The world is changing fast and to keep up you need local knowledge with global context.
The hard-hitting Magnus Heystek compares the BizNews share portfolio’s performance to some of South Africa’s largest asset managers that have greatly underperformed offshore-focused funds over the past decade. Alec Hogg’s BizNews portfolio is focused on exponential companies that can grow at more than 20% per annum; the portfolio includes the likes of Apple, Amazon, Microsoft and Netflix. The point Magnus is trying to convey is that many South African savers lack diversification and offshore exposure in their portfolios, which have made them poorer as a result. The South African economy has been beaten to its knees. The unemployment data released earlier this week shows that … with no signs of a recovery. Magnus also announces his first bitcoin purchase, the investment strategist having a change of heart following an investment conference he attended. – Justin Rowe-Roberts
On the local vs offshore returns over the last 10 years:
It is astonishing how well your portfolio has done (BizNews share portfolio). It just shows how if you’re not made aware of the facts about what is going on in global markets, how easy it is to be complacent and happy with returns of 4% or 5% per annum. The real facts are being kept away. I have been trying for a long time to alert people that there’s something fantastic going on overseas and I have had a lot of pushback and been slammed by journalists and commentators. You created this portfolio for all and sundry to see. When you tweeted this morning about your portfolio, I quickly had a look at our two biggest names; similar funds, equity funds and the difference is not marginal. The difference is life changing. We’re talking seven years here. We’re not talking about a humongous amount of money for most people, R2.2m. But seven years later, you have got R12.5m in your portfolio and you’ve got R2.8m in the other one. That is the reality. And, unfortunately, that’s the truth. It ties to Regulation 28 that I wrote about last week. Again, I had people slamming me for talking rubbish. They’re happy with 3% or 4% returns. The poor investors do not know how badly they are being shafted by Regulation 28.
On the troubles within the asset management industry in South Africa:
They would like to grow their book or their business faster than it’s currently growing. We see it in the numbers of Coronation that came out last week, and you can do the same for all the big names, the numbers are not growing. This is a growth industry; your assets under management determine your profitability and I think the asset managers are realising that, although it’s nice to be in a protected environment. But if it is growing at 5% and the rest of the world is growing at 15%, if you do the numbers, you’d rather be part of that 15% because that means a much bigger impact on your bottom line five or 10 years down the line, as opposed to a market that is struggling to beat inflation back home. So, they see the danger signs. They are losing discretionary money because of the exchange controls.
On buying bitcoin:
This bitcoin thing, as you well know, has been swirling around and now and then, somebody will ask me, “When are you going to buy bitcoin, Magnus?” And I always said, I don’t know enough about bitcoin. But part of our exercise as advisers is to educate ourselves about bitcoin. We had a speaker by the name of Dwaine van Vuuren – a bitcoin expert – and he gave us a long lecture and tried to explain it as best he can. The reason is not that we want to become involved in bitcoin. It’s that you need to have knowledge on parts of the investment world so that you can guide your clients and say, we’ve investigated bitcoin and we don’t think you should invest. Or, you can invest maybe 5% of your portfolios. It’s part of a learning curve and all of us in the room bought bitcoin. Some smart guy worked it out well, we basically only put R200 into bitcoin. So, yes, I have bought bitcoin but it’s only worth around R200.
- Regulation 28: South African savers are being shafted – Magnus Heystek
- R500,000 investment challenge: Piet Viljoen vs Magnus Heystek
- The lost decade and how your wealth has evaporated – Magnus Heystek
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