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Back to News OUR ADVICE CONCERNING THE CORONA VIRUS
Mar 2020
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OUR ADVICE CONCERNING THE CORONA VIRUS

 

  1. Except for the fact that you should wash your hands regularly and not touch your face we advise not to touch your investments or your shares. Clients who have followed our advice would have moved as much as possible of their voluntary contribution money (non-pension) to Mauritius via our administrator IAL to a selection of well-diversified offshore funds.

 

  1. Our Moriah Global FoF has grown with 4.3% (nett of all fees) for February 2020 and is already at 15.33% ZAR , YTD (year to date)! The USD growth has also been good with 0.03% for February and YTD 3.10% for the two months up to the end of February (see the spreadsheet below). That is according to our estimate, as our administrator in Mauritius, IAL, only calculates the unit price of Moriah Global at the end of February 2020 after the 3rd week of March.

 


 

  1. The Sphere Invest fund, above, that we use for clients who will need their money within the next 12 months or 3 years, has ironically  dropped with -3.34% YTD in USD up to the end of February and YTD now -2.79% in USD.  However above you will notice that Sphere has never had a negative year and seldomly negative months. You will notice in the case of Sphere that the fund has a low STD (Measurement of Volatility) of only 3.47% compared to the Berkshire fund of Warren Buffet below, with a STD of 14.3%. However, you will notice that the latter fund has a very good CAR (compound annual rate of return since inception) of 17.2% and has grown 12.15% for 2019 in USD.

 


 

  1. Above you will notice that Moriah Global is invested in three similar growth funds with a total exposure of +-20% (see above). These growth funds are some of the best growth funds world-wide with BNP Paribas that grew with 30.8% for 2019 and JP Morgan with 39.57%, but during February they fell badly because of the Corona virus. In the case of BNP Paribas with -9.09%.%.

 

  1. Those of you that have been our clients for more than 30 years may recall that we switched to cash timeously during the world-wide crash of October 1987, as well as before the June 1998 Far East Pacific Crash, IT Bubble Crash of 2000 and the Credit Crunch Crash of 2008. We are thankful that we could have protected clients against world-wide crashes which usually take global markets down more than 50%, usually for more than a year, however we have never guaranteed that we would be able to do it timeously, because of which it is so important not to have all your eggs in one basket with growth funds.

 

  1. In the case of Market Corrections, which usually happen more than once a year, we do not even try to time them. We have not switched to cash in the case of the above-mentioned growth funds, as well as in the case of the South African growth funds, because we see the current downturn as a correction and not a crash. We may be wrong, because of which in the case of Moriah Global we have an exposure of +- only 20% to growth funds. In the case of our South African Kanaan Balanced FoF, we have an exposure of only 15% to South African registered offshore funds with a Balance of 85% in a selection of Income funds. In the case of our Active 2 we have 25% in a selection of income funds as most of the investors in Active 2 have compulsory money (pension and LA’s) invested in Active 2 and they need stability. 75% has been switched on 12 March 2020, to the locally registered offshore funds, after global markets took their worst knock since the October 1987 crash, with the Dow Jones going down 10% in one day and now YTD for the year down more than 20%. As mentioned we see the present down turn as a correction and therefore do not intend to stay out of the market, as in the case of a crash. We have mainly younger clients in our Active 3 Fund, with a longer term view, where we have an exposure of 85% to South African registered offshore funds, 15% to South African growth funds, which we believe will make a comeback and eventually outperform conservative Income funds over the medium to the long term with a great margin.

 

  1. Moriah global has an exposure of +-70% to hedge funds, which have proven themselves to be able to hedge timeously. Below you will notice that the KG Fund has taken a knock of -7.9%, but we are confident that they will make a turnaround soon. In the case of Global Sigma, to which we have an exposure of more than 23% the fund has grown more than 1.19%, YTD 1.2% in USD up to the end of February 2020. In the case of Hadiar Jupiter where we have an exposure of almost 30%, the fund has grown a fantastic 7.5% in USD for February, YTD 22.57%! The Dow Jones, share market of the USA where we find the best growth funds in the world, was -17.74% YTD on 11 March 2020 and the JSE of South Africa -18.08%!

 


 

  1. Our relatively big exposure to the Global Sigma and Hadiar Jupiter hedge funds have protected Moriah Global FoF, to such an extent that it has grown with 0.03% in USD and YTD now at 3.1%  In ZAR for February 4.3% and YTD at 15.3% Net of all fees, whereas the Dow Jones of the USA was on the 12 of March 2020 YTD at -17.47%!.

 

  1. The investment summary report below of your portfolio managed by us will, if you have made a top up to  Moriah Global during January, will not show the growth for February, as shown above in the spreadsheet below Par 2, as this growth will only be calculated by IAL after the 21st of March, but we believe that the estimates that we have received already from the underlying funds mentioned above are close to accurate.

 

 

 

  1. Clients who transferred their investments in our Kanaan Hedge FoF, during January, which have been invested from 1 February, will be able to see the values above, as mentioned not the growth, but IAL only send us the monthly report after the 21st of each month which we will upload our on server. We will therefore send you your investment summary report again during April to show you that your Moriah Global investment has grown for February, with 0.03% in USD and 4.87% in ZAR, nett off fees. See also below the movement of your top-ups  if applicable, on our server in the investment account below.

 

 

 

Friendly greetings

 

Andre Delport

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