Dear reader
We hope that all of our clients and partners had a restful holiday period and share our sense of renewed energy for 2024. By all accounts, we are in for a busy year ahead, full of challenges and opportunities.
The global ETF industry is certainly on a strong run. Last year closed with the 52nd consecutive month of net inflows. That was on the back of the third quarter for 2023 posting USD 550 billion of net inflows. Of course, history doesn’t guarantee anything about the future. But these are positive signals for the year ahead.
One strategic tussle the local business community is watching closely is the way Naspers is responding to Amazon moving into the neighbourhood. JSE giant Naspers owns Takealot, and has been vocal about positioning itself to compete with the arrival of the global online retailer founded by Jeff Bezos.
Globally, one struggles to find commentators suggesting geopolitical tensions will ease any time soon. There don’t seem to be any realistic proposals for a brisk end to the conflict in Ukraine, and America’s appetite for financial support may be waning. The results of the upcoming US election will play a role here, as current presidential candidates hold varying positions on the matter.
In the Middle East, there is a real risk that the conflict in Gaza could ignite more fighting in the region. This will bring an oil supply shock into sharp focus. A spike in oil prices would add fuel to inflationary pressures and make it very hard for central banks to follow through with plans to ease rates further.
South Africa’s political economic landscape is also precarious. The pending general election is on all of our tongues. We won’t attempt a full analysis here. There are as many opinions on this as there are South Africans. For markets, the fact that 2024 is an election year matters more than the political outcome, a fair election and a smooth transition are what investors like to see.
Amid the challenges, one can always find positives. Just look at the “Magnificent Seven”: Apple, Alphabet, Microsoft, Amazon, Meta, Tesla, and Nvidia. They are at the forefront of bringing artificial intelligence (AI) from startups and ideas into profitable applications. Research out of Goldman Sachs Global Investment Research shows these stocks provided an indexed return of 71% between December 2022 and December 2023. The remaining 493 stocks in the index returned just 6%, and the S&P 500 overall gave investors 19%. This has been a boon for the 1nvest S&P500 Info Tech Index Feeder Fund.
Returning to our core – providing simple, transparent and cost-effective index investing tools – the business case remains sound. In a tumultuous world, a diverse portfolio of assets from multiple industries, with the freedom to pivot exposure to different geographies, is increasingly popular as a way to approach this unpredictable world.
We look forward to continuing to provide our clients and partners with a wide selection of high-quality index tracking products as we embrace the challenges and opportunities that 2024 brings.
Regards,
The 1nvest team
