Coronation Fund Portfolio Manager, Peter Leger, this week appealed to Batswana to invest as much as they can in equities if they have time on their side and do not have a short term need for cash.
Speaking at the Botswana Pensions Society annual retirement fund conference, Leger urged Batswana to invest for the longÔÇôterm, saying that it offers the best returns over time.
“Having analyzed 107 years of returns, shares have consistently beaten cash and bonds as an investment,” he said. When saving, one has a choice of bank, government bonds or shares. He said when saving, start and end points matter more in the short term and less in the long term.
He highlighted that often the fear of capital loss in shares prevents people from investing in this superior asset. Companies grow their earnings over time which makes the share more valuable. Cash and bonds pay interest, but the capital value stays the same and loses real value due to inflation.
In an interview with the Sunday Standard, Leger explained that the primary and most important investment decision is the allocation of assets given a selected time horizon and taking into account the competing elements of returns and risk. “Asset allocation and diversification are the foundation stones of successful long term investment,” he pointed out.
He further stated that the most critical driver of equity performance over the longer term is the earning growth. Leger believes that if earnings growth is stable, returns should also be stable.
“Time diversification of risk-equities which is over a five-year period, usually shows that equities never suffer negative returns,” he said. Additionally, he revealed that the damage from tax is larger over the long term thus making equity-type assets the only viable long-term asset class. Earnings and dividend growth usually outstrip inflation over the long term, he said.
As bottom-up investors, Leger stated that their investment decisions are based on understanding the value of each company they invest in, and how the company will perform over the long term. He said their exemplary long term track record in managing assets, bears testimony to the strength of their investment team and process.
According to Kumbulani Munamati, MD of Coronation Botswana, their aim is to become the leading provider of asset management services to Botswana savings and investment markets, mainly via the private sector and public sector institutional clients. The total assets under management by the group amounts to P121 billion with 10 percent of these assets managed offshore. Coronation Fund Managers Botswana has approximately P2.3 billion assets under management.
“We have a very strong management team who focus on making sure that our clients receive quality service and excellent investment performance,” says Leger.