Category Investments

STANLIB picks the big 2010 winners

01 February 2007 STANLIB / Clear Distinction

STANLIB, the country's largest unit trust company, has already picked the two big winners for 2010 - the South African economy and the domestic equity asset class, an investment option that has always out-performed other options in the long-term and achieved a 26% average annual return over the last five years.

Yet, strangely it has become runner-up to more conservative funds in terms of recent support by unit trust-holders.

STANLIB also predicts another category of winner: those local investors who return to the equity category and place special emphasis on the listed companies positioned to benefit from World Cup developments and national infrastructure projects that will play out way beyond 2010.

"Clients who 'bet' on 2010 as a catalyst for enhanced investment returns could be on to a very good thing," says Kim Zietsman, head of single-manager unit trusts at STANLIB.

"Everyone looks forward to 2010, but we've been looking forward to it from an investment perspective. We've concluded that lots of strategic goals will be scored both before and for a long time after the event.

"The prospects of long-term growth through infrastructure development are very strong indeed in view of Government's commitment to reduce poverty and grow the economy by 6% a year."

South Africa 2010 will result in:

A contribution of R21.3 billion to GDP;
R4.6 billion in ticket sales alone;
R7.2 billion in taxes to Government;
400 000 visitors (33% of ticket sales);
10 500 media representatives and 14 500 VIPs;
59 000 new jobs.

The general economy will also be scoring vital goals:

By then, car sales will top 1 000 000;
South Africa's credit rating could be up to A from BBB+;
At projected GDP growth rates, another 2 000 000 jobs will have been created by 2010 (2000 per day) on top of the 2006 figure when a little under 500 000 new jobs were created;
Government should have loads of money (tax receipts up, Budget deficit down, reserves up and Government debt down);
Gross domestic fixed investment will increase, with full utilisation of the R410 billion earmarked for strategic projects;
SADEC will be doing better, with GDP up and inflation down.

Zietsman notes: "Our future-spotters expect solid global growth, local growth of 4-6%, relatively high commodity rates and relatively low interest rates.

"By 2010, South Africa could well have enjoyed seven consecutive years of high growth with the prospect of more to come. In scenarios such as this, equities can be expected to do well and should return to favour among investors seeking long-term growth."

Our status as Soccer World Cup hosts will ensure that our achievements are internationally showcased. Positive local and global sentiment can have huge impact on a nations equity market and could enable the JSE to position itself as an eexciting emerging market for foreign investors.

For these reasons, STANLIB has created a new-look domestic equity fund that embraces and exploits all the 2010 positives and the potential for infrastructure-led growth for several years after that.

The new Nationbuilder Fund - launched on 31 January 2007 - will take equity positions in listed companies large and small that are positioned to derive advantage from South Africa 2010 and the huge developmental projects that will play out at the same time.

Zietsman explains: "We think 2010 can perform an important national service by kick-starting a return to equities by the smaller investor.

"They should take a four-year view - at least - and commit to shares that can be expected to trend higher on the back of infrastructure growth, as opposed to stop-start consumer-led growth.

"A huge lost-opportunity cost could attach to time out of the equity market. You score investment goals by getting into the game, not by staying on the sidelines.

"That's our 2010 message to both our advisers and our clients."

* To encourage the widest possible buy-in, minimum investment requirements have been kept as low as possible. The minimum lump sum investment in the Nationbuilder Fund is just R1000 or R100 a month by debit order.

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