In August 2023, the average prudential balanced portfolio returned 0.4% (July 2023: 1.1%). The top performer is Allan Gray Balanced Fund with 1.6%, while M&G Managed Fund with -0.3% takes the bottom spot. For the three months Momentum Namibia Growth Fund takes the top spot, outperforming the 'average' by roughly 1.4%. NinetyOne Managed Fund underperformed the 'average' by 2.0% on the other end of the scale. Note that these returns are before (gross of) asset management fees. (Refer to graph 3.5.1 for a more insightful picture of the rolling long-term performances of the portfolios.)

The Monthly Review of Portfolio Performance to 31 August 2023 also reflects the editor’s views on current developments and their impact on investment markets.

The bumpy road ahead to a new global economic order

Where we are now, it does not look as if the Ukraine conflict will escalate into a fully blown war between the US and its allies on the one side and Russia, China and their allies on the other. It means that global financial markets will not be unhinged but will continue fairly orderly, given the impact of global economic restructuring. Another result of the global economic restructuring will be a global hunt for alternative supplies of commodities. This hunt should advance the economic fortunes of commodity-based economies, which are mostly emerging economies such as SA and Namibia.

We will likely experience a transition to a new bipolar world dominated by the US and China, each with its financial system and hegemonical territory. The two financial systems would likely be linked over time to promote trade and financial flows, but it will not be ‘smooth sailing’. Given the dissipation of the great uncertainty that the Ukraine conflict could have resulted in a global confrontation, the investor should review his investment strategy now. Clearly, the global economy will experience a new dawn, offering lots of investment opportunities while at the same time eliminating lots of existing businesses. It will undoubtedly be a rough ride with lots of volatility on the road to the new global order.

The new bipolar world and a global decoupling dictate that one should focus on international diversification. Global equities would be appropriate to counter the impact of rising inflation and interest rates. Such diversification should consider the expected re-orientation between the two global poles, with Western countries shifting manufacturing, production, and development of goods and services away from China.