Dear Investor,

Those who have already been following our newsletter for a while, will know that we are a proudly SA company that likes to celebrate South African excellence with our View of the Month picture – think about the SpaceX launch, the Ndlovo Youth Choir and the Springboks winning the world cup.

This month we are celebrating “My Octopus Teacher”, a documentary by a South African team that won an Oscar in the Best Documentary Feature Category at the 93rd Academy Awards in Los Angeles on 25 April. The documentary is set in the False Bay area in Cape Town and focuses on the intimate relationship between independent filmmaker Craig Foster and an octopus, who meet and bond in the kelp forest of the Atlantic Ocean.

The documentary is a great advertisement of our marine biodiversity. We can only hope that it will encourage the millions of viewers of the documentary to come and visit and see for themselves how beautiful and unique our ocean life is. A great win for tourism which is one of the industries hardest hit by the Covid-19 pandemic in SA.

 

In this month’s newsletter we cover the following topics:

1. Affected by the ABSA Money Market Fund closure? We’ve got the perfect solution for you
2. Nine money truths nobody talks about
3. Capital protected investment opportunities
4. Rand forecasts – Banks revise their Rand forecasts drastically
5. Oil tanks feedback
6. Fuel prices
7. Market stats summary
8. Financial Indicators as at 30 April 2021
9. Disclaimer

 

1. Affected by the ABSA Money Market Fund closure? We’ve got the perfect solution for you

On 7 April’21 ABSA communicated to their popular ABSA Money Market Fund (AMMF) investors, that it will be closing the fund by 6 July’21. The main reason, from their communication, seems to be that investors in the fund were under the impression that the AMMF was a bank account and capital/returns were guaranteed by ABSA Bank. This is however a misconception as the AMMF is not a bank account but rather a unit trust and therefore capital and returns are not guaranteed.

Enters the Investec Corporate Cash Manager (CCM), a capital guaranteed bank account with Investec that does not attract any banking fees (transactional, monthly, administration) but offers competitive interest rates (See past rates below). Accounts within CCM can be structured to be instant cash, notice term (32 or 60 days) or fixed term (up to 5 years). Vista Wealth helps clients structure the account to earn a great interest rate while satisfying their liquidity needs.

On Thursday 6 May’21, CCM is launching the new Investec CCM PrimeMoney Call Account. This new instant cash, bank-guaranteed prime-linked deposit product is designed to give clients capital security and competitive returns (annualized effective rate of 4.59%) relative to comparable cash and money market alternatives.
To provide an alternative solution to customers affected by the AMMF closure, Vista Wealth compiled the comparison below between the AMMF and the new Investec PrimeMoney Call Account:

Click here to read the Investec PrimeMoney Call Account product rules

Important note to existing Vista Wealth Investec Call Money Fund clients: We will be contacting you in due course to potentially convert to the new Investec PrimeMoney Call Account. There is no cost involved with this switch – while it provides you with higher rates.

 

2. Nine money truths nobody talks about

Staying with the octopus and teaching, it is a well-known fact that an octopus has 9 brains. In addition to the central brain, each of the 8 arms has a mini brain that allows it to act independently. A recent tweet by Nayan (who goes by the twitter handle @sovereigneur) listed the top 9 money truths nobody talks about. We liked the thread and wanted to share it with our readers.

Money Truth 1: Spend Less Than You Earn
Spending money you do not have will keep you stuck in the paycheck-to-paycheck cycle. Cut down on every unnecessary expense:
– Shopping
– Eating out
– Entertainment
– DSTV

Money Truth 2: Make More Money
If you are not earning enough, priority should be on making more. There are tons of ways to make extra money, below a few examples:
– A second job
– Gig economy
– Selling products online
There’s no excuse for being broke

Money Truth 3: Stick To A Budget
You need a plan to stay on track and stick to a budget. Without a budget you will likely overspend. Action plan:
– Create a budget
– Set priority for each expense
– Follow the budget
If you plan to go over, make adjustments to the budget

Money Truth 4: Learn To Save Money

Saving money will not make you rich, but it will allow you to invest. Investment is a skill that isn’t taught to everyone, but it’s the foundation of building wealth. Consider:
– Cutting expenses
– Credit card points
– Shop around

Money Truth 5: Pay Off Debt

As long as you are in debt, you are a slave to your debt. The best way to get out of debt is to pay it off. How to fix it:
– Pay off your debt ASAP
– Focus on the debt with the highest interest rate first

Money Truth 6: Invest your money
The key to wealth is investing. Have a plan to invest on a regular schedule. Learn how to invest and how to diversify your investment. Things to consider:
– Start early
– Invest in a diverse portfolio
– Have a recurring investment plan

Money Truth 7: Start A Side Hustle
Side hustles can net you some serious extra cash. Many people quit their 9-5s after the side hustles earned them more money than their job. Some side hustles include:
– Selling online
– Online Marketing
– Creating a course
– Freelance writing

