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 The Sharenet Daily 
Tuesday, 16 July 2013 - 20:00
Top News
SA Business
Company News
Company Results
World Markets (Spot Prices)
JSE Today
JSE Trading Statistics
Major Moves
Index Summary
Latest Consensus Changes / Results Expected
Recent Dividends / Ex Div
Upcoming AGMs
Stock Exchange News Service (SENS)

The High Risk of Low Risk Investments

I recently did an investment feedback presentation for a retirement fund that was attended by the wife of an ex client of mine, and seeing her got me thinking about investment risk.

Her husband (my ex client) is an academic and he invested R 100 000 of his hard earned savings with me in December 2001. Because the investment was of a long term nature we invested the money in a portfolio with a balanced mandate targeting inflation plus 5. More than a year later, in March 2003, his investment value had dropped to R 88 500. He was understandably not impressed with what had happened and gave me a long analysis on how if he had invested R 100 000 in a money market fund it would have been worth R 115 076 and that he was wasting his time with these “high risk low return” investments.

He decided to disinvest from the balanced fund and invest in a money market fund. I tried to explain to him that his comparison was not accurate because he had neglected to take the tax effect of his interest earnings into account. He informed me that even after 30% tax he still would have had R 110 334 which was way better than my “shocking investment”. It is never easy to lose clients but, because I had a number of other clients at the institution where he worked, this one was extremely difficult.

After seeing his wife, I decided to have a relook at where this ex client would now be after implementing his “low risk high return” policy. After taking 30% tax into account at the end of March 2013, my ex client would have had a princely sum of R 150 708 (green line below) in his money market fund. If he had stayed in the balanced fund I suggested, he would now have an investment of R 469 845 (blue line below).

We went through a similar scenario from April 2007 to January 2009 where investors in balanced funds saw long periods of negative returns. Investors who disinvested during this period would have ended up generating a return in line with the purple line above.

Investors need to realize that the return profiles of balanced funds are not linear and investors can sometimes go for long periods without seeing positive returns. Both investors, and advisors, tend to forget this in periods that we have had in the good years, like we experienced from March 2003 to September 2007 and from February 2009 to March this year. Over the last few months we have seen negative returns creeping back into the markets.

If you have a 5 year plus time horizon, now is not the time to panic and switch to money market funds. With balanced funds there is a chance of losing money in real terms i.e. after tax and inflation, over the short term, but in money market funds you are guaranteed to lose money in real terms over the long term (especially when the effects of tax are taken into account).

Should you have any investment related queries, or are approaching retirement and would like to discuss your financial plan, we have qualified Wealth Managers who are able to guide you through this process.

Kind regards,

Barry Hugo

021 914 4966

Tue, 16 Jul 2013
Top News
G20 summits don't always set the pulse racing but this week's gathering of finance ministers and central bankers in Moscow has a better chance than most of grabbing the attention of financial markets.  Full story

South African state-owned power utility Eskom said on Tuesday a one-day wildcat strike over wages at its 3,600-megawatt Matla power station was over and the plant was operating normally.  Full story
Egypt's army-backed leaders swore in a new interim cabinet on Tuesday after a night of street violence, with not a single minister representing either of the main Islamist groups that have won five straight elections since 2011.  Full story
The dramatic capture of the boss of the Zetas drug cartel provides fresh evidence that Mexican authorities are starting to win their protracted fight against a gang that has done more than any other to stain the country's name with its brutality.  Full story
A convoy carrying members of Hezbollah was hit by a roadside bomb near the Lebanese-Syrian border on Tuesday, wounding three of its officials in the third attack on the Shi'ite militant group since May, security sources said.  Full story
The dollar eased and U.S. stocks fell on Tuesday, snapping an eight-day advance by the benchmark S&P 500 index, as investors took a. . .  Full story
U.S. stocks slipped on Tuesday as investor caution took hold on the day before the Federal Reserve chairman's congressional testimony, while losses in commodity. . .  Full story
European shares retreated from six-week highs on Tuesday, as concern about the earnings outlook prompted some investors to book profits, with Swedbank hit. . .  Full story
Mining heavyweight Rio Tinto helped limit a slide in Britain's blue-chip FTSE 100 index on Tuesday with a production update that assuaged. . .  Full story

