8 October 2019
The global economic landscape is a complex one. Trade wars, Brexit, escalating tensions between Iran and the West, and the tentative unwinding (or indeed reintroduction) of quantitative easing – arguably the biggest financial experiment in history. Add to that the climatic consequences of global warming and it’s easy to see why investors throw their hands up in despair. This hardly seems the perfect time to look abroad for investment options. Not true, says Brotchie.
While global returns have been muted recently, global equities have broadly returned in the region of 28% in USD terms over the last three years. So, there are some good reasons to include offshore investing as part of your portfolio. There are more opportunities than we can imagine, as this is the age of ideas and innovation. Advancements in AI and machine learning are leading us down exciting investment paths. Look for opportunities and you will find them, and that’s what we spend a large part of our time doing at Glacier International. Currently, given investors’ nervousness around global prospects, we are focusing on opportunities for enhanced capital growth but with an overlay of protection, should it be required.
Brotchie cautions against ignorance, and everything has a context. We can’t ignore the turmoil in geopolitics, in all quarters of the globe. We have to be aware of the dangerous rise of nationalism around the world, a consequence of the fragile interplay between liberal democracy and the version of capitalism that we have created. There simply are too few winners in this game. Humans often adopt a narrow world view when their survival is under threat, and nationalism is a function of this.
Recently, due to some election surprises around the world, currencies like the Argentine peso have plummeted, and stocks and bond markets have suffered the same fate. However, these countries are coping and finding innovative ways to recover. Remember how bad things were for Greece a couple of years ago during their crisis? The Athex – the main Greek stock index – is now up more than 40% since January (roughly double the S&P 500 over the same period). Sovereign yields are lower than the US, and after contracting by more than 25% during the crisis, the Greek GDP grew by 1.9% in 2018. South Africa is not going through this kind of crisis, but we have socio-political challenges that we need to deal with urgently. Corruption, poverty and crime are crippling us economically, and adversely affecting the morale of our people. Positive action to address these ills and visible outcomes of these actions, are needed urgently.
Dealing with everything that is happening in the global arena requires patience, resilience and know-how. Here are a few tips to help you cope:
Glacier International Global Market Leaders Enhancer is an underlying investment option within an endowment policy underwritten by Sanlam Life, offering 90% capital protection in tough markets and an enhanced return of 250% in positive markets, over five years. The returns are before tax, subject to international market conditions and may therefore change, although not materially. Final levels will be confirmed at inception of the investment. Talk to your financial adviser today.