Investing in 2025: Prepare for Change, Embrace Disruption

 “With rising geopolitical risks and continued global economic volatility in 2025, it is important to maintain resilient portfolios that can withstand economic shocks and limit capital loss for investors,” says Truffle Asset Management CIO Iain Power, who manages the Amplify SCI* Wealth Protector Fund.

Rather than reacting to every shift, resilient managers embrace change as an opportunity to grow, stay ahead of the curve and position themselves, says Erik Nel, CIO of Terebinth Capital and manager of the Amplify SCI* Strategic Income Fund.

“Resilience is also about maintaining clarity and discipline in decision-making,” Nel says. It is about having a vision that guides every action, no matter the external pressures. The vision must be adaptable to the changing world around us, but “anchored in the values and long-term goals that drive us.”

Managers of Amplify’s high-performing unit trusts and hedge funds highlight the following critical elements of resilience to navigate investment in 2025.

Diversify

Spread investments across different and uncorrelated asset classes (equity, bonds, property, etc.) and consider further uncorrelated returns by introducing hedge funds in your strategy. This helps reduce exposure to any single market event or economic factor, creating a more stable portfolio in volatile markets and a cushion during downturns. Investing across multiple asset classes and securities smooths volatility, mitigates risk, and provides strong long-term capital growth.

Have an asymmetric mindset

Ease the pain of loss aversion by investing with an asymmetric mindset. People experience losses as more psychologically painful than gains of the same size. Be cognisant of this bias and seek investment strategies that deliver asymmetric returns by protecting on the downside while only giving a small amount of the upside away. The inclusion of various hedge fund strategies can play a strong supportive role for asymmetrical returns when combined with traditional long only funds.

Focus on long-term goals and stay invested

Define your long term goals, and stick to and trust your long term investment strategy, which will help you ride out volatility. Avoid frequent adjustments based on short-term market movements and focus on long-term value rather than short-term gains. Invest with a skilled, knowledgeable, and diverse team that knows what information matters, when it matters and that can execute investment decisions with agility.

It’s all about time in the market, not timing the market. According to Abax Investments, which manages the Amplify SCI* Flexible Equity Fund, over the past 1,250 trading days (five years to end October 2024), the FTSE/JSE All Share SWIX TR ZAR provided a cumulative return of 63%. If you strip out the top 10 trading days, the cumulative return over the remainder (1,240 days) is only 4%, meaning that just 10 trading days accounted for 94% of the growth, with only one of these days being in the past 12 months, despite SWIX delivering a 28% return for the year. It is impossible to predict those 10 days.

Invest in quality

High-quality assets, such as companies with strong balance sheets, consistent earnings, and established market positions, tend to be more resilient during economic downturns. Quality investments often recover faster after downturns, contributing to overall resilience in the portfolio.

Rebalance your portfolio 

Periodically adjust asset allocations to match your risk tolerance and financial goals, especially after major market changes, rather than reacting to market noise. This helps maintain alignment with your investment objectives.

Think rationally and deal in facts, not emotions

Market volatility can trigger fear-based reactions. Make decisions based on a well-informed strategy to prevent impulsive moves during market fluctuations.

Turn volatility into opportunity 

Market volatility is an opportunity to rebalance and capture potential gains. Look for investment managers who stay nimble, using turbulent periods to strengthen long-term portfolio performance.

Diversify beyond traditional assets

Consider hedge funds for enhanced risk management as they use a broader range of strategies and asset classes such as long/short equity, bonds and derivatives, which can help cushion portfolios against market downturns. Integrating hedge funds can add a layer of protection, which is especially valuable in volatile market conditions.

Leverage rand-cost averaging

By investing a fixed amount at regular intervals, you can mitigate the risk of entering the market at a peak, buying more shares when prices are low and fewer when prices are high.

Build an emergency fund

Having accessible cash reserves outside of investments gives you peace of mind and prevents the need to withdraw from investments during market downturns.

Mindset matters

Adopt a resilience mindset. Volatility is normal and patience pays off. Steady, thoughtful action always beats panic.

Employ nimble and agile teams

Markets are constantly changing, and nimble and agile teams strengthen resilience by adapting quickly to changing conditions while seizing emerging opportunities. Fund managers need to be flexible, nimble and active to achieve the fund’s objectives and goal.

For Amplify Investment Partners, resilience is about thriving in an environment of disruption, uncertainty and change by being proactive, nimble and agile.

Matrix Fund Managers, one of Amplify’s fund managers, highlights the following critical elements of resilience to navigate investment in 2025:

  • Active asset allocation eats strategic asset allocation for breakfast.
  • Short term macro views tend to create more reliable long-term outcomes. Focus on what’s in front of you and you will reach your goals more consistently.
  • Be nimble and flexible.
  • Inflation remains public enemy number one – have that as your main objective for real performance outcomes.
  • Don’t sweat the small stuff, ignore the noise, stay the course.
  • Plan for the future and stick to your plan.
  • If the facts change, change your mind and your strategy.
  • Anything can and does happen, don’t take it personally – adjust and move on.
  • Every moment in the market is unique, but also brings with it opportunity.
  • Slow and steady wins the race.

*Sanlam Collective Investments

Disclaimer: Sanlam Investments consists of authorised financial services providers in terms of FAIS and disclaimers can be viewed on www.sanlaminvestments.com

Disclaimer

AMPLIFY INVESTMENT PARTNERS (PTY) LTD IS AN AUTHORISED FINANCIAL SERVICES PROVIDER (FSP 712).

Sanlam Collective Investments (RF) (Pty) Ltd (“SCI”) is a registered and approved Manager in terms of the Collective Investment Schemes Control Act. Collective investment schemes are generally medium- to long-term investments. Past performance is not necessarily a guide to future performance, and the value of investments/units /unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available from the Manager on request. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The Manager does not provide any guarantee with respect to either the capital or the return of a portfolio. The manager has the right to close the portfolio to new investors in order to manage it more efficiently in accordance with its mandate. Income funds derive their income primarily from interest-bearing instruments. The yield is current and is calculated on a daily basis. If the fund holds assets in foreign countries, it could be exposed to the following risks regarding potential constraints on liquidity and the repatriation of funds: macro-economic, political, foreign exchange. The Manager retails full legal responsibility for the co-brand portfolios. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in the portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Forward pricing is used. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-div date. Performance is calculated for the portfolio and the individual investor performance may differ as a result of initial fees, actual investment date, date of reinvestment and dividend withholding tax.

Maximum fund charges include (incl. VAT): Manager initial fee (max.): 0.00%; Manager annual fee (max.): 0.81%; Total Expense Ratio (TER): 1.76%. The Manager retains full legal responsibility of the third-party portfolio. The registered name of the fund is Amplify Sanlam Collective Investment Property Equity Fund.