The boring, bold and secure

There was a time when South Africa, along with other emerging markets, was considered a new frontier for growth.

But over time, South Africa has lost much of its lustre and in the midst of globally high interest rates, an energy crisis and a number of questionable policy mis-steps, investor optimism has been diminishing.

Several reports on global investor trends show that investing behaviour is changing and according to the 2023 EY Global Wealth Research Report, 57% of high net-worth individuals feel unprepared to meet their financial goals – citing market volatility as a primary reason.

• This report also details interesting differences between younger investors and baby boomers, however, despite the differences in investment appetites, 73% of all respondents report changing investment behaviour because of a decline in portfolio values.
• Other interesting finds are that the appetite for advice is growing, and that investors have acted in similar proportions in response to market volatility, moving to active investments and seeking safety with increased allocation toward savings or deposits.

Michael Field, GM: Investments at Fedgroup, says that these investor trends have also been observed and reported locally, speaking to a growing investor need for certainty amidst global and local unpredictability.

“What we have seen in the last few months are investors moving towards fixed instruments as investment options, with outflows from variable instruments and assets.”

Data from SARB shows that fixed deposits and notice deposits grew 16.45% over the 18-month period between January 2022 and June 2023. Fedgroup has seen a similar trend over this period, with growth of 33.5% in its Secured Investment product, offering an attractive fixed rate over five years along with capital security and zero fees.

This investor behaviour speaks to a growing, risk-averse trend both locally and globally.

Earlier this year, asset manager Ninety-One, reported a £10.6 billion (about R138bn) in net annual outflows of assets under management (AUM) in May, indicating a preference for the preservation of capital over the potential for higher-than-average returns.

An additional nuance to this behaviour doesn’t just exist in the world of HNWIs (high-net-worth individuals) but amongst middle-income retail investors who are becoming more savvy when it comes to using traditional banking products to save and invest. These investors are also often younger. TymeBank’s Rainy Day Report 2023 shows that from TymeBank’s depositor base, just under 40% of customers between the ages of 26 – 35, used a fixed deposit to save. The trend towards capital preservation, and ensuring that it appreciates, even modestly, is a preferred way to navigate volatility – especially in a market facing national elections next year, along with probable policy changes.

Fedgroup is known for its Secured Investment offering and recently developed additional products to protect and grow investors’ wealth, particularly in its competitive Specialist Endowment Portfolios. These portfolios include a combination of alternatives and traditional underlying assets that are counter-cyclical in nature and designed to smooth volatility and provide balance to investment portfolios.

In response to the growing client need for certainty, Fedgroup has now also launched a Fixed Endowment offering, providing all the tax and estate benefits of the endowment structure along with a market-beating fixed return. Clients and financial advisors have seen the value in this offering and demand has been overwhelming.

So whether the world you’re facing experiences a black swan event, a global pandemic, war in the 21st century, a suspended government in Europe, a coup in West Africa, a local road falling in like you’re living in a Marvel movie, or political battles that now take place in the courtroom instead of the ballot, speak to your financial advisor about how Fedgroup’s Fixed Endowment and its top-performing Secured Investment can offer you certainty so you can be a bit bolder in the world of the upside down.