Which investments have performed well so far this year, and which have performed poorly?
This year was a tough one for investors around the world with the impact of the COVID-19 pandemic that forced many economies to their knees. And for many, it is surprising that ten months of the year are now something of the past. At this stage, we can only reflect on how markets domestically and globally perform up to the end of October.
If we look at the details, there were a few themes that firmly stood out:
First is how excellent gold performed. Gold was once again an investors' haven in uncertain times, especially considering the times in which we are living.
Another thing that came to the fore was how poorly listed shares and especially listed property performed. Both these asset classes are performing negatively for the last five and even seven years, respectively.
Furthermore, interest rates both here and abroad have been cut to extremely low levels to support struggling economies and consumers. This, unfortunately, does not bode so well for investors who are dependent on interest income.
But let's take a more in-depth look at each asset class until the end of October. Keep in mind that inflation in Namibia currently stands at 2.3% and 3% in South Africa. Only growth above inflation can be considered as real growth. Let's kick off with money market investments or cash:
- It would seem as if rates reached the lower turning point although some money market rates are still on a lower incline. Twelve-month fixed term rates are now around 3.5% effective per year after tax and selected money market unit trust funds are set to offer growth at around 4.5%.
- Bonds or long-term bonds were the only asset class that showed positive growth in October and were up by almost 1% for the month. Over the last 12 months, we saw growth of about 5% and 8.5% per year over the last three years.
- Listed property was again the culprit in October and was lower by 8.5% for the month. Twelve-month growth is now at -51.6%, and the real deterioration of the asset class can be illustrated like this: If you invested in unlisted properties ten years ago your total growth would have been a mere 0.7% per year.
- Shares on the JSE were also in the red with 5.2% for October and down by 12.2% for the year. Also, with this asset class, growth over the last five years has been negative by -2.1% per annum;
- Foreign shares in Namibia Dollar terms fell by 6.1% in October on the back of a stronger rand, but mainly because of the weaker world market. However, for the year, this asset class is still up by 12.8% and up by 10.4% over the last 12 months.
International markets measured in their respective currencies were all red for October except for the Chinese market, which grew by 5%. The Dax in Germany had the worst performance, with -9.4% for the month followed by Eurostox, which was down by 7.3%. The S&P 500 in the US contracted with 2.7% while the British FTSE100 declined by 4.7%.
Commodities in US Dollar terms was a mixed bag with oil still under pressure closing 11.5% lower for the month.
So far this year, the index is off by more than 63%. Agricultural indexes were again positive, and gold has slightly dropped by 0.8%. The Namibian Dollar strengthened against all major currencies and was around 3% stronger against the US Dollar, British Pound and the Euro.
This is the picture so far this year. If there are clients that want to know more about any other investments and also how to invest in gold, they are welcome to contact us at Capricorn Private Wealth.