We have seen growth in stock markets worldwide over the
past few months, but the question is whether that growth is fundamentality
sustainable. Most renowned economists believe not. The so called quantitative easing
by the central banks of the major first world countries is a stimulus for
growth in share prices, but not for the productivity and profitability of the
underlying companies. It is very difficult to become profitable if you have too
much debt.
This makes it difficult for us to outperform the JSE as we
had been doing since August 1995 (see attached Kanaan Balanced Wrap Fund
factsheet, which is the predecessor of Met Balanced Fof). According to the shorter
term performances of Met Balanced Fof the JSE is outperforming the fund, but
Met Balanced is still outperforming inflation after tax hands down and is much
less volatile than the market with a CAR (Compound Annualised Return) of 9.4%
per annum, according to Par 7 of the attached fund factsheet. We are happy with
the 8.89% YTD up to the end of September (Par 8), with very little risk, if
there is a meltdown because of the huge built up of debt in the first world
countries.
Met Balanced and Flexible are ideally suitable for Pension
money. Unfortunately the law, as it stands now, does not yet allow us to switch
some of the Met Balanced fund into selected Hedge funds.
Last opportunity for small amounts in
Hedge Funds
Because Hedge Funds are allowed to use short selling, the
successful ones can go against the trend of a share market crash, as was the
case with most SA Hedge funds during the 2008 credit crunch crash. Clients who
intend to invest in Hedge funds should do it quickly, as regulations that
should come into effect by February 2013 will change the minimum investment in
Hedge funds to R1m, while at this stage it is still R100 000.
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