In November 2020 the average prudential balanced portfolio returned 5.7% (October 2020: -2.0%). Top performer is NAM Coronation Balanced Plus Fund with 8.0%, while Stanlib Managed Fund with 3.8% takes the bottom spot. For the 3-month period, NAM Coronation Balanced Plus Fund takes the top spot, outperforming the ‘average’ by roughly 2.3%. On the other end of the scale Stanlib Managed Fund underperformed the ‘average’ by 2.1%. Note that these returns are before (gross of) asset management fees.
The Monthly Review of Portfolio Performance to 30 November 2020 provides a full review of portfolio performances and other interesting analyses.
Typical balanced pension fund portfolios should offer peace of mind!
Just recently I came across interesting information in John Mauldin’s Thoughts from the Frontline newsletter. A graph he presents, depicts the stimulus as percentage of GDP injected by a selected number of countries into their economies, namely the stimulus after the 2008 financial crisis and the stimulus in the face of the COVID-19 pandemic.
Take Germany whose 2008 financial crisis stimulus was a mere 3.5% of GDP and in line with that of the US. This time around the stimulus represents 33% of GDP, nearly 3 times the stimulus given by the US at 12.1% of GDP. With an economy of only US$ 3.8 trn representing only about 18% to the US economy’s US 21.4 trn, the German COVID stimulus of US$ 1.3 trn, amounts to half the US stimulus of US$ 2.6 trn. These figures are based on World Bank GDP data of 2019, before the decimation of global economies by COIVD-19. According to John Mauldin’s newsletter global debt will be US$ 300 trn by the end of the first quarter of 2021, that represents 340% of 2019 global GPD, estimated at US$ 87.8 trn by the World Bank!
If you want to put this into the context of a household, that is the equivalent of a household having borrowed around 11 times its annual household income. If your household income is your salary and that is N$ 1 million, your debt is just over N$ 11 million. If you had to repay this debt at the bank’s mortgage rate of currently 8.5% over say 20 years, you would be in deep trouble as the loan repayment of N$ 1.18 million per annum would already exceed your salary and you have not paid your bills yet. Of course, we know that some governments nowadays actually pay zero % interest on the money they borrow. Even at 0%, the repayments over 20 years still represent 57% of total government revenue, before government has spent any money on infrastructure, health, housing, education, government and social services.
Read part 6 of the Monthly Review of Portfolio Performance to 30 November 2020 to find out what our investment views are..