Advisers can protect client wealth even in a market slide

By Janice Roberts


There’s good news for advisers trying to help clients fearful for their retirement nest-eggs and those tempted to jeopardise their financial future by fleeing the market and abandoning perfectly workable investment strategies.

Because even during a market meltdown, it’s possible to grow or protect wealth.

Real-life experience at Hollard Investments proves it.

This new addition to the Hollard financial services group recently celebrated two years of wealth-building.

Those two years witnessed a succession of JSE highs, followed by a market correction, falling growth and a U-turn in Emerging Market sentiment.

In February 2014, the JSE ALSI was at the 45,132 mark and many local equity investors often pocketed double-digit gains. By the end of January this year, the JSE had fallen 9.7% from its record high in April 2015 and continued to deteriorate in February.

It is often at these times of great market volatility that consumers exit the market, realising losses and disqualifying themselves from the buying opportunities that exist in every downturn.

“It is important to build a long-term strategy to grow wealth that can be delivered by an investment manager whose objectives align with your client’s objectives,” says Hollard Investments’ Chief Investment Officer, David Green.

Hollard Investments’ results have consistently outperformed over these last two years.

After two years, Hollard Investments’ unit trust funds have all beaten their benchmarks For some funds that means exceeding inflation by 4%, creating a build-up in real wealth. Over two years, both the Strategic Assertive and the Strategic Balanced funds have delivered over 10% each year, beating their benchmarks by 2% and 2.7% respectively.

2015 gains were achieved despite the JSE correction anticipated by Hollard as it felt local price/earnings multiples were too high, with industrials above 20-times.

Today multiples for the market are close to 18, still high as the 20-year average is 15-times and the 50-year average 12-times.

Green attributes fund success to a prudent approach to managing downside risk, especially evident in these uncertain times, and the architecture of the Hollard range.

The firm offers multi-manager and single-manager funds. Hollard selects a single manager for each of its ‘building-block’ funds, each a specialist in a targeted asset class. Hollard funds of funds (FoFs) are constructed from these building blocks and aim to outperform inflation by 2, 4 or 6% per year over a rolling 3-, 5- and 7-year periods.

All three Hollard FoFs are top quartile performers.

“Our unique single manager approach helps us outperform benchmarks, freed from performance dilution caused by hiring multiple managers in the same asset class,” explains Green.

During Hollard’s launch phase, 2% South African economic growth was widely projected, Chinese growth was going strong, interest rates were at record lows and sentiment generally favoured Emerging Markets. A reversal of those positives has failed to derail the new business.

Says FOF fund manager Conlias Mancuveni: “Successfully coming through a stress test like the 2015/2016 market correction enhances credibility across what is a key customer segment for us – the professional, client-focused advisor.

“It also demonstrates the ability of resilient processes to achieve inflation-beating growth, even in tough times.”

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