Perspective on Recent Mr Market and China Woes

30 August 2015

The volatility on global markets has everyone fearful and searching for a new way to think about it, or should they? Mr Market is currently concerned with whether the weakness in China is going to undermine US and European recovery and therefore global growth. It is far too early to assume this, but this is the fear.

What is clear, China is slowing down faster than thought, and is demonstrating that it is perfectly willing to run over some smaller guys in the process of protecting itself. And this is said why investors are reviewing the outlook for global growth, triggering Mr Market volatility. For example: Equity sell-off triggered by Chinese growth concerns, pending Fed Fund rate hike and currency pressures by an expected stronger dollar.

It's at times like these that the benefits of a time-horizon-centric asset allocation, which is key to our investment process, comes to the fore. Although fund returns have come under short term pressure, it is still far less than the drop of the market, as they are exposed to other assets besides equities. The Silke Multi-Manager Portfolios are set up to align with your investment objectives and time horizon goal risk profiles.

Past performance is no indication of future performance. The above internal rate of return shows investment's returns gross of Silke fees. Taking into account the timing of inflows and outflows, during the period being measured your portfolio return will differ from the Silke Model Portfolio's as a result of portfolios being managed individually. No guarantees are provided.

This degree of the pullback seams unreasonable as the economic fundamentals of improving US, Eurozone and Chinese growth with low global interest rates have not changed in recent weeks. We remain supportive of our time-horizon-centric asset allocation investment process and its ability to deliver the required return over the respective investment terms, despite any short term volatility.

In this environment emerging markets, ironically, will be an important part of the global growth story. The world needs emerging economies to buy and sell more goods and services.

If you have any further questions please contact us.

Regards,

Shane Thom, CFP® GTP(SA)™
Managing Partner: Integrated Wealthcare