COLUMN - It's the first week of spring, which feels like a good time for a market recap.
I've used the following indices to show what has been happening across different parts of the market:
JSE All Share Index — represents the broad South African equity market.
JSE Listed Property Index — represents the performance of South African listed property companies.
MSCI Emerging Markets Index — a market-cap-weighted index representing emerging markets globally. China and other Asian markets make up a large part of the index, while South Africa is a relatively small component.
S&P 500 — represents 500 of the largest listed companies in the United States.
SA Money Market return — broadly represents what you could have earned by sitting in cash, with far less volatility than equity or property markets.
All returns are in rand, to the end of August 2026. The chart below shows the 1 year numbers.
A strong year for South African markets
1-year returns
Both the JSE All Share and Listed Property indices returned approximately 18% over the past 12 months, while cash returned just over 7%.
Emerging markets were the standout at close to 25%.
The S&P 500 returned approximately 8.6% in rand terms, and while the dollar return was higher, rand strength reduced the return experienced by a South African investor.
The chart below shows the three-year numbers.
Three years of strong growth asset returns
3-year returns
Over the past three years, the JSE All Share Index returned an annualised 19.75%, while the listed property sector returned approximately 24% per year. This period has coincided with the end of loadshedding (touch wood), improved fiscal stability (we stabilised our national debt and received a ratings upgrade) and an upturn in the commodity sector which represents over 30% of our local market.
Emerging markets returned approximately 16% per year and the S&P 500 around 13% per year in rand terms, again dampened by rand strength.
Money market returns were considerably more stable and less uncomfortable along the way, but returned approximately 7.89% per year.
The chart below shows the five-year numbers.
The five-year numbers tell a different story
5-year returns
The five-year numbers are where I think the most important lesson sits.
For two full years, from September 2021 to September 2023, growth assets did nothing. Emerging markets and South African listed property both returned less than cash. The JSE and the S&P 500 were not much better than cash either. And they gave you a scare in the process, because unlike cash, they did not go up in a straight line to get there.
I know a number of investors would have questioned the whole approach at that point, and many would have moved to cash. Why tolerate that kind of volatility when you can earn a predictable return with none of the discomfort?
The cost of moving to cash at the wrong time
Then look at what happened next. Over the full five years, the growth indices delivered annualised returns of between approximately 10.7% and 15.8%, compared with around 7.1% from cash.
Almost all of that came in the last two years, and you had to be invested to get it.
The danger is not holding cash. Cash has an important role in any financial plan. The danger is moving long-term money into cash because recent volatility has become uncomfortable, and then missing the recovery that follows.
Have a fantastic Friday. As always, please feel free to reply if there is anything on your mind or if you have any questions.
Matthew Matthee has a wealth management business that specialises in retirement planning and investments. He writes about financial markets, investments, and investor psychology. He holds a Masters Degree in Economics from Stellenbosch University and a Post Graduate Diploma in Financial Planning from UFS. He is a partner at PSG Wealth. [email protected]
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