The world is changing fast and to keep up you need local knowledge with global context.
Lisa Segall, of GinsGlobal Index Funds, and award-winning independent investment expert Magnus Heystek, of Brenthurst Wealth Management joined BizNews for a vibrant conversation on how to make the most of your hard-earned savings – at home and offshore. Jackie Cameron
Magnus Heystek on how currencies are likely to unfold over the next year:
If you look at the amount of money that the US Fed has created and printed in the last year or three, especially last year, they have increased their balance sheet by 60%. There’s a lot of dollars floating around the world. So it’s no surprise that the dollar is gently floating downwards against all currencies, including the South African rand. But that’s only half the story. It is making certain asset classes cheaper.
A lot of people only look at the rand/dollar exchange rate when they look at onshore/offshore – it’s almost like a binary thing. In fact, we’ve done an analysis. If you took money out on the worst day last year when the rand was at 19,20 against the dollar and you invested in a range of the high tech funds or other funds – healthcare funds, demographic funds – despite the strengthening of the rand, you still have made positive returns because the growth has been faster than the decline in the currency.
So looking at the rand, our exchange rate is only looking at one side of the coin. You’ve got to look at the other side as well. So, yes, it can go lower and probably will go lower, but it’s actually good for equity markets because there’s nothing much else on at the stage bonds or a yield or a zero. There might be an oil and a gold play somewhere, but the momentum is still in these mega trends. We’ve been talking about them for a year or two now and I don’t see any reason to change that.
Lisa Segall on Bitcoin:
If I can’t understand something, I won’t sell it. However, in our Itek, there is a blockchain theme, which is the support – the administration behind your Bitcoin and cryptocurrency. So for me that would be a less risky play in the Bitcoin arena. It doesn’t depend on the performance of the Bitcoin. It just depends on the volume and the trading of it. Bitcoin can get 20% up one day and then the next day you can get 30% negative.
So the actual blockchain – which is the support for Bitcoin and cryptocurrency – wouldn’t be as volatile because it just depends on the trading It doesn’t depend on the return of that particular currency. So I would look at blockchain as more of a diversified, less risky play than the Bitcoin cryptocurrency itself.
Magnus Heystek on commodities and silver:
Commodities is a big player. Commodities have benefitted last year – and still are benefitting from emerging markets picking up and particularly China. The China activity is driving the demand for commodities. So we are benefitting and then we are still a big player there.
Silver is not a commodity. It’s part of the precious metals. For 40 years, I’ve been in the investment world and for 40 years people have been silver is the next big one. ‘The next big one is silver’, and for 40 years I’ve been saying, ‘I don’t know. I don’t think so’. Especially for South African, [it] is very difficult to buy silver on any exchange.
It’s not a big thing. I’m not aware of any silver ETF on any of the local markets. You probably will have to go to the offshore markets to go and buy silver products. But it’s not a big thing. I wouldn’t look at silver as a big player. I think gold – I mean people must remember [that] gold last year, had a fantastic run in the first half. People made a lot of money, [but] it hasn’t done much since then. I would rather be buying gold at these levels. Silver has just always been such a peripheral player, hanging onto the coattails of gold and platinum. It just doesn’t excite me.
Lisa Segall on Nio as a long-term investment:
Nio is one of the holdings in the Itek – the digital revolution – the mega trend. It is one of the underlying stocks. So that’s obviously the Chinese Tesla. As I said before, we believe in the power of diversification, less risk, less volatility. So if you want to have exposure, maybe put in a percentage into the Itek as your base – your foundation – for that particular exposure.
If you like it and you believe it’s a good play, you can always then buy the stock to add to that particular fund. But as I said, we don’t make a play on any particular stock. That wouldn’t be what I would advise. We believe in more broad based diversification based on the theme. So the theme for Neo would fit into the fourth industrial play.
Magnus Heystek on platinum:
Platinum was a star on the JSE last year. Apart from the gold, it was essentially platinum, gold and Naspers last year that drove our market share. But remember, platinum is very, very volatile and it’s got many more variables. Platinum has been a good place to be as a speculative player for speculative investors. I’m looking for areas in the market where you can invest via your pension fund or your living annuity, which gives you greater exposure to global mega trends. But platinum has been a good place to be, but with very high volatility.
Lisa Segall on the affects Covid-19 will have on investing in the next few years:
We actually think Covid has just accelerated with the digital revolution and the fourth industrial revolution quicker. So something – especially in the healthcare that would have taken five years – [has] taking ten months. So we think Covid has just accelerated fast adoption of these companies.
It’s like in genomics [and] telemedicine. It’s just come to the play, into the fore much quicker than it would have been. We see a lot of spending in those areas, especially by the Biden presidency. I think healthcare is a good – I don’t like to give tips – but it would be something that you should have exposure to in your portfolio. Maybe [it] depends on how you build your portfolio, but it should be a 5% or 5-10% allocation.
I definitely would have the mega trend equally weighted ETF, which is the fourth industrial revolution. It’s a tech play, but it’s substantial companies. Companies that have been around for a long time that is just being embracing – using technology to make the products faster, more efficient, better value and better cost.
Magnus Heystek on Naspers:
If you, tongue in cheek, do a simple exercise. The last 10 years, if you had a R1m to invest 10 years ago and you put 30% into Naspers and 70% into cash, you had a phenomenal return with very, very low risk – beating everything else on our market. It’s been a Naspers market for 10, maybe even 20 years. It’s driven by tech. It’s one of the best investments in the world. I think Koos Bekker paid $31mn 20 years ago for that stake in Tencent, and that’s worth R1.5trn. So Naspers – and, of course, – the Prosus part is a place where I will put money and I have put money.
BizNews Finance Friday: We kick off discussions at this week’s BizNews Finance Friday webinar with a look at whether bitcoin, blockchain and SA’s underperforming funds have a place in your portfolio of assets. Answering your money questions this week are: independent financial advisors Dawn Ridler, of Kerenga Wealth Ecology, Johannesburg, and Jonathan Botha of Netto Invest, Cape Town. Free, but you must register: https://attendee.gotowebinar.com/rt/4021535659282633484.
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