Wealth Viewpoint | August 2023

Dear Client

Welcome to our July 2023 edition of FC Viewpoint. We have reached the half-year mark and what an eventful first half it’s been!

IN THE NEWS:

  • The JSE All Share Index closed on 73 081 on Friday 18 August. This is 1.7% lower than the 74 346 on Monday 10 July 2023.
  • 1 US Dollar will cost you R18.99; 1 Pound = R24.19 and 1 Euro = R20.66.
  • Annual consumer price Inflation is on 5.4%.
  • The prime lending rate in SA is 11.75% per annum.
  • The price of Oil is $84 per barrel.
  • SA and China strike trade agreements worth R41 billion which is aimed at boosting SA manufacturing exports to China and Chinese investment in SA, as well as partnering SA’s efforts to industrialise further and to transition to a greener manufacturing economy.

THIS MONTH’S TOPIC: OUR FC WEALTH AND INVESTMENT APPROACH

During May 2022 we, in conjunction with Ninety One, developed the FC Model Portfolios.

Using Morningstar for the data source, monthly returns for a 15-year period for a maximum of 15 top competitor funds in each relevant ASISA sector were extracted and analysed. In selecting these funds the following criteria were considered:

  • The fund’s AUM
  • Track record
  • Philosophy of the fund manager
  • availability of funds across a wide range of platforms

This list of funds was then built into an optimizing tool. The purpose of the optimizer tool is to simplify the sample of funds chosen onto a portfolio that is optimized based on various risk and performance metrics. The tool, a macro-enabled spreadsheet, uses historic monthly returns over the longest possible period to identify which mix of funds results in the best outcome on a risk-adjusted basis.

From the resultant optimized portfolios for each sector, models were built in Morningstar and performance analysis reports were run to measure the performance of the models against the sector and market.

FC Wealth and Investments chose to follow a multi-asset approach to portfolio construction, and as a result, the underlying asset allocation is a result of the chosen fund managers.

On an ongoing basis, we monitor the model portfolios and assess whether any changes are needed at our quarterly investment committee meeting.

The FC Model Portfolios are aimed at giving our investors the best opportunity to realise their specific financial goals and to continuously assess that our portfolios meet the expected returns.

SLIDE OF THE MONTH: CONSUMER SENTIMENT INDEX AND SUBSEQUENT 12-MONTH S&P 500 RETURNS

The below graph illustrates consumer sentiment over the past 50 years, with 9 distinct peaks and troughs, and how much the S&P 500 gained or lost in the 12 months following. On average, buying at a confidence peak returned 3.5% while buying at a trough returned 25%.

TO CONCLUDE

We, at FC Wealth and Investments, would like to invite you, to make us part of your financial journey, in good and in challenging times and every life changing event in between, as we want to be there for you. Feel free to call us, or to book a physical or online meeting, we are here for you.

Spend wisely, keep investing and saving and stay positive.

Wealth regards,

Fanie Jansen Van Vuuren CA (SA), CFP®

Director: FC Wealth and Investments (Pty) Ltd

E: [email protected]  |  T: 083 384 5868

W: www.fcfin.co.za

Download this issue of Viewpoint here