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Six Park 2017 outlook and watch list
After a fairly unusual and turbulent 2016, we expect that 2017 will be less volatile, and we maintain a generally positive outlook for both local and global markets. We expect interest rates, broadly speaking, to rise slowly, and not in a disruptive manner as rising interest rates have been expected now for some time.
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US Election - An Unexpected Victory
Donald Trump’s unexpected victory in yesterday’s US Presidential election has sparked extreme volatility in share markets around the world. Since most polls and observers had been predicting a Clinton victory, this outcome has introduced an element of fear and uncertainty for investors. Based on the points below, our main advice to investors is to not panic. We do not believe this outcome should fundamentally change an investor’s medium to long-term investment strategy or asset allocation.
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Mission Improbable: Beating the Market
While a very small minority of fund managers do manage to “beat the market” from time to time, such outperformance tends not be sustained for extended periods. It is also nearly impossible to identify in advance which managers will actually outperform the market for a particular period. A recent study by S&P Dow Jones found that less than 5% of the highest performing funds managed to retain their top quartile ranking after three years – and only 0.28% (i.e. 2 out of the 703 top quartile funds!) stayed top quartile performers after 5 years! The data also showed a strong likelihood for the better performing funds to become the worst-performing funds over time – with over 25% of the initial top quartile funds becoming bottom quartile funds by the end of the five year period.
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