As has occurred several times over the years, we have seen another subtle adjustment within our local portfolios which accommodates for risk management vs. buying opportunities, covered below. Please remember that these adjustments are not overhauls of strategy but rather minor tactical corrections as we chart the course and ultimately manage the risk for each individual mandate we run. Ten’s of these have happened in the background over the past years, and will continue to as the landscape evolves.

South African Solution (JULY 2023)

This piece is compiled by Liam Dawson, Portfolio Manager & Investment Analyst - PortfolioMetrix.

We have experienced strong divergences in performances across local and global asset classes which have been accentuated by a volatile rand. Locally, equities and bonds have languished with global equity markets buoyant, albeit in a very concentrated fashion. The result of this has been a material drift from our target asset allocations which we believe required realignment. 

Asset Allocation Changes

Given the continued weakness of South African (SA) asset classes, the resulting portfolio movement has been to generally sell down our overweight positions in offshore asset classes in favour of SA asset classes. Although this may “feel” uncomfortable, we believe it is good portfolio management practice that enforces a buy-low, sell-high discipline whilst remaining appropriately diversified. The below graphic provides an indication of what this means for portfolios: 

Timing

The rebalance took place during the week of 10 – 14 July 2023. 

Conclusion

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 information please contact your Partner Relationship Specialist or email the team on support@portfoliometrix.co.za.