Can I invest in South African equities?

At the end of 2010 we looked at the US equity market and were very relieved that we had “dodged that bullet”. The ten years from 2000 to 2010, and stretching into 2013, is known as the “lost decade” for US equities.

US equities from 1950 till 2016
US equities from 1950 till 2016

If you look at the graph for US equities from 1950 till 2016 you will see what looks like a “W” from around 2000 till 2013. As an investor in the S&P500, you would have come away with between 0% and 7% return after 10 years’ investment.

Over the same period, the South African All Share gave you around 16% return per annum. If you were invested in a good equity fund, you would have received even better returns in South Africa, such as Allan Gray equities 20% and Prudential equities 19%.

Currently the US equity market is doing better than the South African market. That is fine, but before you sell all your South African shares just look at the graph of the S&P500 again and breathe deeply. The takeaway from all this is that everything changes all the time. Do not concentrate your investments in any one specific asset class, country or industry. An active fund manager can perform well even if the index is performing badly and without ever trying to “time” the markets.

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