Tuesday, 18 November 2014 - 20:00
Charts
Seed weekly - A Longer Term Perspective on Asset Class Returns
Because investors are inundated with news flow, which very easily results in myopic behaviour, it is often useful to take a step back from time to time and have a good look at the bigger picture. SBG Securities have produced an in depth report on the returns that the various asset classes have produced over time in South Africa.
With no shortage of opportunities, investors have a wide choice as to what to do with their savings. Within a South African context, some of the main asset classes include money market, bonds, listed property, and listed shares. Analysing history is but one part of the process in trying to determine what investors can expect into the future.
The chart below provides a long term view of the returns across the main asset classes. Over 54 years from 1960 to the end of 2013, the arithmetic total return from equities came in at 19.5%, far exceeding the returns from bonds and cash and producing an 11.2% real return. Over meaningful periods of time, the total return from equities has been found to be in a range from 17% to 21%.
Chart 1: Asset Class Performance (1960-2013)
When measured over the last 38 years, to also include the total return from listed property, listed equities still outperformed in most measured periods, except for over the last 15 years, where an investment into listed property would have produced 21.3% against the 20.7% for equities.
The chart below, over the shorter period of 38 years, also includes gold and the total return derived from “investing” into ones’ mortgage bond.
Chart 2: Asset Class Performance – 38 years (1976 – 2013)
What is noteworthy is that South Africa has had a tumultuous time against which these superior returns from listed equities were generated. Some of the negatives included inflation rising to double digits from mid-1970’s to early 1990’s, prescribed investments into government bonds from mid-1960’s to late 1980’s for pension funds, the debt standstill crisis in mid-1980’s and then the move from apartheid to a democracy in 1994. Over the last 20 years, while operating a democracy, there has also been no shortage of both local and global issues, including the Asian crisis in 1997, and then the 2007-2008 global financial crisis, which resulted in the single biggest decline in listed equities in a calendar year of 28.3%.
It is a common fact that the returns from listed equities are volatile - one year returns have varied from negative 28% (2008) to a positive 137% (1999). It is this single fact that continues to keep many investors from being adequately invested. However, for those investors that can afford to adopt a horizon of at least 5 years, there have been no 5 year rolling periods since 1960 where investors have experienced a negative return in nominal terms.
The cumulative effect of a truly long term investor is astounding. SBG Securities have calculated that R100 in 1960 adjusted for inflation would be the equivalent of R7 000 today. An investor that had kept his money in the money market and reinvested the interest (also assuming no tax) would have turned his R100 into R14 000, while an investor compounding his investment on the JSE would be worth some R520 000.
The material difference in returns between “low risk” cash and bonds, on the one hand, and listed equities, on the other, means that all investors must give serious consideration to including them as a core component of their portfolio. Just what percentage this should be is largely dependent on one’s time horizon. The longer that investment horizon naturally the greater that weighting should be.
Kind regards,
Ian de Lange
www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966
Tue, 18 Nov 2014
Top News
South Africa's rand climbed 1 percent to 11.0230 on Tuesday, its strongest in two weeks against the dollar as Japan's slide into recession helped boost demand for higher-yielding emerging market assets.
