Winter is upon us, and temperatures are dropping. To ensure our investments are not dropping as well, this newsletter will hopefully shed some light on what the next 12 months have in store for us in terms of investments. With the Euro crisis not under control yet, it affects our markets directly. This newsletter contains relevant investment news and also the report on investment expectations for the next 12 months. The report collates the performance expectations of leading South African Asset Managers over the coming 12 months. Asset managers are asked to comment on expected performance of various asset classes and index sectors, currency levels and commodity prices.  As no one has a crystal ball to know what will happen in the future, the view of several investment professionals at least gives us some sense of direction.

 

About the survey

This survey was conducted between 3 Apr and 8 May 2012. Seven asset management houses participated in the survey. In all cases the responses were given in consultation with the chief investment officers, strategists or a fund manager who was a member of the company’s asset allocation committee.

 

LOCAL ASSET CLASSES

The asset management houses are asked to predict the expected performance over the next 12 months of the 4 major assets classes i.e. Cash, Bonds, Property and Equity

CASH: All the asset management houses were anonymous and indicated that cash will perform below 7% for the year. Again, no surprises here!

BONDS: Most of the asset management houses expected growth between 7%-9% and the rest expected growth below 7%.

PROPERTY: The average expected growth in property was between 7%-9%.

EQUITY: Most of the asset management houses expected growth between 11%-13%.

 

 

 

 

Looking at this it seems that equity is the place to be this coming 12 months.

 

LOCAL SECTOR CLASSES

The following sector classes are analyzed here: Resources, Financials, Industrials, Small caps, Mid caps, Value and Growth.

The asset class expected to perform the best is Resources, Financials and mid Caps (10%-15%). The other asset classes are all expected to perform around 5-10%. The only exception is Industrials expected to perform between 0%-5%.

The asset management houses’ outlook on the sector classes was bullish on resources, bearish on industrials and neutral to the rest.

IN GENERAL

When asked about on the condition that best describes the SA equity market they felt it was fairly valued, while some felt it was overvalued. The majority of them expect the oil price to be between $100 and $120 per barrel. There was not a lot of consensus on the gold price although most expects the gold price to trade between $1600 to $1800, and even above the $1800 mark!

Most of them expect the interest rate to be stable, although some of them expect it to trend upward. All of them felt that rand will trade between R8-R8.50 to the dollar, while most felt that the Rand is fairly valued. 71% view SA inflation as stable.

Although we do not know what the future holds, it is quite interesting to get an insight into the expectations and thoughts of investment professionals. We hope this information is of great value to you. We thank Glacier by Sanlam for the survey they conducted.

Should you have any investment queries, please feel free to contact us.

The Baird Financial Team