Centaur performed exceptionally well in 2010, with all categories of funds exceeding their benchmarks by 10% or more prior to fees, and the Centaur Flexible Fund was the 2nd best performing SA unit trust.
Nevertheless investing is a marathon and not a sprint, and now is not the time for us to rest on our laurels and we remain alert to intrinsic value and the latent risks of the shares we invest in and the market. The Rand should remain strong as emerging market flows support it, however, it appears overvalued on a purchasing power parity basis and we will use the current Rand strength to diversify internationally.
The SA economic recovery is gathering momentum driven by a recovery in consumer expenditure and mining production, offset by a recession in the construction sector. Our market is rated on a forward PE of around 11.5 times which indicates a full but not overvalued market. Low interest rates (internationally and locally), reasonable economic growth and international demand should push the JSE higher resulting in a good investment year, however a material slowdown in the Chinese economy or a fiscal crisis in the USA may result in things not turning out so well. We will remain alert to investment factors and react accordingly to add value to our clients' portfolios in the year ahead.
