In July our average prudential balanced portfolio returned 2.42% (June minus 0.47%). Top performer is Investec (2.84%), while Allan Gray (1.48%) takes bottom spot.

In earlier newsletters we made reference to the tail winds that benefited local financial markets, caused by the financial crisis in developed countries. Exceptionally low interest rates offshore have produced a flood of money flowing into our and other developing countries in search of yields, resulting in a strong currency and low interest rates. Low interest rates no doubt encouraged the consumer to over extend his debt which in turn would have resulted in high property prices and unsustainable consumption levels. In the article ‘Running out of luck Down Under’ Jonathan Trepper provides a review of the Australian economy. The Australian situation as described, can be mirrored upon our economies and should be food for thought for any investor with a longer-term investment horizon. Download the exceptionally interesting article here...