“The backdrop of political uncertainty, equity indices at or near their highs and low bond yields creates a challenging environment for investors. Bonds will deliver a low but predictable level of income, yet will struggle to keep pace with inflation over the longer term. Equities will deliver a variable near-term income and have historically offered some inflation protection, but volatility is likely to be high.
“My preferred route is to invest in alternative assets – such as infrastructure, renewable energy and specialist property, including distribution centres and student accommodation – which provide a stable income stream with inflation linkage. Real assets currently account for 25% of our Sanlam FOUR Multi-Strategy Fund – 10% in renewables, 10% in infrastructure and 5% in property. This is up from about 10% when we launched the Fund more than four years ago.
“While some market participants have viewed these areas of the market as expensive, they continue to perform extremely well; and where else can you get 4% yields with inflation linkage? Real assets should continue to be an attractive home for investors in this environment.”
Mike Pinggera, manager of the Sanlam FOUR Multi-Strategy Fund