Letter from the CEO
Gary Mockler
Group Chief Executive Officer
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Welcome to 2023. All of us at GTC trust that you and your families did take a break at the end of the year and that you are ready and anticipating a productive investment year in 2023.
The investment year that was
Until right at the end, last year was a long and difficult year (and not only difficult for investments). Closest to home perhaps (at least here in Gauteng) was the progressive hard evidence of declining service delivery from many municipalities, the most important component of which was of course electricity. Municipalities will rightfully protest that their lack of delivery in this regard was not of their doing, but rather a direct consequence of Eskom’s utility management.
Avoiding the ‘blame game’ we at GTC rather focus on the investment consequences of load-shedding and unreliable service delivery. We immediately see the crippling effect that this has had on many aspects of economic growth.
Other contributing factors to a difficult economic period were brought about by what we initially thought was a faraway war between Russia and Ukraine. Now in its 11th month, we are less naïve as to believe that this military intervention from 12 000 km away has little to do with us. We have been rudely reminded that the world is indeed a global village.
Petrol and diesel costs were immediately and directly affected by sanctions imposed upon Russia and this, coupled with our own electricity prices and crisis, has made doing business (and just living) challenging.
The gratefully accepted last quarter good news, saw the local equity market rally significantly by more than 12% outperforming both developed and emerging markets peers. Listed property (+19.31%), Resources (+17.56%), Industrials (+15.67%) and Financials (+13.92%) all contributed positively to this return. Over the full calendar year, Financials (+10.21%) and Resources (+6.21%) were the largest drivers behind the local market’s +4.41% return.
After a deeply negative 9-month period to September 2022, global developed and emerging equity markets bounced back strongly in Q4, each up some +9.7% in USD terms. For the full year, both markets remained in excess of -18% in the red as the weaker global backdrop detracted from investor sentiment. To an extent, the 6.09% rand-dollar exchange rate weakness over the year lessened the negative rand based offshore performance. This was however not sufficient to propel it ahead of the +4.41% local equity market performance. Persistent concerns with the delivery of supplies collided with lacklustre global demand expectations, resulting in higher global inflation over the year. This consequently led to rolling interest rate hikes by many countries’ central banks. The South African Reserve Bank (SARB) raised the repo rate 7 times over the course of 2022, taking the official repo rate to 7% in their efforts to curb local inflation.
Over the years senior members of our asset management team, have joined me in repeatedly cautioning investors about emotive and non-researched reactive investing, particularly during difficult times. Well, 2022 would certainly qualify as one of those difficult and tumultuous investment periods. The rapidity and extent of the positive correction in the last several weeks of the year endorses our sentiment convincingly.
Those investors who lacked the stomach for retaining their long-term investment strategies and sought refuge in fixed income investments, in the latter months of 2022 would almost certainly have completely missed out on the positive rebounds that we experienced.
Aside from monitoring investment markets and creating portfolios, what has GTC been doing?
From a GTC perspective, we have had a very constructive and technologically busy year. Based on our strategic objectives of 2016, GTC has consistently been seeking to deliver an investment platform that accommodates private clients as well as retirement fund members in such a way that each investor can create a holistic and integrated financial plan.
In this construction a client can combine all their investments with their company retirement fund, creating a single risk-adjusted investment strategy for themselves. GTC’s experience, supported by specific research we have undertaken, is that most investors have a fragmented and decentralised investment strategy. We often (usually?) see investor’s retirement fund investments and their personal investments at odds with each other, at least so far as the investment strategy goes.
For the past five years, GTC has been seeking to be a provider that avoids this schizophrenic strategy and in the past two years, GTC has successfully integrated some 6 000 retirement fund members onto GTC’s TrueNorth platform. Once they have access to TrueNorth they are able, as private clients, to consolidate all investments, create a personal income statement and balance sheet, undertake sophisticated scenario planning, and establish detailed and accurate budgets for life events. Collectively this allows for an investor to create and monitor a very detailed personalised financial plan.
So, GTC’s own objectives for 2023 are to continue improving the interface between professional financial planning and technology. Over recent years there is a collective recognition that technology does not replace personal perspectives, but rather augments the relevant experience. So far as wealth creation and financial wellness is concerned, GTC will continue to strive to be the very best adopters of this personal-tech interface.
I will keenly await GTC’s many diverse clients’ perspectives in this regard, over this year.
