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Ok. Got itUnderstanding market cycles
It certainly has been extraordinary times, with much uncertainty and market volatility. We know this is a heightened time of anxiety and fear. Many investors currently feel the need to protect their savings and move investments into cash. History teaches us that very often investors switch at the worst possible time, eroding possible returns for the future. One’s emotions often cause one to sell when markets are cheap (after a correction) and buy when markets are expensive (after a strong recovery). Our advice is always to try and stick to one’s original investment plan and time horizon – markets go through cycles, bull and bear phases. Markets do recover, and often very quickly.
The two graphs below show both the SA and World equity markets since the start of the year. Since their low point in March (19th March for SA and 23 March for World), both domestic and global equity markets are up over 32% (in ZAR) and 28% (in USD) respectively.
SA equities have shown a strong recovery since 19 March on the back of a more positive global outlook and the slow “re-ignition” of various parts of the global economy. There is still quite a long way to go till economies are fully back to “normal” – with the new “normal” probably having several differences to life as we knew it.
Global equities markets showed a strong rebound and now a slight levelling off. It seems markets may be losing some of its momentum gained in the past few weeks, as earnings numbers are slowly being released. We shall see how things continue to unfold.
*Updated as at 30 April 2020 - month end
DISCLAIMER
Nedgroup Collective Investments (RF) Proprietary Limited is an authorised Collective Investment Scheme and the representative of Nedgroup Investments Funds PLC in terms of the Collective Investment Schemes Control Act. It is a member of the Association of Savings & Investment South Africa (ASISA). Collective Investment Schemes are generally medium to long-term investments. The value of your investment may go down as well as up. Past performance is not necessarily a guide to future performance. Nedgroup Investments does not guarantee the performance of your investment and even if forecasts about the expected future performance are included you will carry the investment and market risk, which includes the possibility of losing capital. Our funds are traded at ruling prices and can engage in borrowing and scrip lending. Certain funds may be subject to currency fluctuations due to its international exposure. Nedgroup Investments has the right to close funds to new investors in order to manage it more efficiently. A fund of funds may only invest in other funds, and a feeder fund may only invest in another single fund, both will have funds that levy their own charges, which could result in a higher fee structure. A schedule of fees, charges and maximum commissions is available on request from Nedgroup Investments.