Insights, Updates and News

Q1, 2015 Letter to investors

By Nic Andrew, Head of Nedgroup Investments

Dear valued investor

At this time of the year, the media and financial publications are full of economic forecasts. These are often well-researched, fascinating to read and draw insightful conclusions. Investors will do well not to place too much reliance these forecasts because there are so many unknown variables or as Niels Bohr more eloquently put it “Prediction is very difficult, especially if it’s about the future.” A year ago, who could have predicted that the price of a barrel of oil would be languishing around $50?

Much more useful for investors is to set clear goals, begin saving enough diligently and regularly into an appropriate, fairly priced fund and then having the discipline to stick to the plan through the market’s ups and down. Or put simply, develop a sensible plan and then stick to it!

South Africa is a relatively small economy and its problems are well publicised. It therefore makes sense for most South African investors to diversify a portion of their investments offshore. This is for both diversification purposes (spreading your risks) and because there is a much wider opportunity set.

Over the past five years we have been working on enhancing our international Best of breed™ proposition. Our first appointment in 2010 was a London based manager, Veritas, to manage the Nedgroup Investments Global Equity Fund. In 2013, we appointed FPA, based in Los Angeles to manage the Nedgroup Investments Global Flexible Fund. Both these managers have performed exceptionally since their appointment and have attracted significant support. We are delighted to announce a new manager to our international range with the appointment of The Killen Group to manage the Nedgroup Investments Global Cautious Fund. Simon Watts introduces them and explains why we are excited by this partnership.

Following on from international trends (particularly in the US), another area we have been investing in is the development of low-cost multi-asset solutions which can be used together with active funds to reduce the overall costs to the client. Jannie Leach writes about our Core Range that recently celebrated its five-year anniversary. The range features two of the most successful, best value and longest running passive funds in the industry.

Treasury has delayed the implementation of many of its proposed retirement reforms pending further consultation. One of the proposals which have not been delayed is the introduction of a tax-free savings account in March 2015 which provides attractive incentives to savers. The small savings in tax each year can make a big impact when compounded over long periods. Seugnet van der Merwe provides more detail on the practicalities.

Many thanks for your continued support. It is much appreciated and we will do everything to ensure our service and long-term performance meets your expectations. May 2015 be another successful year which takes you one step closer to achieving your long-term investment goals!

Regards,

Nic

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