Junk Status – Protecting your investments

Junk status - investmentsEver since the news broke that South Africa’s credit rating was downgraded to junk status, our office has been inundated by calls and emails from concerned investors that listen to Finance 101 on CCFM.

Most of these investors have investments with insurance companies, and experienced a significant loss of their investment capital. However, investors with Passive Investments reported the highest losses.

Just before Minister Nene was fired, Northwood implemented an investment strategy which has paid off.

The 2IP Model Portfolios were introduced to our clients. We are extremely satisfied by the performance of these model portfolios. During the period 1 January 2017 to 31 March 2017, the High Equity benchmark of ASISA (Association for Savings and Investment South Africa), was 1,31%.

During the same period, the 2IP Flexible Fund model portfolio (CPI+6%) made a return of 5% on its investment capital. We exceeded the ASISA benchmark by more than 3%.

The maximum amount ever lost by the 2IP Flexible Fund in any month was -4.44%. The maximum recovery in a month was 7.55%. If you were to compare this to the JSE indices, it is clear the investments placed into the 2IP model portfolios have preserved our client’s capital.

Below is a breakdown of the diversification of this portfolio as at 31 March 2017.

SA Equity
45% on JSE
3.2% Bonds
7.3% Property
10.7% Cash
Non SA Equity
21.9% on offshore exchanges
2.3% Bonds
1.1% Property
8.1% Cash

The 2IP model portfolios our clients invest their money in, were designed and are actively managed by a team of Financial Managers and Analysts. During extreme market fluctuations, they re-balance the portfolio or update the fund selection to better protect capital.

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