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Investments: exciting prospects for 2007

01 February 2007 FAnews

In today's constantly changing environment, financial advisers need to be at the top of their game to ensure the best performance for their clients. FAnews asked Di Turpin (CEO of the Association of Collective Investments), Pieter Koekemoer (Head of Retail Business, Coronation) and Paul Hansen (Director of Retail Investing, Stanlib) to share some of their predictions for 2007.

What issues should financial advisers pay attention to when reviewing their clients' investment portfolios in 2007?

Di: It is important that advisers focus on the situation and needs applicable to individual clients. They should definitely look at including some offshore portfolio diversification in the year ahead.

Pieter: I believe that the most important issue remains a focus on robust investment philosophy and process. Financial advisers should ensure that their clients' investments are matched to portfolios appropriate for their needs.

Paul: It's very important that advisers re-evaluate portfolio weightings when conducting an annual review. It might be appropriate to take a little profit in equities and beef up the portfolio's cash component, paying due regard to the client's risk-profile.

What are your predictions for the winning investment strategies for this year?

Pieter: Equities definitely remain the asset class with the most potential. Coronation prefers selected developed market equities to the domestic market. All investors should have some offshore exposure in their portfolios. We still prefer listed real estate to bonds, and do not see bonds outperforming cash.

Paul: Winning investment strategies in 2007 will still focus on equities. Stanlib believes there is potential for a 15 to 20% gain in rand terms in offshore equities, while local equities could well strengthen further, perhaps by 14% over the year.

Given the importance of portfolio diversification, what new investment options should financial advisers consider?

Di: Financial advisers should remember that offshore exposure remains an important part of a diversified portfolio.

Paul: We predict that offshore property warrants attention as the supply and demand fundamentals remain favourable. Advisers should not ignore the role of this asset class as a portfolio diversifier.

What industry events are likely to impact on the investment industry?

Di: The life industry's statement of intent roll-out is one event that will definitely have a serious impact on the industry. ACI also hopes that Treasury will be able to issue its long awaited second paper on retirement fund reform. This will not have a direct effect on the industry in 2007 but will have a major impact going forward. On the regulation front, the FAIS Act may well be added to, which could have implications for how advisers conduct their business this year.

Pieter: Coronation is excited about a number of major reform initiatives that are currently under way. There is also the potential for changes to collective investment regulation, in line with recent European regulatory changes, which will make recent financial market innovations more accessible to individual investors and their advisers.


Consensus

There you have it. Each of the experts polled believes that financial advisers should pay specific attention to individual client requirements before changing their investment strategies.

Di, Pieter and Paul agree that advisers wishing to diversify their client's portfolios should consider offshore investments (equities and listed property) in the coming year.

The consensus is that domestic equities will continue to perform well in 2007 and more than likely provide better returns than listed property, cash and bonds.

Quick Polls

QUESTION

Each year ordinary consumers and their financial and wealth advisers flock to dozens of asset manager ‘outlook’ presentations to find out about economic and investment trends, and the next ‘hot’ company. What do you want asset managers to share during these events?

ANSWER

Asset allocation strategies
Big picture investment themes and how to position portfolios for them
Investment methodologies and historic fund yields
Share tips by the score
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