Patience Is Rewarded

A number of shares have fallen drastically over the past year. This is especially pertinent with regard to financial stocks, consumer stocks and certain industrial counters. This drop in value of certain shares has naturally affected certain unit trust funds negatively, and as you would know by now, equity-based unit trusts are nothing more than managed share portfolios.

Is this the time to be concerned about your equity funds dropping in value? We believe that as long as your investment objectives are intact for the specific time horizon for which an investment is allocated, it is time to stick to your goals and put your reliance into qualified and specialist fund managers and investment analysts who constantly research the market to find undervalued shares to invest in.

The information given in Figure 1 below clearly illustrates the pain that equity funds have suffered over the past year. It is certainly not the right time to be selling shares or unit trust funds at this point. Looking at Figure 1 below it is clear that the greatest value is to be found in the Investec Value Fund which has lost 22.08% over the past year. This fund is overweight in financial stocks and selected industrial stocks which are trading on an extremely low valuation, with attractive dividend yields at present. Buying into this fund now at a 22% discount is a definite buying opportunity. You can bet your bottom dollar that once interest rate start falling, this fund will again perform superbly.

Fig:1

Silke Financial Services believes that portfolio diversification is essential to successful investing and this is where we can help you in your investment decisions. We believe in compartmentalising your investments into different strategies so that you can earmark money for different purposes. You should separate your investments into retirement savings [long term], children’s education fund [medium to long term], emergency fund and a holiday fund, for example.

Next week we will look in more detail at portfolios compartmentalisation.

Silke Financial Services has the skill and expertise to construct a sound financial plan to cover all your bases.