08-05-2025
The importance of a balanced outlook in turbulent times
Should one's investment strategy shift in response to market volatility? Old Mutual Corporate Consultants' approach demonstrates the value of a balanced outlook and portfolio – and the power of playing the long game.
Many shocks and surprises occurred in the first quarter of 2025, significantly impacting stock markets and the investment world at large. These included numerous surprise announcements by Donald Trump, record cryptocurrency heights, and tech companies and indices blindsided by the sudden rise of Chinese rival AI DeepSeek – to name just a few.
Market volatility is nothing new; it is the rhythm of investment. South Africa's equity markets have weathered numerous storms, from the devastating 58% decline in the late 1960s to the sharp 21% drop during COVID-19. Globally, we have seen remarkable resilience following the dot-com crash and pandemic-related downturns.
But here is what matters: These shake-ups are not just challenges; they are opportunities. After the COVID-19 decline, markets surged into an expansionary phase with exceptional returns. While any asset class can underperform inflation temporarily (as we saw in 2022), history consistently shows that these periods are followed by significant outperformance. Additionally, regulatory evolution – like SARB's expansion of offshore investment allowances – has opened new avenues for portfolio growth and diversification.
To adapt or endure?
Our investment approach remains steadfast because it is built on decades of market wisdom. Our analysis of South Africa's equity market from 1925 to 2023 tells a compelling story, from the 58-month downturn and 72-month recovery in the 1950s to the remarkable 110-month bull run in the early 1990s. This historical perspective confirms what we have always known: markets recover, expand, and reward the patient and consistent investor.
Growth assets are notably the primary beneficiaries of this expansion, as my colleague, Head of Smoothed Bonus Products & Investment Strategy Marvin Nair, points out. It is therefore imperative for an investor to maintain as much growth asset exposure as possible throughout their investment journey.
Chasing market trends is not an optimal investment approach for four simple reasons:
Market cycles are natural and inevitable. Reacting to every fluctuation means missing the recoveries that follow.
The data is undeniable: Long-term investors consistently earn positive real returns. Short-term investors may sometimes outperform the market, Nair adds, but they cannot consistently do so.
Diversification works. Spreading investments across asset classes cushions the impact of volatility.
Market timing is a fool's errand. The 'periodic tables', as shown in our note of returns, demonstrate the impossibility of consistently predicting top performers. As Nair puts it, the adage continues to hold true: 'Time in the market is better than timing the market'.
At Old Mutual Corporate Consultants, we are guided by 'The Investor's Compass': a framework centred on long-term success rather than short-term noise. We recognise market cycles and look for strategies to harness them, not fear them. By emphasising sustained growth over time and strategic diversification across asset classes, we maximise the probability of inflation-beating returns. Above all, we champion patience – the essential ingredient for investment success.
Nair points out that our flagship Absolute Growth Portfolios (AGP) product, in particular, is designed to see through the noise and maintain high growth asset exposure throughout an investor's journey. This is critical to ensure upside participation through various market cycles.
The power of patience
Adopting a disciplined approach to investing delivers multiple benefits. Investors are more likely to achieve their long-term financial goals and enjoy superior risk management through strategic diversification. A disciplined approach also protects investors from making emotional decisions during periods of market volatility while enhancing their confidence through deep investment understanding. Investors become more adaptable to evolving market conditions without abandoning their core principles, and benefit from consistent course correction through regular portfolio reviews focusing on long-term outcomes.
This type of strategy directly targets what matters most to retirement fund members. How? By offering:
Maximum long-term growth potential through optimal growth asset allocations suitable for varying risk profiles.
Capital preservation options that enable strategic diversification, including exposure to alternative asset classes (those being a key differentiated source of returns, particularly in our Smoothed Bonus portfolios).
Inflation-beating returns that protect members' purchasing power.
Peace of mind from a consistent, proven approach that withstands market storms.
Technology can also help employers – and, therefore, their employees – to remain calm and confident in turbulent times. As they say, knowledge is power, and one can't afford to be rattled by sudden market turns. Old Mutual Corporate's proprietary solution, OnTrack™, functions as a powerful diagnostic tool, enabling employers to understand how well their retirement fund is serving members and to make data-driven improvements that ensure more employees achieve a secure retirement.
The bottom line? At Old Mutual Corporate, we navigate turbulent markets with a steady hand, delivering sustainable returns for our clients and their employees. Our long-term perspective, diversified approach, and unwavering patience create retirement journeys that do not just weather market shake-ups – they thrive because of them. DM
Author: Dennis Murray
