THE PAST IS NOT THE FUTURE
By Andró Griessel
7/2/2026
According to my data, one would have to go back to 1999 to find a period in which a combination of South African assets (equities, bonds, cash and listed property) delivered a better return than in 2025.
It is, however, a bittersweet statistic, I suspect, because many investors have, over the past few years, lost so much faith in South African assets that they have shifted their holdings, partially or entirely, offshore.
Over the past few years there has been a material divergence between returns achieved from South African and offshore equities. See the accompanying graphic.
South African equities delivered nearly 46%, while exposure to the MSCI World Index produced just over 3% (both in rand terms).
Before attempting to provide further context, it is important to highlight the relevance of such a dramatic one-year divergence in performance (even though it is a short period) for longer-term numbers as well.
When it comes to numbers, one proverbial swallow really can make a summer (or a winter). While some commentators only a year or so ago pointed out that South African equities had not only performed significantly worse than offshore equities in the past, but would also underperform in the future, local equities have now comfortably outperformed offshore equities over one year (45.7% vs. 3.4%), three years (18.7% p.a. vs. 15.74% p.a.) and five years (18.34% vs. 14.24% p.a.), while performance over the past 32 years is essentially identical.
All of the above is good and well, but at this point it may be important to pause and consider how the JSE All Share Index’s formidable return was achieved. See alongside the JSE’s performance (in total) versus the various sectors that comprise it.
The Resources Index, even after the recent downward correction, delivered more than 87% over the past 12 months, while the Financials Index returned 36%, and the heavyweight Industrials Index “only” 14%.
Investors with concentrated personal equity portfolios may therefore have performed materially worse than the JSE All Share Index, due to the fact that most portfolios would have had a materially underweight position in resource stocks (given the generally low quality of these companies and the unpredictability of their earnings). This is a typical example of how a potentially sound process can lead to a weaker-than-expected outcome.
Back to the dangers of viewing the world through a single lens:
We often encounter families who have built substantial wealth in a business, only to undo years of disciplined effort through poorly considered investment decisions when they eventually sell the business and need to allocate the proceeds elsewhere.
One common mistake (which is, of course, easier to identify with hindsight) over the past decade was conservative or so-called “safe” offshore investments.
Over the last 10 years, a cautious global asset allocation would not have succeeded in protecting your wealth against South African inflation. This assumes, moreover, that you did not need to draw on these funds and had other local sources of income.
It is therefore important to scrutinise your personal definition of risk.
For me, risk is the inability to protect my accumulated wealth against the impact of inflation (rising living costs).
It would, however, be just as intellectually dishonest for me to present the above as “proof” of why this strategy will continue to underperform, as it was to use the period of weak performance from South African assets as proof that future returns would be equally poor.
I sincerely wish that investment and portfolio construction were that simple — that one could simply extrapolate the recent past indefinitely into the distant future — but unfortunately that is not the case.
Investors who are thinking about their portfolios today should, regardless of whether recent performance was good or bad (because that is water under the bridge), ask themselves, among other things, whether they have a proper understanding of:
- What the value, relative to price, is of the assets they own?
- What the implications for their portfolios could be of the changing world order (which appears to be gaining increasing momentum)?
- What the implications are of the sharp rise in Japanese bond yields and the unwinding of the so-called carry trade?
- What the impact will be of US government debt and a waning appetite from the rest of the world to continue financing its spending?
I could go on indefinitely.
The point I am trying to make is one we have attempted to make many times before. I summarise it briefly again:
- Adopt a clean-slate approach to your portfolio. The past is not the future.
- Diversification is your friend. Be wary of portfolios with binary outcomes or where your success depends on correctly predicting the future, currency movements or even interest rates.
- Ensure you know what your performance target is and measure your progress against it — not against the asset class that performed best last year. If you miss the target, make sure you understand why. It is not the short-term outcome that counts, but the quality of your process and your ability to deliver your desired results over the long term.
- If you experience strong emotions (fear or greed) prompting you to make material changes to your portfolio, and this is not the result of a reasoned process — step back. Any benefit from such actions will be purely coincidental and/or short-lived.
Andró Griessel is a certified financial planner at Woodland Wealth. Contact him at info@woodlandwealth.co.za.
Although all possible care has been taken in the preparation of this document, the factual correctness of the information contained herein cannot be guaranteed. This document does not constitute advice and anyone who intends to take any financial action based on this document is strongly advised to first consult with his/her personal financial advisor. Woodland Wealth is an authorized financial service provider with FSP no. 5966.