2014 – Where to from here?
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2014 – Where to from here?

By Ursula Maritz, Chief Investment Officer Southern Charter

2013 once again proved to be a volatile year, with concerns around the US debt ceiling, economic growth in the US and Europe, as well as the Fed tapering announcement in May and its subsequent speculation thereafter.

However, as in previous years, equity markets seemed to “climb the wall of worry”, with the JSE and MSCI World Index returning 21.4% and 52.8% respectively. In contrast, bond markets corrected as tapering concerns increased, with the All Bond Index only returning 0.6% for the year.  Global assets, particularly property and equities, were the place to be in 2013, and were assisted by a 20% plus fall in the Rand.

Southern Charter fund performance during 2013

The positive returns and dividends delivered to Southern Charter clients were mainly as a result of the asset allocation process followed, beating both cash and fund benchmarks. The Growth Fund also beat the JSE in 2013 with a much lower level of risk.

The funds also outperformed some top players in the market, with Southern Charter funds in the upper quartile ranking consistently across 1, 3 and 5 years.

Major asset allocation calls during 2013:

• Southern Charter generally had high equity exposure throughout the year as valuations and dividend yields looked attractive in certain areas of the market. The earnings outlook was also positive for the market as the growth picture in the US became more robust throughout the course of the year.

• Southern Charter had maximum offshore exposure – with much higher global property exposure in comparison to other fund managers.

• Capital risk was managed by selling long duration assets like property at the first signs of bonds correcting in May 2013.

• The funds had exposure to fixed interest managers throughout the year, who actively reduced duration risk yet managed to earn attractive yields in excess of cash.

• Southern Charter also had exposure to equity managers who, due to their great stock picking skills and global macro views, significantly outperformed the market.

So where to in 2014?

There are certainly some challenges ahead, as bond markets continue to remain under pressure as tapering takes place, but this will be offset by improving global economic growth, which is earnings supportive and might even trigger a long awaited recovery in commodity shares. As the bull market matures and bonds languish, returns are not likely to be as stellar as in previous years. However, as the asset allocation process proved successful for Southern Charter in 2013, so the company will continue to use this strategy to navigate the road ahead.


Roline Bosch
Senior Account Manager
Epic Communications (Pty) Ltd
Suite 602, The Regent, 19-33 Regent Road
Sea Point, Cape Town
Office: +27 21 439 8008
Mobile: +27 82 503 2689
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