By: Hee-Dee Walenga
Investors and others entrusted with allocating capital have been encouraged to rethink their approaches to asset allocation as assets evolve.
Alexforbes hosted an Investment Destination Breakfast Seminar in Windhoek yesterday to inform existing and future clients about the investment products and strategies on offer. The breakfast featured a variety of speakers, including the managing director of Alexforbes Investments Namibia, Frederick Muller, who said that with how assets have evolved over time, new thinking has to be adopted to capital allocation.
Muller started with how assets have evolved over time, likening it to how the Swiss army knife has gone from five to over fifteen tools over the years. “This is the same with asset allocation. We need to adapt our thinking around asset allocation,” stated Muller.
Muller compared this analogy to how there only used to be five asset classes, which included equities, grants, cash and real estate. Today, there are fifteen, including alternative assets such as hedge funds and crypto currency.
He also identified trends in relation to asset allocation, which are the correlation between stocks and bonds and the shrinking of the Johannesburg Stock Exchange (JSE), which went from 800 listed stocks in 1994 to 274 listed stocks today. The Namibian Stock Exchange (NSX) has 30 listed stocks, many of which are dual listed, meaning that they are also listed on the South African Stock Exchange.
THE ILLIQUID NSX
Speaking to The Villager on the NSX, Muller described it as illiquid, explaining that “If you speak to many asset managers, they struggle to invest into these counters because of the small availability of stocks. If they have a couple billion to invest, they can’t fully access the stock because of the limited liquidity. It is not available for them to invest. That is why it is good to diversify offshore.”
Muller, however, noted that the positive developments in the oil, uranium, and gold sectors will greatly help the stocks on the NSX. “For example, B2Gold was the top performing stock because of the good gold price. As the Namibian economy grows and more businesses are created, more stocks will be listed. I am optimistic about the Namibian Stock Exchange,” Muller expressed.
Alexforbes is in partnership with Mercer to manage its portfolios. Mercer is a global firm with 200+ research specialists, over 6,000 asset managers, and 32,000 active strategies. For added perspective, if Mercer were an economy, the $16.2 trillion worth of assets it manages would rank third in the world behind the USA and China in terms of nominal GDP.
Alexander Forbes Investments Namibia Business Development consultant, Thandi Kaukungwa, spoke on mulit-management as a solution to building resilient, diversified investment portfolios. “We are able to spread our clients’ assets across different asset classes, investment strategies, and asset managers with our multi-management process,” Kaukungwa stated. She added that multi-management provides protection against market volatility and offers different sources of returns for Alexforbes clients.
Kaukungwa stated that different styles of asset management will always excel at different times, thus no single asset manager will always outperform all market environments. “We blend different asset managers, each with their own unique style and investment strategy in order to produce the most desirable outcome for our clients,” she explained.
Alexforbes has the largest manager research team in South Africa, with over 360 local investment strategies, of which over 200 are A & B rated. Alexforbes also has over 40 Africa-focused investment strategies with over 20 Africa-based asset managers.