"The rand is stronger because high yields are in vogue at the moment," said Dav Full story |
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Two Palestinians armed with a meat cleaver and a gun killed four worshippers in a Jerusalem synagogue on Tuesday before being shot dead by police, the deadliest such incident in six years in the holy city. Full storyHong Kong on Tuesday cleared part of a protest camp in the heart of the city that has been occupied by pro-democracy demonstrators for nearly two months, leaving most of the main protest site intact. Full storyRomania's incoming president Klaus Iohannis said on Tuesday his party might try to topple Prime Minister Victor Ponta's government next year, an early sign of the instability that might follow his surprise victory. Full story |
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Markets | Stock markets around the world
rose on Tuesday and the yen hit a seven-year low as news of a
surprise election and a. . . Full story | | Gold steadied below a 2-1/2 week
high hit earlier on Tuesday as the dollar softened against the
euro due partly to better-than-expected German. . . Full story | | Hong Kong shares fell again on
Tuesday, as investors took profits from the landmark
Shanghai-Hong Kong stock connect scheme.. . . Full story | | China stocks ended lower on
Tuesday as investors took profits in shares that rose sharply
ahead of Monday's launch of the landmark Hong. . . Full story |
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| Japanese stocks had their biggest
gain in two weeks on Tuesday as investors waited to see if Prime
Minister Shinzo Abe will call. . . Full story | | Australian shares ended at their
lowest in over three weeks on Tuesday with further declines in
iron ore prices taking a heavy toll. . . Full story | | Oil prices fell and global
equity markets were mixed on Monday after news that Japan
unexpectedly slipped into recession in the third quarter. . . Full story | | Gold eased from a
two-week high hit earlier on Monday as the dollar rose on news
that Japan had slipped into recession, and. . . Full story |
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SA Business | South Africa's Treasury sold 2.35 billion rand ($212 million) worth of its 2032, 2037 and 2048 bonds on Tuesday. Yields were. . . Full story | | South Africa is worried about the impact the Ebola outbreak could have on economic growth in Africa, Finance Minister Nhlanhla Nene. . . Full story | | South African cement maker PPC Ltd reported flat full-year profit on Tuesday as growth in some of its sub-Saharan markets was. . . Full story | | South Africa's rand held steady against the dollar early on Tuesday as it waited for direction from abroad, while lower oil. . . Full story |
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| South African stocks fell for a second straight session on Tuesday as cement maker PPC slid the most in more than a year after it reported flat full-year profit and cut. . . Full story | | South Africa plans to spend $2.2 billion over two years to buy HIV/AIDS drugs for public hospitals, a government minister said on Monday, as a study shows the prevalence of the. . . Full story | | South Africa is worried about the impact the Ebola outbreak could have on economic growth in Africa, Finance Minister Nhlanhla Nene said on Tuesday.. