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    Chart of local market performance

    Yesterday I briefly looked at investment performance across the various global assets in 2010. Today I have focused on returns in South Africa across the various asset classes available for general investment.

    The chart below, courtesy of SIM, looks at discrete annual returns in each calendar year across various asset classes.

    Asset Class returns to end of December 2010

    Source: www.sim.sanlam.com

    These have been colour coded to provide a guide as to what were the best and worst performers in each year over the past 11 years.

    There are a few points noteworthy from this illustration of returns:

    • There is not one asset class that is constantly at the top, despite listed property having had a very good run over the last 11 years.

    • Likewise there is not one asset class that is consistently at the bottom of the log; however inflation and bonds have tended to dominate this position.

    • Twice SA Equities were the worst performer in a calendar year, but they have also been top performer in 4 of the 11 years.

    • Except for a couple of years like 2001 and 2005, foreign equity (as measured in rands) has been a relatively poor performer. It has been particularly weak over the last 4 calendar years. Perhaps time for a rebound?

    Because of the variation of returns across the asset classes, a balanced fund which in this case comprises 65% local equities, 10% bonds, 10% money market, 7,5% global equity and 7,5% global bonds has been the most consistent performer, tending to sit near the middle of the range of performances.

    In most of the years a balanced fund has outperformed inflation and because of the diversity of holdings it will have a lower volatility than pure equities.

    For this reason, a local balanced fund is typically one of the better options for most investors, be they saving for the longer term, or looking at options for their retirement funding.

    Kind regards

    Ian de Lange
    021 9144 966

    Permalink2011-01-12, 17:31:02, by ian Email , Leave a comment
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