European shares retreated from six-week highs on Tuesday, as concern about the earnings outlook gave some a cause to book profits, with Swedbank. . .  Full story
Gold rose on Tuesday as the dollar eased ahead of Federal Reserve Chairman Ben Bernanke's congressional testimony later in the week, which investors expect. . .  Full story
Wall Street opened flat on Tuesday as profit-taking after the S&P 500's eight-day advance and investor caution about monetary policy outweighed Goldman Sachs'. . .  Full story
U.S. stock index future edged lower after data showed consumer prices rose slightly more-than-expected in June.. . .  Full story
SA Business
South Africa's third largest mobile operator, Cell C, said on Tuesday it will receive a $350 million cash injection from majority shareholder Oger Telecom and a further $222 million in loans.. . .  Full story
South Africa's rand was steady on Tuesday after hitting a two-week high against the dollar and looked set for a firmer session with emerging markets supported by views the U.S. Federal. . .  Full story
Gold eased in quiet trade on Monday after last week's sharp gain, as investors await Federal Reserve Chairman Ben Bernanke's testimony before U.S. Congress later this week for market cues. The. . .  Full story

Africa's biggest grocer Shoprite Holdings Ltd missed estimates with a 12.1 percent rise in full-year sales, reflecting a slowdown in spending. . .  Full story
South Africa's Astrapak said on Tuesday Coronation Asset Management had increased its holding in the plastics packaging company to 29.33 percent.. . .  Full story
Market uncertainty surrounding the timing of the U.S. Federal Reserve's withdrawal of stimulus to the world's biggest economy will impact South. . .  Full story
Nigerian businessman Tony Elumelu is negotiating with several oil majors to buy two onshore oil and gas assets he will use. . .  Full story
Company News
Shareholders are referred to the cautionary announcement released on SENS on Friday, 10 May 2013 and the further cautionary announcement released on SENS on Monday, 24 June 2013 and are advised that the negotiations referred to have been terminated and accordingly. . .  Full story
For the 12 months to June 2013 the Group increased total turnover by 12.1% to about R92.7 billion, compared with the corresponding 12 months of 2012. Growth on a like-for-like basis was 5.8%. During the 2013 reporting period, internal food inflation. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0040385.34-354.80-0.87%
JSE Top 4017:0035855.07-351.68-0.97%
JSE Gold17:001177.26-4.82-0.41%
JSE Financial17:0030126.72-300.54-0.99%
JSE Industrial17:0053772.72-706.77-1.30%
JSE Indust 2517:0046998.22-668.26-1.40%
JSE Resource17:0043925.5244.110.10%
DJ Futures19:4215355.00-61.00-0.40%
DJ Ind19:5815433.58-50.68-0.33%
SP 50019:581673.90-8.60-0.51%
FTSE 10017:356556.35-29.76-0.45%
All Ords08:454968.603.000.06%
NZSE 5007:544576.55-29.69-0.64%
NameTimeRPMove% Move
Gold $19:591291.958.930.70%
Gold R19:5912768.08105.770.84%
Gold R/kg19:5841040327180.67%
Silver $19:5919.9800.07400.37%
Platinum $19:591422.502.000.14%
Palladium $19:59731.80.800.11%
Brent Crude19:58109.26.210.19%
Rand / Dollar19:599.88280.01150.12%
Rand / Pound19:5514.91810.02910.20%
Rand / Euro19:5512.99090.08020.62%
Rand / NZD19:597.79650.07971.03%
Rand / AUD19:559.13350.13241.47%
Yen / Dollar19:5999.1400-0.7640-0.76%
Euro / Dollar19:590.7607-0.0046-0.60%
Dollar / Euro19:591.31460.00810.62%
Pound / Dollar19:550.6608-0.0012-0.18%

Click here for the Sharenet Spot Price page
The JSE Today

Trading Statistics
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 GIJIMA  1201413.21.%155468
2 MMG  2402712.68.%88082
3 NEPI-NPL  3203512.28.%173306
4 HULAMIN  425256.25.%1638375
5 TRADEH  900455.26.%2537
6 SEPHAKU  550254.76.%541920
7 ONELOGIX  287124.36.%16038
8 FAIRVEST  12554.17.%699983
9 LITHA  270103.85.%57297
10 WITSGOLD  850303.66.%13806
11 ELLIES   785253.29.%1327789
12 CONDUIT  13543.05.%16300
13 SANTOVA  10333.00.%33534
14 VUNANI  17552.94.%2000
15 BUILDMX  18052.86.%4355
16 ZEDER  388102.65.%215998
17 HYPROP  78502012.63.%509222
18 GROWPNT  2650672.59.%6468822
19 AFRO-C  400102.56.%59988
20 MASTDRILL  910202.25.%1578

