Anchor Capital just released their quarterly Strategy and Asset Allocation Report. I have a lot of respect for the Anchor team who together manage over R130 billion in assets.
Their house view on local and offshore asset class returns over the next 12 months are summarized in the table below. It’s based on their estimates of the risk and return characteristics of each asset class.

Source: Anchor Capital; The Navigator
One of the interesting observations is that their highest return expectation comes from SA equities. Our local market has been underperforming for quite some time, and the gap between the JSE and developed markets over the past decade is substantial.
The chart below illustrates this by comparing the JSE All Share Index to the MSCI World Index, which represents a market cap-weighted composite of all developed markets.
Chart: The JSE All Share Index vs. the MSCI World

Source: Ninety One Economic Update
Despite this relative underperformance, the South African market has still generated an annualized return of 13.7% over the past five years—a return many investors would be quite happy with.
One additional headwind for offshore markets, especially when viewed from a rand perspective, is currency risk.
The rand, like many other emerging market currencies, has been undervalued for a long time. When COVID hit, we saw a massive outflow of investment from emerging markets (and even some developed markets) into the US, which led to significant dollar strength.
With the global rate-cutting cycle now underway, there’s potential for an extended unwinding of USD strength.
The chart below shows the history of the exchange rate between the USD and the rand. Looking back at the period from 2001 to 2012, the rand maintained its purchasing power against the dollar for over a decade. A major factor behind this was the rising commodity cycle and higher global growth.
Chart: Rand to USD

Source: Anchor Capital; The Navigator
As global economic growth picks up, so does the demand for commodities. It’s quite possible that the commodity cycle may turn again. Given that 30% of our market is comprised of mining companies like BHP, Anglo, and the PGMs, this can lead to a significant boost in tax collections and ultimately support government spending while strengthening the local currency in the same way it did back in 2001.
On the Expectation for Global Markets
It’s a bit surprising that Anchor’s stance on developed market equities is only neutral, with an expected return of 6%. The US economy is undeniably strong—they added another 254,000 jobs last month, unemployment remains at historic lows, inflation is under control, and a few more rate cuts are expected.
So why the dim outlook?
It’s simply a function of price. The S&P 500 has had an incredible run, and it seems that all these positive factors are already priced into market. The S&P 500 is up almost 100% over the past 5 years. That’s an incredible annualized return of 15% in USD.

It’s always fascinating to see these kinds of estimates for shorter-term market returns. Sometimes they’re spot on, but just as often, an unexpected event—a black swan—turns everything upside down. Predicting short-term movements is nearly impossible.