Words don’t come easy when we look back on all the lives lost due to the COVID-19 pandemic over the past two years and now we watch in dismay as the war in the Ukraine unfolds. We have received questions from our advisors and their clients about the impact of the current geo-political instability, the economic realities it brings and the impact on portfolios. While this piece will deal with the questions at hand, it does not take away our grief from the current human consequences of the Russian invasion into the Ukraine.


As background to how markets have performed over the year-to-date (time of writing is Monday evening 7 March 2022):

  • The SA Rand has appreciated by 3% to the US Dollar – mainly due to its status as a commodity currency.
  • Spot Commodity prices are up over 45% as measured by the iShares GCCI Commodity Index.
  • The FTSE JSE All Share Index and the Top 40 Index are now flat for the year to date.
  • The MSCI All Country World Equity Index is now down more than 15% in USD and ZAR terms, while the MSCI Emerging Market Equity Index returned -12% in USD terms.
  • The SA Bond Index has returned -1.5% and the SA Property Index is -12%.

Our portfolios and funds have had very little direct Russian assets, but all have exposure to global equity markets. In short, our IP funds have held up well for the year-to-date mostly due to activities post our strategic asset allocation meeting when we decided to increase our overweight SA Resource equity exposure and Gold Bullion. This means that our multi-asset growth funds (which are also underweight global equities) are down just over 2%, whilst our Moderate Reg 28 funds remain flat for the year to date. This is despite meaningful offshore exposure in all our funds. Our Conservative Growth funds are all down just over 1% for the year to date.

Our model portfolios have exposure to some managers who have been very conservative or circumspect about the global economic conditions going into 2022. This does assist our portfolio returns at present and it is fair to say that most conservative income and growth solutions are flat for the year-to-date, while our moderate income & growth solutions are down between 1 and 2%. Our long-term High Growth solutions – which have high exposure to global equities – are down between 6 and 7%.


It is impossible to tell what will happen next.

A recent global market overview issued by Epoch Asset Management highlights five medium term challenges due to the Russian-Ukraine current scenario:

  1. The Ukraine Invasion: A third dagger into globalization and global supply chains
  2. A New Era for Europe: Defense budgets are likely to rise dramatically
  3. The Weaponization of Money: A turning point away from USD hegemony
  4. The Impact on US Growth and Inflation: Don’t expect the Fed to pause (absent a Lehman-esque tightening of financial conditions)
  5. Oil, Commodities and Green Energy: The end of “pre-emptive underinvestment”

We will discuss these influences and their potential impact in our weekly meetings and will report our findings and strategy as the facts and information change. We invite you to follow our weekly meeting notes which are available via your advisor portal.


We have de-risked our funds since the 14th of February. Our portfolios are managed by a number of seasoned professionals who will continue to seek the opportunities that market volatility brings. We do think that it is prudent to wait for more clarity in terms of geo-political events and risk before we will add risk to our funds and portfolios.

Our funds and portfolios are well positioned now – our overweight commodity and resource exposure certainly assisted our improved relative performance in the short term. Our process and asset allocation philosophy have proven their strength in trying times and we are very pleased with the outcomes that we have managed over the last couple of weeks, months and years.

This does not mean, however, that we can relax and let our guard down. The global economy is in a very fragile space, and anything could happen. We are vigilant in our attempts to understand the markets and the economic implications of what is happening in the Ukraine and the surrounds. This means that we will not hesitate to take our profits and even de-risk more. It also means that that we are aware of potential buying opportunities that might arise if global geo-politics find a resolve soon.


Roeloff Horne on Russia Ukraine Analysis Roeloff Horne

Head of SA Portfolio Management




The content of this article is for information purposes only and does not constitute an offer or invitation to any person. The opinions expressed are subject to change and are not to be interpreted as investment advice. You should consult an adviser who will be able to provide appropriate advice that is based on your specific needs and circumstances. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable and given in good faith, but no representation is made as to their accuracy, completeness or correctness. MitonOptimal South Africa (Pty) Limited is an Authorised Financial Services Provider Licence No. 28160, regulated by the Financial Sector Conduct Authority (FSCA) – Registration No. 2005/032750/07.MitonOptimal Portfolio Management (Pty) Limited is an Authorised Financial Services Provider Licence No. 734, regulated by the FSCA – Registration No. 2000/000717/07.

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