MONEY
IS YOUR RETIREMENT PORTFOLIO POSITIONED FOR THE INFLATIONBEATING RETURNS ON OFFER?
I
f the last year has taught investors anything, it is the cost of ignoring risk assets when market circumstances change so dramatically. With a period of rapid global economic
growth expected this year, risk assets such as equities remain
BUT THESE INFLATION-BEATING RETURNS ARE FINITE
set to benefit.
There will be abundant years and lean years. As an income-
But inflation-plus returns do not come through in a straight
drawing investor, it is important for your retirement portfolio to
line. As such, if you are in or near retirement, specifically if you
be positioned to capture these inflation-beating returns during
have de-risked your portfolio in recent years, you need to ensure
the abundant years as is currently the case.
your retirement savings are appropriately positioned to capture these returns that are on offer. Here’s what you need to know.
YOUR RETIREMENT SAVINGS CAN BENEFIT WITHOUT BEING EXPOSED TO UNDUE RISK
THE STAGE HAS BEEN SET FOR A PERIOD OF RAPID GLOBAL ECONOMIC GROWTH
If you are in or near retirement, you should seek funds that
The IMF expects global growth at 6% this year (up from their
assets but also maintain a strong focus on risk to reduce the
previous forecast of 5.2%), with growth in the US leading the
likelihood of potential negative returns over shorter time
way. Albeit off a low base, this global economic recovery is
periods. The latter is important to those who are already
expected to continue in 2022 at a somewhat slower pace, but still
drawing a regular income from their funds.
above the long-term trend. This optimistic outlook is premised
invest a meaningful portion of your overall portfolio in growth
At Coronation, we offer two funds that specifically cater for
on the release of significant pent-up demand as economies start
the needs of retired investors: Coronation Capital Plus and
to reopen, further assisted by ongoing massive fiscal stimulus
Coronation Balanced Defensive. Both funds have long track
and very low interest rates.
records in providing a balanced solution by including allocations
In South Africa, we also expect a decent recovery, with the economy expected to grow at 4% or more this year – the
to growth assets while managing downside volatility. As an example, investors in these funds were able to benefit
highest number in some time, but also off a very low base.
from the strong recovery in equities since the COVID-19-
Looking ahead, however, we expect our economy to remain
induced selloff in March 2020. At the time, our deep proprietary
under pressure due to severe and ongoing systemic risks and
research enabled us to conduct rapid analysis and engage in
the devasting economic costs of the looting and mayhem that
robust debates, ultimately leading to the conclusion that the
erupted in KwaZulu-Natal and parts of Gauteng in July; although
market was pricing in the worst outcome. Understanding this
improved revenue collection by the South African Revenue
gave us the conviction to buy global and domestic equities at
Service and strong policy signals from National Treasury should
depressed levels. This decision paid off handsomely across our
see us moving in the right direction.
fund range. And given the current combination of assets held by Coronation Capital Plus and Coronation Balanced Defensive, we
GROWTH ASSETS REMAIN SET TO BENEFIT
believe these portfolios will be able to deliver on their respective
Despite these headwinds to the respective global and local
inflation plus targets.
economic recoveries, we believe that equities (both local and global) still offer upside potential and we expect these asset
To learn more about investing for retirement with Coronation, visit coronation.com or speak to your financial adviser.
classes to continue delivering inflation-beating returns in the next 3-5 years (see table). 16
SILVER DIGEST // SPRING 2021
Coronation is an authorised financial services provider.