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Major Moves Down
SharenameSaleMove% MoveVolume
1 ROLFES  515-35-6.36.%185327
2 ASSORE  32842-2158-6.17.%138541
3 TRNSHEX  360-20-5.26.%248179
4 LEWIS  5985-315-5.00.%414369
5 SHOPRIT  18200-915-4.79.%3468906
6 MASSMART  16851-759-4.31.%411101
7 AMECOR  201-9-4.29.%3005
8 TRANSCAP  675-30-4.26.%1696
9 HOLDSPORT  4340-190-4.19.%131255
10 OCTODEC  2100-90-4.11.%908
11 PETMIN  202-8-3.81.%15204
12 ALTRON  1905-75-3.79.%3831
13 ASTRAPAK  650-25-3.70.%92561
14 DCENTRIX  376-14-3.59.%8885
15 WOOLIES  6422-228-3.43.%4915688
16 CAPITEC  19030-670-3.40.%61191
17 ASPEN  22660-689-2.95.%1147189
18 BELL  2300-69-2.91.%3943
19 SUPRGRP  2295-68-2.88.%436735
20 KELLY  170-5-2.86.%3333

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New Highs
SharenameSaleHighMove% MoveVolume
1 GIJIMA  1201201413.21.%155468
2 DATATEC  590059851001.72.%268335
3 AECI  11900119992001.71.%217563
4 BRAIT  42304343651.56.%482731
5 RAUBEX  24002465210.88.%117461
6 CML  68006874-19-0.28.%705129

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New Lows
SharenameSaleLowMove% MoveVolume
1 ANGGOLD  1223012017-312-2.49.%1958957
2 PICKNPAY  37403686-36-0.95.%1083871
3 PIKWIK  168216670.166889

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Index Summary
Index NameRPMove% Move
Top 4035,855.00-350.00-0.97%
Mid Cap55,455.00-227.00-0.41%
Small Cap44,671.00-117.00-0.26%
Resource 2043,925.0044.000.10%
Industrial 2546,998.00-667.00-1.40%
Financial 1511,234.00-153.00-1.35%
Financial & Ind. 3049,666.00-715.00-1.42%
All Share40,385.00-354.00-0.87%
Oil & Gas 33,145.00-557.00-1.65%
Mining 26,415.00138.000.53%
Gold Mining1,177.00-4.00-0.40%
Platinum Mining38.00.000.03%
GENERAL MINING7,613.0057.000.76%
Oil & Gas Producers 17,821.00-299.00-1.65%
Basic Materials 23,492.00101.000.43%
Chemicals 21,904.0093.000.43%
Forestry & Paper 22,848.00-24.00-0.11%
Industrial Metals 23,751.00-299.00-1.24%
Industrials 41,552.00-331.00-0.79%
General Industrials 124.00.00-0.26%
Consumer Goods 50,123.00-858.00-1.68%
Automobiles & Parts 7,975.0093.001.19%
Household Goods175.000-0.52%
Health Care 68,366.00-626.00-0.91%
Beverages 163.00-2.00-1.44%
Index NameRPMove% Move
Food Producers 69,959.00-639.00-0.91%
Personal Goods 909.00-19.00-2.08%
Consumer Services 91,439.00-1135.00-1.23%
General Retailers 58,525.00-1686.00-2.80%
Travel & Leisure 5,402.0019.000.35%
Support Services 2,403.00.000.02%
Telecommunications 87,362.00-1212.00-1.37%
Financials 30,126.00-300.00-0.99%
Banks 48,554.00-992.00-2.00%
Non-life Insurance 50,046.00-1227.00-2.39%
Life Insurance 28,978.00-395.00-1.35%
General Financial 2,800.00-9.00-0.34%
Technology 40,928.00301.000.74%
SHARIAH TOP40 3,294.00-11-0.34%
FTSE/JSE SHARIAH ALL3,442.00-12-0.37%
COAL MINING19,203.00-114-0.59%
FTSE JSE Fledgling 5,506.0070.14%
FTSE/JSE Alt X 995.00-1-0.20%
RESOURCE 24,001.00300.13%
DIVIDEND PLUS202.00-1-0.70%
FTSE/JSE RAFI 407,881.00-68-0.87%
Capped Top 4018,956.00-197-1.03%
Capped All Share20,455.00-185-0.90%
JSE TABACO 6,661.00-65-0.97%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
22/07/2013AMPLATSJune 2013 (Interim)
22/07/2013ANGLOPLATCCPJune 2013 (Interim)
22/07/2013KIBOMarch 2013 (Interim)
23/07/2013ELLIESApril 2013 (Final)
23/07/2013KUMBAJune 2013 (Interim)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
FOORDCMPS09/07/201326/07/201305/08/2013R 0.3000
TELEMASTR02/07/201319/07/201329/07/2013R 0.0050
HUDACO28/06/201308/08/201319/08/2013R 1.5500
ARGENT26/06/201327/09/201307/10/2013R 0.0700
NASPERS-N25/06/201313/09/201323/09/2013R 3.8500
Ex Div**
Share NameDec-DateLDTPay-DateAmount
LEWIS22/05/201312/07/201322/07/2013R 3.0200
OMNIA25/06/201312/07/201322/07/2013R 2.7000

