Even more market volatility due to Coronavirus fears

The investment landscape continues to be characterised by heightened volatility. The most recent contributor to volatility worldwide was the outbreak of the novel coronavirus, COVID-19.

The impact of this virus has been felt across both domestic and international markets and the perceived deterioration in global economic activity has fuelled excessive investor anxiety and subsequently, financial market volatility. Companies have issued precautionary warnings to investors due to the impact on earnings and equity markets have sold off across the board.

Unsurprisingly, investors panic when performance is at its lowest and there appears to be no recovery in sight. At times like these, it is important to remember that investing is not a linear journey. And although the risks brought about by these events cannot be eliminated, they can be managed.

In this regard, the decision to make certain changes to our Fund’s life-stage portfolios to reduce volatility (covered in detail in Newsflash 1, which we sent to you last month) was a prudent one. The proposed move from risk assets (local and offshore equity) to less volatile local fixed-income investments (such as flexible bonds and cash) within the life-stage portfolios will therefore continue unhindered. We believe that this change will put our investment portfolios in a better position to withstand market turbulence and minimise value-destruction, including those brought about by COVID-19.

We repeat, however, that you should ensure that you are comfortable with your own positioning in the life-stage portfolios (as discussed in Newsflash 1), as we transition to the new strategic asset allocations.

If you have any questions in this regard, please contact David Datnow on 053 807 3363 or Hemah Moodaley on 053 807 3504, or email pension.post@dbpf.co.za.

In the meantime we will continue to publish progress updates, in the form of further Newsflashes, during the transition period.