INVEST TEAM NOTE

Currently, markets are in an extremely volatile state. This is creating a lot of fear and uncertainty for investors, and understandably so. Your health, both physically and financially, is important to us.

Physical Health‍

The physical health and safety of our employees, clients, advisers and business partners is a high priority to us. Our president has requested that we all work together as a people and implement Social Distancing where we can. This is to place less strain on the country’s health-care facilities and help limit the COVID-19 outbreak numbers. To support this request we are implementing precautionary measures by encouraging our staff, that is able, to work from home. This being said, it is still business-as-usual. Our portfolio managers, investment specialists and analysts are not lifting their foot off the pedal. As faithful stewards of our client’s hard-earned capital, we will continue to serve them well at this time. We will be increasing the communications that are sent out to our clients, to weekly updates. If more is necessary, we will so do. We would like to ensure that our clients are up to date with factual information at this time, as we understand that media is riddled with ‘fake news’ and ‘real news’. Sifting through all of this is tiresome and frustrating for our clients.

Market Health‍

Market movements over the last few weeks have been abnormally high. The uncertainty that COVID-19 has introduced into financial markets, shows that financial markets respond aggressively to available information. This information is woven with fake news and fact about the impact of the COVID-19. At present, financial markets are really feeling the crunch. In the month of March, the JSE All Share Index is down more than -20%. The rand has declined in value and is trading at R16.63 against USD. Globally, markets are also struggling, with US markets falling -20% in March to date.

Your Portfolio’s Health

‍Our investors need to remember that they are invested inside diversified solutions. These portfolios have been designed to protect our clients on the downside when the market is doing badly, while still being able to take part in the upside when the market is doing well. At this time we can see that the portfolios are proving to be doing what they were designed to do. For example, the Fairtree Multi-Asset funds are currently down about -8% and the market is down by more than -20% . Here, the portfolios have protected investors from a -12% plus loss of the overall market. Even though it is still disconcerting, we can be encouraged that they are protecting us from worse losses than the fully exposed market. We will continue to limit our participation as markets fall, but we also want to ensure that we are well positioned when the markets return to positive territory. As our Invest Note last week explained, it is important for us to stay true to our investment philosophy and process. Unless fundamentals are no longer sound, we will remain invested based on our overall investment philosophy. Where things really change, we will actively reassess and determine if any changes need to be made within portfolios. Although there is a large amount of uncertainties, we believe that the market is reacting on sentiment, and not necessarily to longer-term fundamental changes. We are not only protecting your short-term capital, but also are guardians of your long-term investment growth. The methods we deploy at this time, holds both of those two factors in tension using strategies, data analytics, expertise and factual information.

As a team, we are working extremely hard to ensure that we protect our investors through our diverse nature solutions. We need to be mindful that further spread of the virus could constrain economic activity.
However, we also believe that in times of uncertainty, some of the best investment decision come to present themselves. We will be ready to take those opportunities as they appear.

We encourage all of our investors to remain on course and to stick to their long-term investment strategies. We understand the concerns and we are working tirelessly to ensure we do everything in our power to provide investors with the necessary information and if anything were to change, you will be the first to know.

With us, it is all about the journey, even when it starts to get cloudy. We ride-the-tides with you.

Should you have any questions or concerns, please feel free to contact us.

-Sybrand Engelbrecht & Kheara Kroggel

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