The first quarter of the year is a good time to review our share portfolios and investment objectives in the light of our risk profile and the prevailing economic conditions.

Emerging markets have been the beneficiaries of a huge rotation of investment flows from developed markets to emerging markets. South Africa has enjoyed the spoils of this rotation, with a strong rand and a stock market that has experienced a very healthy recovery.

It is very difficult to fight a trend, which is why so many of us invest like the rest of the herd. This is probably not a good time to swim against the current. For this year I am recommending a portfolio that is solidly rand hedge and likely to continue benefiting from the inflow of foreign funds but that also offers some protection if the flow reverses, because the rand will inevitably fall if inflows turn to strong outflows!

I have selected a portfolio that is deadly boring and “blue chip”, rather like last year, but I think it is the correct positioning for 2011, which promises to be a very interesting year for investors.

My heaviest weighting is in Anglo American plc, which is emerging from a very unhappy time. It is in good financial shape, ready to resume “normal” dividends and should play “catch-up” with the other major international mining and resources stocks. The second-largest holding is again British American Tobacco (BAT). Operating profitably in almost every geography and currency, it is a wonderful defensive investment with an unrivalled history of dividend growth. Spurn it at your cost.

From last year’s picks, which I made only in March, I have retained BHP Billiton plc. (Despite the already-good investment return, this world-class company is a must.) I have also kept Impala Platinum, SAB Miller plc (we drink when times are good or bad, the management is top class, and I think that the share price has been muted as a consequence of the London listing), Standard Bank (arguably our best-managed bank with great African operations) and Tiger Brands (as a primary food producer). I have ditched from last year’s list Bidvest, Aspen (it has enjoyed a phenomenal run) and Tongaat Hulett (which did not produce the returns I had anticipated).

I have added Spur (a small-cap franchise business that is well managed and is producing sparkling results), Investec (remembering that I work for the group) and MTN Group (the ultimate consumer blue chip, which is going to start paying higher dividends as growth slows and new investment opportunities become more difficult to find).

The performance for the seven-month period over 2010 is a really mixed bag, with the JSE All Share index registering a 5.9-percent gain for the period, while my best pick was Aspen (up 17.5 percent) and my worst was Standard Bank Group (down 9.9 percent). During the same period (in their own currencies) the Japanese Nikkei Dow plunged 17 percent; Britain’s FTSE marked time, shedding a modest 0.1 percent and the United States Dow Jones was up a whimpering 2.4 percent.

This year I am going to be really brave and give you some stock ideas for your offshore funds. I must stress that these are for long-term investors, because the companies are US, European and Japanese, and those geographies are still probably some way off from growth, but the shares just seem cheap by fundamental valuation.

You will need to do your own research, but here goes. In the US: Apollo (private education); Amedisys (health care and hospice services); and Supervalue (the fourth-largest food retailer). In Europe: Roche, Glaxosmithkline (global pharmaceutical); Nokia (the largest cellphone manufacturer; and HSBC (international banking). In Japan: Toyota (motor vehicle manufacturer); Nintendo (computer games); and Park 24 (parkade operator).

PS. This column was written in mid November 2010. Note that I have shares in all the South African companies I have recommended and also in Supervalue, Roche, HSBC and Toyota.

David Sylvester is the chairman of the Shareholders’ Association, telephone 021 686 7567.

This article was first published in the 1st quarter 2011 edition of Personal Finance magazine.