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EACH week we ask an expert to allocate a hypothetical lump sum of R1m. Investment ideas range from the stock market and stamps to art and wine.
This week Viv Govender, senior analyst at Vunani Private Clients, devises a portfolio.
To invest R1m over the next three to five years the best option could be a core and satellite strategy.
This involves creating a diversified core portfolio and adding overweight positions in companies we believe are likely to outperform the market.
An amount of R1m is sufficient to create a reasonably diversified portfolio; however, for the sake of simplicity we will create our core with the use of low-cost exchange-traded funds (ETFs).
Our core makes up 76% of the value of our portfolio and consists of a 21.3% holding in Satrix Fini, a 25% holding in Satrix Resi and a 29.7% holding in Satrix Indi.
As you can see we are quite overweight on the industrial index and thus will only add one industrial share, Vodacom (4%), as a satellite. Even though cellphone penetration has almost reached saturation point, the expansion of smartphones and mobile data usage still allows for growth opportunities.
With regard to financials, our preferred stocks are Old Mutual [JSE:OML] (4%) and RMB Holdings [JSE:RMH] (3%). We are quite partial to insurers, but fear that banks may face downside risks.
In the resource sector, our satellites would be Kumba Iron Ore [JSE:KIO] (3%), BHP Billiton [JSE:BIL] (3%), Exxaro Resources [JSE:EXX] (3%) and Impala Platinum Holdings [JSE:IMP] (4%). We have more satellites in this sector due to the fact that it is underweighted in our core.
The portfolio is underweight gold, since it has a longer term time horizon and the metal has not outperformed historically. Instead, we have chosen to go overweight on resources stocks likely to benefit from the continuing high growth rates in Asia, Latin America and Africa.
Demand for coal, iron ore, platinum and copper is likely to soar as billions of people enter the middle class over the next few decades and begin to mimic the consumption patterns of the developed world.
- Fin24
- Previous investment ideas:
Robin von Holdt, CEO of Top 100 SA Wines.
Charl Bezuidenhout, owner of the Worldart-gallery.
Schalk Louw, head of Contego Asset Management.
Alan Rogers, president of the Philatelic Federation of SA.
This week Viv Govender, senior analyst at Vunani Private Clients, devises a portfolio.
To invest R1m over the next three to five years the best option could be a core and satellite strategy.
This involves creating a diversified core portfolio and adding overweight positions in companies we believe are likely to outperform the market.
An amount of R1m is sufficient to create a reasonably diversified portfolio; however, for the sake of simplicity we will create our core with the use of low-cost exchange-traded funds (ETFs).
Our core makes up 76% of the value of our portfolio and consists of a 21.3% holding in Satrix Fini, a 25% holding in Satrix Resi and a 29.7% holding in Satrix Indi.
As you can see we are quite overweight on the industrial index and thus will only add one industrial share, Vodacom (4%), as a satellite. Even though cellphone penetration has almost reached saturation point, the expansion of smartphones and mobile data usage still allows for growth opportunities.
With regard to financials, our preferred stocks are Old Mutual [JSE:OML] (4%) and RMB Holdings [JSE:RMH] (3%). We are quite partial to insurers, but fear that banks may face downside risks.
In the resource sector, our satellites would be Kumba Iron Ore [JSE:KIO] (3%), BHP Billiton [JSE:BIL] (3%), Exxaro Resources [JSE:EXX] (3%) and Impala Platinum Holdings [JSE:IMP] (4%). We have more satellites in this sector due to the fact that it is underweighted in our core.
The portfolio is underweight gold, since it has a longer term time horizon and the metal has not outperformed historically. Instead, we have chosen to go overweight on resources stocks likely to benefit from the continuing high growth rates in Asia, Latin America and Africa.
Demand for coal, iron ore, platinum and copper is likely to soar as billions of people enter the middle class over the next few decades and begin to mimic the consumption patterns of the developed world.
- Fin24
- Previous investment ideas:
Robin von Holdt, CEO of Top 100 SA Wines.
Charl Bezuidenhout, owner of the Worldart-gallery.
Schalk Louw, head of Contego Asset Management.
Alan Rogers, president of the Philatelic Federation of SA.
