Navigating investment portfolio strategies and making sense of how current events across the world will influence variables that drives financial market valuations is becoming increasingly challenging.

On the positive side of considerations, the world is recovering from the COVID pandemic and the demand side of economies are showing resilience on the back of substantial fiscal stimulation from developed world governments, with more still planned.  Together with this, interest rates are kept low by central banks, which further stimulate economic activity.

On the negative side of considerations, Government debt burdens are growing as a % of economic output (moving the cost of current strategies to future generations), prices of goods and services are increasing as a result of supply chain bottlenecks as well as an increase in the cost of energy which is driven by an increase in oil and gas prices,   There is also the trade tensions between the USA and China, with the battle for the independence of Taiwan introduced into that mix.

From a South African perspective, we have structural shortcomings and ideological policies that hamper fixed investment into the economy, resulting in a low potential for sustainable economic growth and sustained high unemployment.

It is important for investment professionals to seek assets that will sustain through these conditions to ensure long term growth in the portfolios.  The emphasis here is long term.  Members need to view their investment strategies from a long term perspective, as the real value of quality assets may take time to realise.  A short term view in these conditions may lead to value destruction.