It’s great knowing that spring is around the corner and that good rains will soon provide a much needed end to a chilly but relatively mild winter. As we have said in the past, the JSE is not currently offering the valuations and opportunities that we have seen in the last decade. Due to this, we have suggested increasing exposure to offshore markets.
An alternative option, which has created interest amongst many investors, is that of investing in stock markets on the African continent. Whilst this does pose risks over the short term, due to political volatility experienced in many African countries, it could provide competitive returns over the longer term.
It has previously been difficult to gain access to shares and unit trusts in African countries due to liquidity issues and extremely large minimum contributions.
The Stanlib African Equity Unit Trust Fund is a well-managed fund that allows access to African equities. Jurgens Finance has negotiated with Stanlib to market their fund at significantly lower minimum contributions than usually required. This is a higher risk fund and requires an investment horizon of at least five to ten years. We would not recommend more than a maximum of 5% of one’s total investment portfolio be invested in this type of fund. Should you be interested in finding out more about this fund, please contact me or one of my colleagues in the office.
Wishing you all a fresh and healthy start to spring and a memorable “first swim” of the season!
Short Term News from Greg Brits:
It was a surprise to all of us to experience the earth quake recently on 5 August 2014. A question from a few of our clients was whether their buildings insurance policy covered them for earthquake damage. We can gladly report that our clients do enjoy earthquake cover on their building policies.
Some statistics I found on earth quakes in South Africa showed that these are more common than one would think. There were 5 recorded earthquakes in 2013 and 3 recorded in 2014. I believe that the reason the 5th August “quake” attracted so much additional attention was due to the tremors being felt over such a vast area. With the epicentre in Orkney in the North West Province, it was felt as far away as Botswana and Durban and it lasted for 90 seconds. It also had the second highest recording of 5.5 on the Richter Scale. (The largest earthquake in South Africa was in 1969 which measured of 6.3 in the Tulbagh area).
There may have been a few claims in the Johannesburg region. One of the larger insurers reported losses up to R10 Million Rand for the latest event, mostly in the north west region closer to the epicentre, which is reasonably small considering the amount of buildings that are insured. As we head towards the hail season, please be more vigilant where you park your vehicles to avoid the need for an insurance claim and having your personal possessions damaged. Remote jamming of vehicles is still very prevalent, so please make sure your vehicle is locked by checking the door handle as opposed to trusting the remote control. The thieves are usually close by and as you attempt to lock your vehicle with a remote and walk away, they jam the signal, usually with another remote, preventing locking and then proceed to steal goods from your vehicle once you are out of sight. This usually happens within a minute of you walking away.
Please also remember to get valuations on specified items, as this assists when paying a claim, making the claims process a lot smoother. This is not only limited to jewelery and watches, it also includes sports equipment such as bicycles, golf clubs etc. If the insurer does not have such valuations, it’s always difficult to asses the actual loss and the detail thereof.
The Parable of the lost money:
One evening a minister of religion was walking along a road and saw a distressed man under a lamppost. Asking if he could assist, the man informed him that he had lost his week’s wages. The minister offered to help search but without success.
Having a systematic approach, the minister asked where the man had lost his money. “Down the road”, he said. Being taken aback the minister asked, “If you lost the money down the road, why are we looking for the money here?”.
“Oh”, the man replied, “because there is more light under the lamppost”.
The moral of the parable is, if you wish to solve a problem, first identify the source and then find solutions.