This was the positioning statement that kicked off the Melville Douglas Investment Conference under the title ‘Adapt. Adopt. Advise: Investments in a disruptive world’.
Speakers and panelists at the investment conference unpacked some of the significant disruptive forces (and aftershocks) that have impacted the investment landscape the last four years – exploring investment opportunities and threats presented by the changes.
One overriding message throughout the day is that markets have had four of the most unstable years of recent decades.
In his investment outlook, Bernard Drotschie, Chief Investment Officer at Melville Douglas reflected on how much of the world has been trying to recover from the biggest pandemic in a century while also “trying to navigate the global economic disruptions brought on by an unprecedented series of interconnected geopolitical and macro-economic shocks”.
In his presentation Drotschie addressed the most common query following the results from the big election year, including the Trump win: “what do the election outcomes mean for markets?”
“We’re at the tail end of a long election year and one of the outcomes is that globally, the great power rivalry is back at the forefront of affairs and while US inc. seems to love Trump, other markets aren’t as excited,” explained Drotschie.
“For the US markets, a Trump administration comes with the expectations of lower tax rates, less regulations and more business-friendly policies. On the other hand, for other markets it raises concerns around import tariffs for countries like China and less support on some of the benefits like AGOA for South Africa.”
Drotschie also shared his 2024-2025 outlook, highlighting strong returns in domestic equities. He noted that investors who stuck with a disciplined long-term strategy saw significant growth, stating: “If you had simply remained invested in global equities (MSCI ACWI) at the end of 2019, before COVID struck, you would have seen returns up 70% in US dollars.”
Another highlight of the conference included an insights presentation by Flux Trends founder and CEO, Dion Chang, on emerging trends amongst High Net Worth (HNW) Individuals which highlighted the shift in the HNW demographic.
The presentation revealed that heirs to wealthy South African families have mostly emigrated, and this is starting to present a significant threat to succession planning for local wealth planners.
Chang explained how the move of wealth out of our homeland borders means that the generational wealth of South Africa has been added to the global wealth pool - presenting local advisors and planners with unique challenges in trying to keep “old money” on our shores.
The insights also revealed how the new wealth client is not only younger (in their 30’s or 40’s) but also that their fortunes have been acquired from alternative sources of income such as social media influencing and crypto.
In response to the presentation, Head of Standard Bank Group Investments, Duncan Wattam says, “Perhaps our greatest concern – and possibly our greatest opportunity of entry – lies in the shift of the HNW demographics.”
“In our business, the importance of understanding our clients cannot be overstated. Just as changes in the market require a new approach to investing, changes in demographics require a new approach to attracting, advising and retaining those new clients,” adds Wattam, “The challenge is for the industry, as a collective, to creatively solve for attracting the HNW millennial who has no precedent to a particular firm but sitting with millions of uninherited new wealth.”
The Melville Douglas research team, in the disruption panel, further unpacked the implications of disruptions, such as AI and climate change, in different sectors including healthcare, financial services and insurance; and explored ways in which the fund manager has navigated the opportunities and threats that come with the changes.
Mike Laws, Managing Director for Melville Douglas underscored the fund manager’s strategic positioning and emphasized their commitment to integrating disruptive forces into the company’s investment strategy.
“While the world may change, our purpose remains the same: we are personally committed to enhancing our clients’ lives,” he said.
“Melville Douglas has a strong SA heritage with deep roots into global markets, delivering solutions for global clients. As a dedicated private client investment manager offering thoughtful, specialised discretionary portfolio management, we provide tailored solutions across the risk spectrum, from minimal risk to pure equity mandates, both domestic and offshore.” DM
Business Maverick
Geo-politics, AI and a changing HNW demographic: Presenting the biggest threats, and opportunities, for wealth management in SA
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