Dear Readers

Welcome to the March issue of the Views newsletter.

The hope and excitement at the end of last year certainly continued into February, and seems set to go on into March and beyond. Without overestimating the political changes, it is wonderful to at last be able to picture a brighter future for SA with a degree of realism.

The Budget Speech given recently indicated that some of the political rhetoric has not been without follow-up action. New President Cyril Ramaphosa this year approved the largest reallocation of fiscal resources to higher education and training, with additional funding of R57 billion over the medium term. This will no doubt aid the phase-in of free higher education for students from poor and working-class families. Find out what else has changed in government spending in Dwaine Van Vuuren’s Budget Speech summary below.

The 2018 Budget Speech Summary

21 February 2018 | Dwaine van Vuuren The salient points we took from the 2018 budget speech. Read more >

So how do South African investors make the most of this improving business climate? Joani van Wyk explains how you can profit from changes in the rand by repositioning your portfolio to include or exclude companies which generate revenue offshore, depending on whether you think the rand will strengthen or weaken against the major currencies.

Joani’s article is particularly useful, as it includes four trading strategies that can be used in conjunction with the dynamic table (also included in the article) which shows what proportion of revenue of the companies comprising the JSE Top40 Index is generated offshore. So, virtually all the work has already been done for you. The main idea is that, while the return of a share is still directly linked to the company’s performance, you can benefit from a currency kicker depending on where they earn their revenues - and if you call the rand direction correctly. Read her article below for more details.

How To Take Advantage Of The Rand

21 February 2018 | Joani van Wyk How to position your portfolio amidst SA’s current economic and political optimism. Read more >

While the political and economic outlook may be improving, the meteorological outlook - at least for Cape Town - is not. Even the name "Day Zero" sounds somewhat apocalyptic: could this severe drought be the beginning of the end of Cape Town’s place as a key SA city?

Dwaine pens another post on this urgent topic that looks at the future of the agricultural sector in 2019, if its water usage continues to be restricted. With weather patterns being less predictable and extreme weather events (such as droughts) increasingly frequent due to climate change, our troubles may be a long way from over - whether or not Day Zero has been postponed.

Forget Day Zero - Its 2019 We Need To Worry About

13 February 2018 | Dwaine van Vuuren Day Zero in 2018 has almost certainly been avoided. But that’s the least of our worries... Read more >

Wishing you a successful month on the markets,

Natalie Mayer

Editor

[email protected]

The University of Leeds (UK) studied 51 countries to see which are providing a good life for all while using resources sustainably. South Africa is located in the worst region of the graph along with Swaziland. Our country ranked poorly in the social sphere under the following categories: equality (almost 30 points below the boundary), healthy life expectancy (almost 20 fewer years of healthy life compared to the boundary) and sanitation (the percentage of those with access is about 20% lower than the threshold). Our worst mark in the biophysical sphere was also the worst result on our whole report card: carbon dioxide emissions. The boundary sits at 1.6 tons emitted per person annually, but South Africans are responsible for a whopping 7.6 tons each.

University of Leeds (https://goodlife.leeds.ac.uk/countries/#SouthAfrica)

Source: Farber, T. 2018. It’s a giant fail for SA on global wellbeing graph. Times Live, 23 February 2018.

Can we actually meet the basic needs of all people?

"No country in the world currently meets the basic needs of its citizens at a globally sustainable level of resource use. Our research, recently published in Nature Sustainability (and summarised in The Conversation), is the first to quantify the national resource use associated with achieving a good life for over 150 countries. It shows that meeting the basic needs of all people on the planet would result in humanity transgressing multiple environmental limits, based on current relationships between resource use and human well-being."

Source: University of Leeds (https://goodlife.leeds.ac.uk/countries/#SouthAfrica)

Q: Which Strategy Makes You More? Active of Passive Investing?

A: First, you have to understand the difference. If you’re a passive investor, you invest for the long haul. Passive investors limit the amount of buying and selling within their portfolios. The strategy requires a buy-and-hold mentality. That means resisting the temptation to react or anticipate the stock market’s every next move.

Active investing, as its name implies, takes a hands-on approach and requires that someone act in the role of portfolio manager. The goal of active money management is to beat the stock market’s average returns and take full advantage of short-term price fluctuations. It involves a much deeper analysis and the expertise to know when to pivot into or out of a particular stock, bond or any asset.

There could be a place for both. Many investment advisors believe the best strategy is a blend of active and passive styles.

Index trackers may be a good addition to a portfolio. It is an inexpensive way of tracking exposure to the asset class you require if you don’t have the expertise to identify and select good managers. But, by doing your homework, you should be able to identify fund managers like Sharenet who justify their fees and consistently add value through active management.

Make the most of your savings, contact us for more information.

Visit: www.sharenetinvestments.co.za
Email Us: [email protected]

Source: Investopia & Sharenet Multi Management Team