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:10 | 50372.05 | -139.47 | -0.28% | JSE Top 40 | 17:00 | 44802.60 | -228.88 | -0.51% | JSE Gold | 17:00 | 1102.93 | 65.01 | 6.26% | JSE Financial | 17:00 | 40361.03 | 166.26 | 0.41% | JSE Industrial | 17:10 | 69506.89 | -246.14 | -0.35% | JSE Indust 25 | 17:00 | 61443.30 | -280.59 | -0.45% | JSE Resource | 17:00 | 47310.47 | -458.55 | -0.96% | DJ Futures | 19:52 | 17640.00 | 18.00 | 0.10% | DJ Ind | 19:58 | 17688.89 | 41.14 | 0.23% | SP 500 | 19:58 | 2050.80 | 9.48 | 0.46% | Nasdaq | 19:58 | 4701.37 | 30.37 | 0.65% | FTSE 100 | 18:35 | 6709.13 | 37.16 | 0.56% | DAX | 19:08 | 9456.53 | 150.18 | 1.61% | CAC40 | 19:08 | 4262.38 | 36.28 | 0.86% | Nikkei | 08:32 | 17344.06 | 370.26 | 2.18% | Shanghai | 09:28 | 2456.37 | -17.64 | -0.71% | Hang-Seng | 07:08 | 23619.75 | -177.33 | -0.75% | All Ords | 07:40 | 5383.10 | -13.50 | -0.25% | NZSE 50 | 06:50 | 5505.03 | 14.80 | 0.27% |
| | Name | Time | RP | Move | % Move | Gold $ | 19:59 | 1195.06 | 9.15 | 0.77% | Gold R | 19:59 | 13186.05 | 7.58 | 0.06% | Gold R/kg | 19:58 | 424051 | 967 | 0.23% | Silver $ | 19:59 | 16.1610 | .0320 | 0.20% | Platinum $ | 19:59 | 1203.30 | 3.50 | 0.29% | Palladium $ | 19:59 | 775.50 | 6.90 | 0.90% | R157 | 22/09 | 6.99 | -.02 | 0.00% | R186 | 17:41 | 7.81 | -.05 | -0.64% | R204 | 17:30 | 6.89 | -.04 | -0.51% | R207 | 17:30 | 7.14 | -.04 | -0.63% | Brent Crude | 19:58 | 78.59 | .85 | 1.09% | Rand / Dollar | 19:59 | 11.0317 | -0.0816 | -0.73% | Rand / Pound | 19:55 | 17.2249 | -0.1247 | -0.72% | Rand / Euro | 19:55 | 13.8238 | -0.0159 | -0.11% | Rand / NZD | 19:59 | 8.7632 | -0.0365 | -0.41% | Rand / AUD | 19:55 | 9.6296 | -0.0604 | -0.62% | Yen / Dollar | 19:59 | 116.7860 | 0.1380 | 0.12% | Euro / Dollar | 19:58 | 0.7980 | -0.0053 | -0.66% | Dollar / Euro | 19:59 | 1.2531 | 0.0083 | 0.67% | Pound / Dollar | 19:55 | 0.6387 | -0.0006 | -0.09% |
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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18/11/2014 | 182 | 156 | 66 | 404 | 191,103,637 | R13,925,384,266 | 193515 | 1351917 | 17/11/2014 | 164 | 186 | 59 | 409 | 187,601,389 | R13,901,630,195 | 206644 | 1329941 | 14/11/2014 | 147 | 208 | 61 | 416 | 265,018,405 | R19,736,613,903 | 253654 | 136715 | 13/11/2014 | 182 | 167 | 90 | 439 | 210,687,744 | R14,363,846,238 | 202164 | 454688 | 12/11/2014 | 201 | 154 | 63 | 418 | 229,836,108 | R17,886,613,835 | 253357 | 792738 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 44,802.60 | -228.88 | -0.51% | Industrial | 69,506.89 | -246.14 | -0.35% | Mid Cap | 68,086.03 | 660.02 | 0.98% | Small Cap | 57,357.60 | 313.44 | 0.55% | Resource 20 | 47,310.47 | -458.55 | -0.96% | Industrial 25 | 61,443.30 | -280.59 | -0.45% | Financial 15 | 15,485.97 | 57.61 | 0.37% | Financial & Ind. 30 | 65,648.72 | -177.02 | -0.27% | All Share | 50,372.05 | -139.47 | -0.28% | Oil & Gas | 38,472.95 | -756.74 | -1.93% | Mining | 27,797.76 | -130.42 | -0.47% | Gold Mining | 1,102.93 | 65.01 | 6.26% | Platinum Mining | 36.23 | 1.32 | 3.78% | GENERAL MINING | 8,260.67 | -132.25 | -1.58% | Oil & Gas Producers | 20,686.19 | -406.89 | -1.93% | Basic Materials | 25,080.83 | -96.35 | -0.38% | Chemicals | 24,238.96 | 135.38 | 0.56% | Forestry & Paper | 32,791.79 | 222.69 | 0.68% | Industrial Metals | 15,105.14 | -452.01 | -2.91% | Industrials | 47,629.95 | 66.65 | 0.14% | General Industrials | 163.08 | .56 | 0.34% | Consumer Goods | 61,072.05 | -237.66 | -0.39% | Automobiles & Parts | 8,378.50 | -56.61 | -0.67% | Household Goods | 380.54 | -3 | -0.84% | Health Care | 10,172.46 | 49.20 | 0.49% | Beverages | 207.36 | -1.88 | -0.90% |
