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Unit trust statements – Opportunity to guide investors

A recent media release by the Actuarial Society of South Africa reaffirms that the first quarter of this year has been a rollercoaster ride for investors, with unit trust portfolios having delivered a wide range of returns. “Only one of the 168 South African Equity General unit trust portfolios managed to eke out a small positive return in the three months to the end of March 2020, while the rest delivered negative returns. The worst performing general equity portfolio lost almost 35% of its value over this period.”

According to Andrew Davison, deputy chair of the Investments Committee of the Actuarial Society of South Africa, the double digit negative returns on quarterly unit trust portfolio statements would have caused distress for many investors. He stresses that there is absolutely no point in drawing any material conclusions from such a short performance period.

“The reality is that it’s not business as usual. Uncertainty abounds and stock markets, bond markets and the rand have experienced significant falls because of anxiety about the effects of COVID-19 on the global economy and businesses of all sorts and sizes.”

Davison further reiterates that this is not the time for panic and knee-jerk investment decisions. It is however a very good opportunity to assess whether the portfolio that are invested in is performing in line with expectations.

In line with a recent article in this publication, now is a good time to stay close to your clients and guard against them taking irrational decisions.

The media release further discusses volatilities, different outcomes as well as shares some valuable insights for investors.

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