Money Truth 8: Invest In Yourself.
You are your own business. Investing in yourself is the best investment. If you want to be financially free, invest in yourself. Things to consider:
Take a course
– Learn a high-value skill
– Build social media presence

Money Truth 9: Learn Money Management
You will struggle to become financially free if you don’t know money management. Proper money management will let you keep and grow your money. Track:
– Cashflows
– Investments
– Your networth
– Hire a good accountant

Conclusion:
Money is the foundation of your financial future
Start by cutting down on expenses, making more money, or paying off debt
Find ways to earn more, learn how to invest, and track your money
Money goes where it’s most appreciated and can grow

 

3. Capital protected opportunities

With interest rates currently at historical lows and equity market uncertainty, capital protected investments might be a solution for savers or conservative investors with a low-risk appetite.

Below are 2 capital protected investment opportunities where the initial capital is 100% protected. Even though you’re investing in ZAR, they both have international equity exposure:

* Click on the investment name to see the detailed investment brochure

Below a short visual summary of each product:

Glacier SA – Sustainable World Enhancer

ABSA – Twin Fixed Return and Growth Protector

 

4. Rand forecasts – Banks revise their Rand forecasts drastically

The Banks have changed their forecasts for the Rand drastically during the month of April’21. As an example, both ABSA and Investec revised their ZAR to USD forecasts as follows:

ABSA: R14.25/USD (previously 15.75) by mid-year and R15.25/USD (previously 16.25) by year-end.
Investec: Q2 Average price is now R14.70/USD (previously 15.40)

In Investec’s Rand Note they highlight the weaker USD and the fact that SA is a key commodity exporter as a main contributor to the appreciating Rand. They also highlight that agricultural prices have seen substantial increases, and so SA’s exports have also been boosted by these price rises, with improving global demand as the world’s economic recovery gains traction a key influence. Lastly, they highlight that a strong Rand helps subdue inflation, and so has a positive impact on the outlook for the Rand, creating a virtuous circle.

Below Investec’s latest expected exchange rate forecasts:

5. Oil tanks feedback

Oil prices have shown a very rapid recovery to Q1.21, but recently have seen some stabilisation with concerns over the ongoing pandemic and that global immunisation will continue this year, and into next, creating worries over demand. The Brent crude oil price is currently around USD67/bbl, slightly up on March’21 when it was at USD64/bbl.

The recent blocking of the Suez Canal did not have a substantial impact on oil prices, nor did the recent attack on an oil plant in Saudi Arabia, as the oil market has been tightened considerably by OPEC+, and so has had less impact from market forces.

According to Investec, oil prices are not expected to see much more of a lift in Q2.21 which is positive for fuel prices, and for SA’s CPI inflation outcome.

As published in our previous newsletters, we’ve been trading oil in both our local and foreign share portfolios. See below returns over the last 4 months of the two Exchange Traded Products (ETPs) used to get exposure to oil:

#	Portfolio	Instrument	Currency	Performance for Jan’21	Performance for Feb’21	Performance for Mar’21	Performance for Apr’21
1	JSE  portfolio	SBAOIL	ZAR	14.75%	17.69%	-3.81%	3.33%
2	Offshore portfolio	USO	USD	13.59%	17.42%	-1.89%	6.91%

 

6. Fuel prices

Following on from the above Rand note and Oil tanks sections. After a series of hefty petrol price hikes this year, we’re finally set to see a month with a small cut instead. According to the Automobile Association (AA), fuel prices are set to decrease for May as of Tuesday 4 May’21 midnight.

The petrol price will drop by 9 cents a litre from Wednesday while diesel will decrease by up to 31 cents. The AA also said, “Stability on international petroleum markets and a stronger exchange rate have given fuel prices a breather”

Remember to only fill-up from Wednesday 5 May’21 to take advantage of the decrease in fuel price.

7. Market stats summary

The red block shows the market stats for the month of April 2021. In short, the JSE All Share Total Return index was up ↑1% for the month (↑36.4% for the last 12 months). The Listed Property sector was the best performing sector for the month, up a massive ↑11.7%. The Resource sector was the second-best performing sector up ↑2.7% for the month. The Financial sector was slightly up ↑0.6% for the month. Lastly, the Industrial sector was down ↓-1.3% for the month.

 

8. Financial indicators as at 30 April 2021

Global indices (NB! Returns are measured in Rand percentage points. For example, the S&P 500 was up 3.11% for the month as measured in Rands) 

JSE Sectors:

Currencies: (NB! Positive indicates ZAR has weakened for the period, vice versa)

Interest Rates:

9. Disclaimer

The information contained in this e-mail is of a general nature and is not a substitute for professional advice. We recommended that you obtain specific professional advice before you take any action. Vista Wealth Management takes all reasonable steps to ensure that the content of this e-mail is accurate and up to date, however, errors and omissions may occur. The accuracy of the information contained should therefore not be relied upon as a statement of fact.