Over the long term, equity investments deliver superior returns to investors. For this reason, the portfolio will almost always be invested in equities to the maximum allowable extent (75%), unless we consider equity valuations to be expensive or we need to contain risk.
When evaluating equities, we tend to follow a value investment approach with a preference for high quality companies with the potential to generate stable, consistent returns. The importance of identifying and investing in these companies is to harness the compounding effect on shareholder return.

As we believe that international diversification is important, a substantial portion of our assets will always be invested in offshore equity via investments in our own Worldwide Flexible Fund and other direct offshore holdings. Locally listed stocks with rand hedge qualities are also important when considering international diversification.

The remaining 25% of the portfolio not allowed in equity we prefer to have invested in listed property rather than bonds or cash, as listed property has (like equity) outperformed bonds and cash over the long term. However, we are of the opinion that the negative sentiment that we are seeing in the international property markets (due to amongst other negative rental growth) is yet to reach South Africa and we are unsure how this will play out over the long term. Therefore, we have decided to follow a more diversified approach and the fund is currently invested in a combination of listed property (11.1%), inflationlinked bonds (3.7%) and a fixed income fund (3.9%) with the remainder being kept in cash.