EQUITY INVESTMENTS STILL PROFITABLE

MBABANE – While 2020 is proving to be a very challenging year on many fronts, the Eswatini equity investor is still able to make money.

The African Alliance South African Prescient Equity Fund has performed well against the challenging backdrop, gaining +7.5 per cent return year-to-date while in the same period the average general equity fund has lost its investor 8.1 per cent.
Equity funds invest in stocks/shares of listed companies across the markets and sectors.

Equity is considered a risky investment but as a result has the potential to deliver higher returns than fixed income or money market returns over the long term.
Pension funds and investors with a long-term goal of generally five years should have exposure to equity funds.

Exposure

The Prescient Equity Fund is said to be for investors seeking broad-based exposure to the South African equity market. This Fund is appropriate for investors with a long-term investment horizon. Victor Langa, who is African Alliance Eswatini General Manager, in an interview, confirmed the good performance of the Fund.

 “The Fund is a solution we are using for all of our clients that are seeking exposure to the SA equity market. It is used as a building block in a total portfolio sense to ensure that the local investment regulations are adhered to – that of the 50 per cent local asset allocation,” Langa explained.
Every pension fund managed by African Alliance Eswatini with SA equity exposure is said to be benefitting from this strong performance. What has worked well for the Fund is the strength of the investment process.

“We actively manage our portfolios and that has enabled the fund to react in a positive and efficient manner during times of market stress,” said Langa.
He stressed that investment managers began the year optimistic about the prospects of the year ahead.  “The global economy was on a strong footing and a trade deal was on the table between the United States and China; to partially end what was the longest trade dispute between the two world super powers.
“Little did we know that COVID-19 was about to unleash its devastating effects on the global economy.

Unfold
“Investors are rightfully concerned as the pandemic continues to unfold. The world is operating in unprecedented times as we deal with the consequences – the likes of which have not been seen since the Spanish Flu of the early 20th Century,” he said.

Langa has shared that until the world can find a cure, there is a need to adjust to a new normal. “At African Alliance we are doing great during this time, the performance of our funds – in both absolute and relative terms – remains strong” said Langa. “Our investment team has no particular style bias (we are style agnostic), which differs to the peer group that often follow a style of investment management, typically growth or value. We combine both a bottom-up and top-down approach when screening, building and positioning the Fund,” he said.

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