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Don't fall asleep

02 February 2004 Angelo Coppola

Anil Thakersee, head of business development and strategy, says there are several challenges for investors in this environment, and environment not seen in South Africa since the 1960s.

Commitment to inflation targets, low inflation maintained, low interest rates, nominal returns low, 550 bps rates cuts, currency volatility are some of the factors to impact on investors.

In December investors were invested 56% in money market and fixed interest, while the equity component has more than halved in the last five years, when looking at the investors in the unit trust sector.

While investors have been in cash, the local equity market has bounced nicely in the last 12 months, and investors have missed out on the opportunity.

So what about 2004?

"A portfolio optimised for tax efficiency and asset allocation is a recipe for investment success," says Thakersee, quoting from another international investment publication.

He mentioned that the best approach is a diversified portfolio, which is equally split between money market funds, gilts, property and high dividend yield equities.

"Keep in mind that dividend income is tax exempt. While another option is that investors can invest R130 000 in unit trusts, without paying tax on the income earned, courtesy of Finance Minister Manuel. Watch out for over-exposures to specialist mandates."

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