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In the case of our Met Balanced FoF for pension and Met Flexible FoF for voluntary contribution investments we hoped to close the year of 2012 with a return of 10%. We made more than 13% in both cases (see Par 8 of the factsheet).

 

Day by day we are becoming more convinced that first world governments are quite determined to delay, or if possible, even prevent a deep recession because of an economic collapse down their huge fiscal cliffs. That is because of an accumulation of industrial and state debt, which a majority of economists believe is presently snowballing faster than the growth that these countries are desperately trying to stimulate in an effort to pay back the debt.

 

As we have mentioned often over the past 4 years, the chances are big that a collapse will take place in these countries some or other time, but it is very difficult to predict when, if ever. These governments are determined to delay a collapse for the foreseeable future, even against the advice of their own economists, such as the minister of finance in Germany. Because of these efforts we have seen a 27% growth on the JSE this year and might see similar rates over the next few years.

 

We do not want to switch Met Balanced FoF to these growth funds, as it accommodates pension funds. We intend to switch Met Flexible FoF, but we first want to advise income drawing clients and clients who do not want to be exposed to bigger volatility (even though they may see much bigger returns for the next few years), to switch from Met Flexible FoF to Met Balanced FoF.

 

It has been proven over and over again that to follow a buy and hold strategy in good growth funds will eventually outperform all the other strategies over the long term, with the condition that you do not draw income. Where such a strategy has been followed (where you stay in these funds even when they drop with 30% or more), over the last 10 years, most good growth funds are still averaging more than 20% per annum over that period.

 

We are happy to report that the Xhilarator Fund of Hedge Funds (XFHF) returned more than 18% for 2012.

 

Kanaan Trust

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