• Humans can be wonderfully creative.

    By May 11, 2020Uncategorized

    It is always inspiring to see how creative our fellow human beings can be, so we just had to borrow this picture on the future of dining out from a recent Vestact newsletter.

    In South Africa we are still not allowed to dine out or go and collect take-away food from restaurants, but food deliveries are allowed. As the inflection point between lockdown and opening up the economy is getting closer, it is interesting to see how things are panning out in Sweden, which never went into a hard lockdown. As we can see from the graph below, they are not worse off than their peers and because they allowed their economy to continue, will not see the devastation to livelihoods that countries like South Africa will soon see.

    At JWR it is business as usual with the level 4 restrictions allowing us to work from the office or from home. Working from home is for the most part not a problem and we have live webinars with fund managers almost daily. At a recent webinar with Ninety One (the old Investec Asset Management), there were over a thousand participants via Zoom and it went very well.

    It is probably a majority view that the initial lockdown was necessary to give the medical facilities in the country a chance to prepare for the inevitable onslaught of sick people, but that it cannot remain in force for much longer because of the devastation it would cause to people’s livelihoods. A vaccine will most probably only be available in 2021 and we have to accept the new realities of responsible social distancing, wearing a mask in public and washing hands often, without its having to be enforced by government.

    The interesting thing, however, is the way investment markets are reacting. After the huge sell-off in March, we saw a strong recovery in April and into May. This is a very typical reaction of markets when confronted by a sudden unforeseen shock: first everyone runs away as fast as they can, but then they feel a bit silly and start to make their way back. The problem now is that the second shock wave of the economic impact on company earnings may be worse than expected and then the markets will run away again. We will only see the effects of this second shock wave towards the end of June.

    It is therefore important to note the following changes made to withdrawals from your living annuity:

    Expanding access to living annuity funds: Individuals who receive funds from a living annuity will temporarily be allowed to immediately either increase (up to a maximum of 20 percent from 17.5 percent) or decrease (down to a minimum of 0.5 percent from 2.5 percent) the proportion they receive as annuity income, instead of waiting up to one year until their next contract anniversary date. This will assist individuals who either need cash flow immediately or who do not want to be forced to sell after their investments have underperformed.”