How to stay on the safe side

Shun view that if US does well, the index implies the world is doing well.

- Marius Fenwick

This year has been an exceptional year on a broad base. Investors experienced fantastic returns across regions and most asset classes. Equities, bonds and property provided healthy double-digit returns that boosted investment portfolios, regardless of how they were structured.

The only caveat is offshore investments that are reported in rands. With the rand strengthening, offshore returns were watered down due to the currency move.

Measured in hard currency, offshore returns are a different story, with the S&P 500 reaching record highs (again).

Today, the MSCI World Index is dominated by US stocks, with the S&P 500 now making up almost 75% of the index.

This somewhat skews the impression of how other markets are doing.

If the US does well, the index implies that the whole world is doing well. Be careful not to fall into the trap of misconceptions.

If we consider the MSCI World Index, the return of almost 29% of the MSCI World Index over the past year trails only the US indices. All other indices trail the MSCI World Index by a mile, thanks to the phenomenal returns of the US market.