private wealth management
ROFICIO PNFB FINANCIAL UPDATE ISSUE 94 OCT/NOV 2017
FROM THE CEO’s DESK t NFB we set about building robust advisory processes and once we had achieved appropriate Assets under Management, our own in-house solutions. These can be troublesome, as the question will always beg asking, “Why is an NFB Advisor recommending an NFB solution; is this not just NFB taking advantage of the client?”
A
which materially affects Family Trusts. In essence “7C” deems the non-charging of interest to be a donation, subject to donations tax (at 20%) on an amount of 8% of the loan advanced. NFB's advisors are collaborating with clients and their accountants to mitigate this and would recommend clients with trusts address this issue promptly.
This issue has raised its head often in a market where profit comes before delivery! In the case of NFB's Asset Management business, I can proudly record that not only is the process world class, but two of our most significant offerings are amongst the country's top few funds. In addition, the business was also awarded a Plexus 5 Star rating - the highest in the industry. This independent recognition comes hot on the heels of the two Raging Bull Awards NFB Asset Management won earlier this year.
Probably the second most discussed issue is the Rand. Whilst we exist in a market brimming with negative economic news, daily political shenanigans and generally a world full of risk, the local currency remains relatively strong. Our equity market similarly seems to be testing new highs, leaving investors asking how, why and when does this end?
Rank
Out of
NFB Ci Balanced Fund of Funds A
7
th
92
NFB Ci Cautious Fund of Funds A
1st
80
NFB Asset Management
1st
92
Since I last penned an article, the Bell Pottinger affair has progressed somewhat. We are particularly pleased that they have been censured, that the consequences are dire and will hopefully serve to warn other businesses and service providers that civil society has limited patience. The one sad reality is that this took place in England, where the Industry Association had the gumption to properly react to the complaint and follow through with their most severe and punitive censure, being expulsion. Far too often these matters are managed away, undermining public confidence. On the home front, public and business scrutiny of professionals, banks and businesses associated with the Guptas and their cronies has become prominent. Reaction to suspicion and accusation has been swift and material. This is necessary, but should also not be judgement by media. Proper process needs to be followed or else this is no different to the threat of vigilantism. With regard to investment, advice and technical issues, quite a bit has been happening. Probably the most discussed topic at NFB with clients has been the new Section 7C amendment,
Probably the most discussed topic at NFB with clients has been the new Section 7C amendment, which materially affects Family Trusts.
On a global level, it appears that Emerging Markets are enjoying quite a bit of attention. Developed markets have enjoyed a fairly protracted period of growth and South Africa, whilst experiencing domestic difficulty, remains an element in the Emerging Market Indices, therefore almost automatically experiencing interest in both equities and bonds from abroad. Our market has, like others, experienced fairly diverse outcomes for sectors and stocks. In the USA, the acronym FAANG has become folklore. It represents the tech wunderkinds Facebook, Apple, Amazon, Netflix and Google. In SA, we have the crazy weighting of what used to be a Newspaper and paper sales outfit, now giant tech play called Naspers and a few others, which together skew returns and have investors wondering why their hard-earned savings are not displaying Index-like returns. The point right know is that a few stocks, and in some cases sectors, both here and abroad, are having a disproportionate impact on performance. Chasing this performance is easiest in the rear-view mirror, and tends to concern lay investors when comparing short term results. What is important to us is that the money managers we give management mandates to are cognisant of these trends, watch these super stocks, but don't get carried away in the chase for returns. It seems clear that technology, along with disruption, are real and sustainable, but markets and cycles are made up of more, and these will continue to ebb and flow over time. continued on page 3...
Mike Estment CFP® professional BA / Chief Executive Officer NFB Financial Services Group Gauteng