Words on Wealth: How your investments fared in the past quarter

Locally, investment performance echoed the subdued sentiment on the state of the South African economy. Photo: Pexels.com

Locally, investment performance echoed the subdued sentiment on the state of the South African economy. Photo: Pexels.com

Published Oct 22, 2023


The third quarter of 2023, to the end of September, was a disappointing one for investors in local and offshore markets.

Locally, investment performance echoed the subdued sentiment on the state of the South African economy. The SA Reserve Bank kept interest rates high at 8.5% as inflation came off its July low (it dropped to 4.7% in July, but rose slightly to 4.8% in August and shot up to 5.4% in September, according to Statistics SA).

In September, Finance Minister Enoch Godongwana spooked everybody by announcing that South Africa’s public finances were in a parlous state, with tax revenue down substantially and the government facing higher borrowing costs.

Asset manager Ninety One reports in its quarterly investment review: “Investors remain concerned about holes in the nation’s budget, which the central bank said will force local rates to remain elevated for some time to come. The country’s budgetary problems have less to do with overspending and more to do with declining revenue collection. Turgid economic growth, lower commodity prices and declining exports of coal and iron ore due to infrastructure deficits have all contributed to the country’s looming fiscal crunch.”

Offshore, investors were equally gloomy, with inflation sticky, interest rates remaining high and recession fears intensifying.

In the US, the rate-hiking cycle seemed relentless. Ninety One reports: “The optimistic sentiment that characterised the second quarter of 2023, leading to a favourable climate for riskier assets, dissipated over the following three months. Investors had hoped that the pace of rate hikes would gradually decrease and eventually cease by year-end.

“However, persistently high inflation rates, stable employment figures, and still ‘above-trend’; economic growth forced the market to accept that the Federal Reserve is likely to raise rates in November and will maintain higher interest rates through 2024. This shift led to Treasury yields reaching their highest levels since 2007.”

The Chinese property crisis deepened as the country’s two biggest developers defaulted on their loans. And oil became pricier, rising about 30% over the quarter on the back of supply concerns and fuelling inflation pressures. The gold price fell by 3.7% to $1856 over the quarter, while platinum, industrial and other precious metals were broadly negative.

Financial indicators

TheJSE All Share Index started the quarter at 76 027 points. It rose to almost 79 000 points at the end of July, but tipped downwards, ending at 72 382 points, a three-month drop of 4.8%.

The total return index – the one more appropriate for investors, because it factors in reinvested dividends – was down 3.5% for the quarter, according to ProfileData. However, the index remained well up from the dip it experienced at the end of September last year, returning 17.7% for the 12 months.

Looking at the four major share sectors – industrials, financials, property and resources – only financials were positive for the quarter.

• Industrials lost 6.2% for the quarter but were up a significant 27.4% year-on-year.

• Financials were up 2.20% for the quarter and up 21.7% year-on-year.

• Listed property was down 1.0% for the quarter but was up 12.9% over 12 months.

• Resources were down 5.4% for the quarter and down 0.5% year-on-year.

Turning to the cash and bond markets, the All Bond Index returned 7.2% over the year to September 30 and cash returned 7.3%.

The rand was almost flat against the US dollar, hovering around R19, save for a temporary bounce-back to R17.55 at the end of July. Over 12 months to the end of September, the rand’s value against the greenback dropped by about 5.5%.

For offshore investors, the MSCI All Country World Index was down 4% in rand terms over the quarter, but up 25.4% year-on-year.

The S&P500 Index, representative of the top 500 companies in the US, dropped from 4 450 points to 4 288 points (−3.6%) in dollar terms, but not before reaching a high of 4 582 points at the end of July, not too far off its record of 4 766 points on December 31, 2021.

The more tech-focused Nasdaq Index, which had been rising steadily since January, hit a peak of 14 353 points in July, coming down to 13 219 points by the end of September.

Unit trust performance

Looking more closely at the more popular collective investment categories (all according to ProfileData), here are the year-on-year performance figures to the end of September:

• SA Equity General funds: Average 11.8%, best 26.1%, worst −4.9%

• SA Multi Asset High Equity funds: Average 13.0%, best 36.3%, worst 4.0%

• SA Multi Asset Low Equity funds: Average 10.4%, best 14.5%, worst 1.7%

• SA Multi Asset Income funds: Average 8.4%, best 13.1%, worst 3.2%

• SA Interest Bearing Variable Term funds: Average 5.9%, best 11.5%, worst −0.5%

• Worldwide Multi Asset Flexible funds: Average 17.5%, best 46.7%, worst 1.09%

• Global Equity General funds: Average 23.5%, best 57.5%, worst 7.7%

* Hesse is the former editor of Personal Finance