Solution Rebalance and February 2024 Update
F&A PORTFOLIO & Monthly UpdateS | FEBRUARY 2024
Hi All,
SA (ZAR) Solution Rebalance
Since our last rebalance midway through 2023 we have experienced a continued meaningful outperformance of global equity. The result of this has been that portfolios have drifted from their target asset allocations, and we feel it is an opportune time to bring these weights back to target.
ASSET ALLOCATION ADJUSTMENTS
Our sizable allocation to global equity across the curve has resulted in strong relative performance for our multi-asset portfolios. However, our increasing exposure to global equity has resulted in our non-rand assets drifting quite significantly from target. The investments team reviewed the target asset allocations and concluded that these weights remain our best house view for portfolios. Therefore, we think it is a good time to rebalance portfolios to harvest some of the gains generated from those assets that have done well and reallocate this to the asset classes (mainly SA equity) that have lagged. The below graphic provides a visual indication of what the trades within portfolios will look like:
TIMING
The rebalance will be processed across platforms between the 9th and the 15th of April 2024. Please note that while the rebalance is being processed (which typically takes 1 to 2 days):
Withdrawals will not be processed; and
Change mandates can be instructed in WealthExplorer™ but, depending on the timing of the instruction, may only be processed by the platform on completion of the rebalance.
We believe these changes appropriately balance the risks we see in the markets with the opportunity set available to us to produce inflation beating returns. Should you have any questions or require any further information please get in touch.
In the meantime, grab yourself a cuppa, and check out our latest monthly update below
☕️ 👀 👌
Sending love
Richard and the F&A team
February 2024 Update
This month's piece is compiled by Brendan de Jongh, SA Head of Research - PortfolioMetrix.
GLOBAL UPDATE
A continuation of the strong US earnings season and stronger US economic data reignited market confidence from the end of last year. Business optimism appears to have returned to the US and, alongside signs of slightly stickier inflation, expectations for when the interest rate cutting cycle will begin were pushed out. The UK fell into a technical recession, but again there are signs that businesses are resilient, pointing to the likelihood of a very shallow and short recession. Broadly positive economic news fed through to stronger equity markets, whilst bonds fell slightly as the prospects of interest rate cuts were pushed out.
LOCAL UPDATE
Global asset classes in rands benefitted from a weakening currency to produce the most attractive returns for investors over the month. Global equities, driven mainly by strong dollar returns in the US, powered ahead to continue to meaningfully outperform other asset classes. Local equities suffered a broad-based selloff with resource stocks leading the way and mid cap equities underperforming both smaller and large cap companies. SA property was the best performing local asset class whilst local bonds fell slightly as yields rose along with global yields.
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