The Upside of Falling Investment Returns

Over the course of the year I have advised several clients on their South African investment portfolios. They came to me frustrated by poor portfolio performance and concerned over their financial futures.

After gaining an understanding of each respective client’s individual needs and doing a detailed Cost / Risk / Return analysis on their portfolios it became apparent that not enough thought had been applied, with no real plan in place and inadequate understanding of the investments. In reality, they had defaulted to a balanced fund with a big-name investment manager and hadn’t looked at the investment in years. They had put their faith in a credible name and trusted the system, unfortunately to their detriment.

After discussing my analysis with the clients, they were quite surprised by a number of aspects and realized they hadn’t allocated sufficient time to their investment planning. This is understandable as our focus is often elsewhere, but time waits for no one and the loss of positive compounding returns has a very large impact on future value.


The table below is a summary of some of the largest South African asset managers’ balanced fund returns over 1 year and 3 years compared to Carrick Wealth’s Balanced Fund. The table demonstrates just how poor recent returns have been:

Source: 31 August 2019 Fact Sheets and Morningstar. Past performance is not an indicator of future performance.


Asset allocation, especially in South Africa, is also critical as income funds have been delivering 9-10% per annum whereas equity funds have been getting battered. As an example, a separate and well-known asset manager’s South African equity fund has a performance this year to 31 August of -19.39% and a Total Expense Ratio of 1.74% incl. VAT (Source: Fact Sheet 31 August 2019).

The upside is that the portfolios have now been corrected and the clients in question are back on track with their financial planning and have a deeper understanding of the risk they are taking, the costs they are paying and the returns they can expect to make. The moral of the story – don’t take anything for granted with respect to your financial planning. This article talks to only one aspect, being investment planning and excludes other critical aspects such as structure, tax, onshore/offshore, income drawdown, estate planning, wills, asset protection and risk (life, dread disease, disability).

For assistance or more information, contact your Carrick Wealth Specialist directly or alternatively contact us at [email protected].

For assistance or more information, contact your Carrick Wealth Specialist directly or alternatively contact us at

[email protected].

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