Upcoming AGMs**
CodeCompany NameDateStatus
ALTAllied Technologies Ltd.16/07/2013Confirmed
ADAPAdrenna Property Group Ltd.16/07/2013Unconfirmed
ANAAdrenna Property Group Ltd.16/07/2013Unconfirmed
ILVIllovo Sugar Ltd.17/07/2013Confirmed
VODVodacom Group Ltd.18/07/2013Confirmed

Stock Exchange News Service
16/07/201317:38HYPROP INVESTMENTS LIMITED - Acquisition of Somerset Mall
16/07/201317:20ABSA CAPITAL - LSI Expiry ABSW20
16/07/201317:13ABSA BANK LIMITED - New Listing ABN84
16/07/201317:11ABSA BANK LIMITED - New Listing ABN83
16/07/201317:10SEKUNJALO INVESTMENTS LIMITED - Dealing In Sekunjalo Investments Limited Shares ...
16/07/201317:05JSE LIMITED - Index Change Advice - 20130719 Lonrho Plc Deletion
16/07/201317:03ABSA BANK LIMITED - ABN48 - Interest Rate Reset
16/07/201317:01ABSA BANK LIMITED - New Listing ABN82
16/07/201316:58ABSA BANK LIMITED - New Listing ABN81
16/07/201316:56SYCOM PROPERTY FUND - SYC - Results of General Meeting
16/07/201316:45ALLIED TECHNOLOGIES LIMITED - Results of Annual General Meeting
16/07/201316:10ONELOGIX GROUP LIMITED - Withdrawal of Cautionary Announcement
16/07/201315:55RECM AND CALIBRE LIMITED - Dealing in securities by an associate of a director
16/07/201315:36AFRICAN OXYGEN LIMITED - Change to the board of directors
16/07/201315:17BUILDMAX LIMITED - Notification of Share Dealings by an Associate of a Director
16/07/201315:00PLATFIELDS LIMITED - Resignation of a director
16/07/201314:00SHOPRITE HOLDINGS LIMITED - Operational Update
16/07/201313:38HOLDSPORT LIMITED - Dealings in securities by Director
16/07/201313:05ASTRAPAK LIMITED - Disclosure of significant holdings in Astrapak Limited ordina...
16/07/201312:00TRANS HEX GROUP LIMITED - Renewal of cautionary announcement relating to the acq...
16/07/201311:55TELKOM SA SOC LIMITED - Director's dealings
16/07/201311:30FIRSTRAND BANK LIMITED - New Instrument Listing - FRC176
16/07/201311:25INGUZA INVESTMENTS (RF) LIMITED - Interest Rate Reset - ING46
16/07/201309:48FORBES & MANHATTAN COAL CORP - By-Law amendmnent
16/07/201309:15CROOKES BROTHERS LIMITED - Dealing in securities by a director
16/07/201307:07THE DB X-TRACKER COL INVEST SCHEME - Listing of additional 6 000 000 DBXUS Secur...
16/07/201307:06BRITISH AMERICAN TOBACCO PLC - Transaction in own shares

Click here for more SENS news