 18 May 2021
14 Apr 16 Sep 01 Apr 21 Aug
PSG Wealth | Weekly Investment Update – 19 May 2021
07 Apr 09 Sep 18 Mar 14 Aug
24 Mar 02 Sep 11 Mar 07 Aug
17 Mar 19 Aug 04 Mar 17 Jul
10 Mar 12 Aug 19 Feb 10 Jul
03 Mar 05 Aug 12 Feb 03 Jul
17 Feb 22 Jul 05 Feb 19 Jun
10 Feb 15 Jul 22 Jan 12 Jun
03 Feb 08 Jul 15 Jan 05 Jun
20 Jan 01 Jul 04 Dec 22 May
09 Dec 17 Jun 20 Nov 07 May
Monthly Research and Strategy Report
May 2021 Jul 2020 Sep 2019 Autumn 2021 Spring 2019
Apr 2021 Jun 2020 Aug 2019 Summer 2021 Winter 2019
Mar 2021 May 2020 Jul 2019 Spring 2020 Autumn 2019
Feb 2021 Apr 2020 Jun 2019 Winter 2020 Summer 2019
Jan 2021 Mar 2020 May 2019 Autumn 2020 Spring 2018
Nov 2020 Feb 2020 Apr 2019 Summer 2020 Winter 2018
Oct 2020 Jan 2020 Mar 2019 Investment Research
and Strategy Report
Monthly Investment Insights
Sep 2020 Nov 2019 Feb 2019
2021 Q1 review
April 2021
Aug 2020 Oct 2019 Jan 2019
Special report Wealth Perspective
Prosus voluntary exchange A word from our CIO
Have you thought about the
April 2021
Adriaan Pask PhD
risk of inflation?
Blockchains and bitcoins - a wealth manager’s
CIO, PSG Wealth
For many investors, the risk – rather than just the return – of their investments has been top of mind during this uncertain
time. While pandemic-induced factors such as currency volatility, recessions and sluggish growth can leave investors nervous,
there are bigger risks that investors often fail to consider. These include allowing your emotions to influence your decisions,
perspective
the failure to save adequately, and perhaps most detrimental, underestimating the impact of inflation over time.
With the current extreme levels of monetary and However, no drastic increases in inflation have been
fiscal stimulus, inflation risk is escalating recorded yet
Over the past year, we’ve seen unprecedented levels of fiscal In South Africa, inflation rose to 3.20% in January 2021
and monetary support globally. A combination of President Joe compared to 4.50% in the same month last year. The US
Biden’s $1.9 trillion stimulus aid, the US Federal Reserve’s (the inflation rate was recorded at 1.40% in January 2021
Fed) determination to suppress interest rates for longer, and a compared to 2.50% in January 2020. Britain’s inflation declined
possible post-Covid-19 consumer spending boom give market to 0.70% in January 2021 compared to 1.80% in the same
Active management in equity portfolios
participants enough reason to believe that a spike in inflation month last year. And in China, inflation fell by 0.30% in the first
is imminent. In general, when additional capital is injected into month of this year compared to an increase to 5.40% in the
the economy by way of fiscal stimulus, and interest rates start same period over the previous year.
to decline simultaneously, higher levels of inflation become
inevitable.
Recent inflation rates compared to January 2020
Inflation in Inflation in Inflation in
Interest and yield-focussed solutions
Country CPI* in January 2020
December 2020 January 2021 February 2021
South Africa 4.50% 3.10% 3.20% 2.90%
United States 2.50% 1.40% 1.40% 1.70%
United Kingdom 1.80% 0.60% 0.70% 0.40%
China 5.40% 0.20% -0.30% -0.20%
Brazil 4.19% 4.52% 4.56% 5.20%
Remgro unbundling (adviser version) Down-
India 7.59% 4.59% 4.06% 5.03%
Voluntary exchange of Naspers
Inflation trending higher Inflation trending lower Inflation stable at previous month recording
Source: Trading Economics *Consumer price inflation as at 16 March 2021
shares for Prosus shares
grade FAQs
Special Report
…we believe it is essential that investors avoid
May 2021 excessive cash allocations.
Moody’s downgrade First Quarter 2021
Covid-19 questions and answers
Advice to Advisers: Crisis of confidence, or
not?
Naspers and NewCo – what you should know
Lessons from the PSG Annual Conference
Mboweni as new Minister of Finance
Value investing in the 21st century
Our bear risk indicator
Sequence risk and our bucket philosophy
PSG Wealth | Monthly Insights - June 2021 23You can also read
