Investing in local equities 'best bet over next decade'
Alwyn van der Merwe, director of investments at Sanlam Private Investments. INVESTMENT in local equities is expected to offer the best annual returns over the next decade — though more muted than the returns seen since the 1960s. Local equities could yield a real return of about 3.8% a year over the next 10 years, said Alwyn van der Merwe, director of investments at Sanlam Private Investments on Tuesday.
The more muted returns were realistic, given the very high past returns, said Mr van der Merwe. "One of the reasons why the outlook is very pedestrian over the next 10 years is because we have had phenomenal returns over the past 10 years," he said.
Equities had given a return of 22% a year over the past 10 years to the end of June, while inflation was an average 5.4% a year, he said. Investors, therefore, earned real returns of 15% a year.
Though returns would be lower, Mr van der Merwe said there would be winners and losers within these asset classes, making the case for active asset management and stock picking. Mr van der Merwe said the real annual return for local equity in the 1960s was 11.9% and ranged from 6.5% in the 1970s to 10% in the 2000s and 8.8% from 2010 to now.
"Over the next 10 years, returns will be lower than any other period since the ’60s," he said.... Read the full, comprehensive news article and discuss at Business Day