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A Fin24 reader writes:
With the world economy in such chaos, will it affect my unit trusts and investments?
Armien Tyer, managing director of Sanlam Investment Management, responds:
Financial markets generally tend to react to major events in the world economy. For example, if something leads to a downgrade in the global growth forecast, it could lead to concerns about the outlook for corporate profits and it could happen that equity prices may fall for a while.
At the same time the prices of some government bonds, often seen as a safe haven asset in times of turmoil, could rise for a while.
South Africa is a small open economy, integrated into the world economy. And our financial markets are well integrated into global financial markets, with foreign investors holding significant shares of our equity and bond markets.
Any major event in the world economy is likely to have an impact on both the local economy as well as asset prices in South Africa. Any investment product such as a unit trust would hence also be impacted, but the direction and severity of the impact would depend on the type of asset classes held in the investment product.
Investments are made with reference to specific goals, time horizons, risk appetite and personal needs.
We do not know when you invested or any of the other specifics that would be important in determining your circumstances.
However, investments in financial markets are best viewed as long-term commitments and, in this regard, what we have seen in the last week or so is not as rare as most people believe.
So be cautious not to overreact to what's happening, particularly if your time horizon is 10 or 20 years or even more.
- Fin24
With the world economy in such chaos, will it affect my unit trusts and investments?
Armien Tyer, managing director of Sanlam Investment Management, responds:
Financial markets generally tend to react to major events in the world economy. For example, if something leads to a downgrade in the global growth forecast, it could lead to concerns about the outlook for corporate profits and it could happen that equity prices may fall for a while.
At the same time the prices of some government bonds, often seen as a safe haven asset in times of turmoil, could rise for a while.
South Africa is a small open economy, integrated into the world economy. And our financial markets are well integrated into global financial markets, with foreign investors holding significant shares of our equity and bond markets.
Any major event in the world economy is likely to have an impact on both the local economy as well as asset prices in South Africa. Any investment product such as a unit trust would hence also be impacted, but the direction and severity of the impact would depend on the type of asset classes held in the investment product.
Investments are made with reference to specific goals, time horizons, risk appetite and personal needs.
We do not know when you invested or any of the other specifics that would be important in determining your circumstances.
However, investments in financial markets are best viewed as long-term commitments and, in this regard, what we have seen in the last week or so is not as rare as most people believe.
So be cautious not to overreact to what's happening, particularly if your time horizon is 10 or 20 years or even more.
- Fin24