| | Index Name | RP | Move | % Move | Food Producers | 9,186.13 | 96.75 | 1.06% | Personal Goods | 956.52 | 2.70 | 0.28% | Consumer Services | 13,966.93 | -68.98 | -0.49% | General Retailers | 72,632.80 | -601.98 | -0.82% | Travel & Leisure | 6,324.83 | 12.18 | 0.19% | Media | 325.94 | -1.77 | -0.54% | Support Services | 2,796.83 | -14.67 | -0.52% | Telecommunications | 10,898.07 | -127.65 | -1.16% | Financials | 40,361.03 | 166.26 | 0.41% | Banks | 70,385.84 | 428.47 | 0.61% | Non-life Insurance | 54,826.81 | -45.94 | -0.08% | Life Insurance | 38,074.51 | 117.31 | 0.31% | General Financial | 3,991.14 | 14.67 | 0.37% | Technology | 48,515.28 | 479.09 | 1.00% | SHARIAH TOP40 | 3,760.73 | -46 | -1.21% | FTSE/JSE SHARIAH ALL | 3,970.46 | -30 | -0.75% | COAL MINING | 14,540.55 | -16 | -0.11% | FTSE JSE Fledgling | 6,549.18 | -39 | -0.60% | FTSE/JSE Alt X | 1,353.37 | -3 | -0.25% | SA LISTED PROPERTY | 577.14 | | 0.32% | CAPPED PROPERTY | 499.18 | | 0.34% | RESOURCE | 25,723.98 | -196 | -0.76% | DIVIDEND PLUS | 228.80 | 1 | 0.42% | FTSE/JSE RAFI 40 | 9,667.01 | -8 | -0.08% | Capped Top 40 | 23,851.08 | -114 | -0.48% | Capped All Share | 25,536.96 | -69 | -0.27% | JSE TABACO | 8,152.52 | -65 | -0.79% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | NPN | NASPERS LIMITED | BUY | 17/11/2014 | SOL | SASOL LIMITED | HOLD | 17/11/2014 | MDC | MEDICLINIC INTERNATIONAL | BUY | 17/11/2014 | SAB | SABMILLER PLC | HOLD | 14/11/2014 | MRF | MERAFE RESOURCES LTD | BUY | 14/11/2014 |
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Results Expected** Expected | Company Name | Fin. Date | 19/11/2014 | KEATON | September 2014 (Interim) | 19/11/2014 | PPC | September 2014 (Final) | 19/11/2014 | TIGBRANDS | September 2014 (Final) | 19/11/2014 | TSO SUN | September 2014 (Interim) | 20/11/2014 | ACCPROP | September 2014 (Interim) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | MRPRICE | 17/11/14 | 05/12/14 | 15/12/14 | ZAR 2.1150 | ASTRAL | 17/11/14 | 16/01/15 | 26/01/15 | ZAR 2.4000 | BARWORLD | 17/11/14 | 16/01/15 | 26/01/15 | ZAR 2.1400 | ACUCAP | 14/11/14 | 28/11/14 | 08/12/14 | ZAR 1.6801 | LIFEHC | 14/11/14 | 28/11/14 | 08/12/14 | ZAR 0.7800 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | SPANJAARD | 31/10/14 | 14/11/14 | 24/11/14 | ZAR 0.1000 | CSG | 17/10/14 | 14/11/14 | 24/11/14 | ZAR 0.0400 | PETMIN | 11/09/14 | 14/11/14 | 24/11/14 | ZAR 0.0300 | RIPLC | 29/10/14 | 14/11/14 | 05/12/14 | GBP 0.0170 | LONFIN | 30/09/14 | 14/11/14 | 12/12/14 | GBP 0.0045 |
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Upcoming AGMs** Code | Company Name | Date | Status | GRT | Growthpoint Properties Ltd. | 18/11/2014 | Confirmed | KAP | KAP Industrial Holdings Ltd. | 18/11/2014 | Confirmed | MNY | MoneyWeb Holdings Ltd. | 18/11/2014 | Confirmed | MMIP | MMI Holdings Ltd. | 18/11/2014 | Confirmed | MMI | MMI Holdings Ltd. | 18/11/2014 | Confirmed |
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