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19 September 2017

Kanaan BCI Balanced FoF News


19 September 2017


Dear Mr. Van Tonder (Jnr)


Your investment in terms of either your voluntary contribution funds and/or your compulsory contribution funds (RA / LA), has grown for the first 2 weeks of September 2017, nett of all fees, with 1.07%.  It is good news but not necessarily an indication of things to come.  To look at the short term growth or depreciation of an investment is any case only of value to traders or gamblers not for long term investors. 


So why do we mention it?


A few years ago we decided to invest up to 25% of Kanaan BCI Balanced FoF portfolio in the top offshore unit trust funds so as to protect the portfolio against Rand depreciation.  If you have been investing for the long term you can rest assure that the Rand has been depreciating over the past 40 years more than 5% per annum against the USD, but that didn’t happen in a straight line.  The Rand is known as one of the world’s most unpredictable currencies and can sometimes appreciate unpredictably, like during 2016 just after Nene-Gate and in the face of the uncertainty of Brexit and the election of Trump, when the Rand appreciated with more than 25%, which was the main contributor to the horrible -8.69% your investment in Kanaan BCI Balanced FoF depreciated during 2016.


Diversification into good quality offshore funds, as we have in Allan Gray, Orbis, Old Mutual Global Equity, is very important, but it can also work against you over the short term, but over the long term it eventually works in your favour as we have been seeing over the past few months.


Friendly greetings


Andre Delport

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