After the tremendous market run from March 2009 last year, we continued well into the beginning of 2010. We were all focused on the pending World Cup with immense excitement and it looked like all in the world was slowly coming right. We even weathered the volcanic ash that engulfed most of Europe and the UK, threatening to affect travel to SA's World Cup.
And then we were rudely reminded just how much trouble the world is in. We had been speaking about the pending crisis in the PIIGS (Portugal, Italy, Ireland, Greece, Spain) regions for quite a while. These countries were, for various reasons, heavily over leveraged (which is a fancy way of saying that they had too much debt) and concerns were that this would ultimately become a problem. Well it did become a problem - in the most spectacular fashion. Just as we here at home in SA began to rev-up to the fi nal moments of preparation for the world cup, Europe began to fall apart. The crisis spread almost immediately from Greece to Portugal and beyond. As Angela Merkel said "there is no FEAR of a contagion crisis in the region, there IS a contagion crisis!"
The mighty Euro fell to multi-year lows against the dollar and other currencies and unbelievably there were fears of the Euro being abandoned. The region continues to provide its fair share of market jitters, most recently Ireland's banking system has come under pressure. The European Commission, hopefully having gained valuable experience dealing with the Greek crisis have acted swiftly, offering to assist where necessary. At the time of writing this article the Greek debt crisis was once again threatening to rear its head again.
South Africa hosted a remarkable World Cup, showing the world AND OURSELVES just what we and AFRICA are capable of. The much touted post- World Cup financial and currency collapse has not happened, and for once South Africa and other emerging markets find themselves in particularly strong positions. South African interest rates have not been this low since the 70's. We expect the Rand to remain fairly strong and interest rates to remain low for the foreseeable future. This is something South Africans' are going to have to adapt to. So how did Octagon Financial fair during this period? We are extremely proud of our South African returns. I thought I would take a moment to discuss these with you, our valued clients. As you may know, we run six risk-profi led, unit trust based investment portfolios. Each investor has a different risk profi le, and we have tried to cater for that. Our funds range from the ultraconservative to the very aggressive. Please see below a graph depicting our various funds and their relative risk profiles (depicted by their equity exposure) and 1 year and four year returns. I take this opportunity to wish you all, and no doubt, well deserved December holiday. Travelsafe and we look forward to a great year ahead in 2011!
011 440 6750 (Phone) 011 440 7333 (Fax)
info@octagonfinancial.co.za (Email)
