In August the average prudential balanced portfolio returned 1.86% (July: 0.61%). Top performer is Allan Gray (3.13%) while EMH Prescient (0.52%) takes the bottom spot. For the 3 month period Metropolitan, takes top spot, outperforming the ‘average’ by roughly 1.0%. On the other end of the scale Stanlib underperformed the ‘average’ by 1.0%.

How should I secure my retirement nest-egg in the face of volatility and turmoil?

Global financial markets are in a sorry state and it is very hard to see a silver lining. The US economy is showing mixed signs, no clear trend to be seen, the European economy is flat, Japan is struggling, so is China, not to speak of Russia and many of the developing countries including South Africa and us. The one thing these countries all have in common is a huge debt burden often substantially higher than the countries’ GDP, at historically low interest rates. China, for example has accumulated total debt of US$ 28 trillion, representing a whopping 255% of its GDP by the end of 2015 (worse evening than Greece) - an increase of 107% over the past 7 years. That is 38% of global GDP and as much as the commercial banking loan books of the US and Japan combined! The Bank of International Settlements is warning that China is facing an escalating risk of a major debt and banking crisis. The BIS is also concerned about a possible spill-over from China to the global economy.

These are prevailing economic threats to the global economy. Of course with the wars going on around the Mediterranean and on the border between Russia and the Ukraine the economic concerns are reinforced by concerns about a possible major military confrontation between Russia and the US with its European allies.

Read part 6 of the Benchtest 08.2016 newsletter to find out what our investment views are.