Staying disciplined in an uncertain environment

Clients often expect portfolios to respond materially to current geopolitical uncertainty, assuming that managers will make decisive or aggressive positioning changes in response to global developments.

Periods of heightened uncertainty often bring increased pressure to demonstrate action. Based on the assumption that visible change is always better, clients want reassurance that managers are responding to the environment. In reality, however, changes are generally measured rather than dramatic.

The real risk is not in responding to uncertainty but in overreacting to it. Long-term objectives should continue to anchor decision-making.

A market shaped by geopolitics and headlines

While geopolitical risk has been elevated for some time now, the persistence with which these developments have influenced market sentiment has become more pronounced.

Escalating tensions, uneven global growth and ongoing uncertainty around inflation and interest rates continue to underpin a cautious investment backdrop. Markets have become increasingly reactive to short-term headlines, often moving sharply on policy comments, diplomatic developments or even social media posts. It is no longer unusual to see meaningful market moves driven by a single statement or Truth Social post, only for sentiment to reverse days or sometimes hours later.

Risks are now understood as being more persistent and less predictable than in previous cycles, which has resulted in more careful portfolio risk management. This has typically taken the form of incremental adjustments rather than broad changes in strategic positioning. Managing risk in this environment is not about abandoning exposure to growth assets but about ensuring that such exposure is appropriate for the prevailing level of uncertainty.

Recent market behaviour has reinforced the lesson that volatility is not always reflective of fundamental change. Equity markets have experienced both sharp sell-offs and strong recoveries in relatively short periods, often driven by shifts in sentiment rather than meaningful changes in economic data. For long-term investors, this is critical. Reacting to each move as if it signals a structural shift can lead to unnecessary portfolio turnover and a focus on timing rather than outcomes.

In practice, the most appropriate response is often less about large shifts and more about maintaining balance and ensuring portfolios are neither overexposed to risk nor unnecessarily defensive.

Despite the current noise, the purpose of retirement portfolios remains unchanged:  deliver real returns over time, across multiple cycles and regimes. This requires a consistent focus on:

This does not mean ignoring the news and current market environment; it simply means responding in a way that is proportionate to the nature of the risk.

Regulation 28 growth portfolios and sensitivity to global conditions

Regulation 28 growth portfolios are well diversified across asset classes and geographies, but they still typically retain meaningful exposure to South African assets.

South African equities, bonds and the currency remain closely linked to global risk sentiment, commodity cycles and shifts in capital flows. Global developments thus have a direct and often immediate effect on the local portion of the portfolio, particularly through rand volatility and changes in risk appetite.

This can amplify short-term portfolio moves as global factors interact with domestic exposures, but it is important to distinguish this from a deterioration in the underlying fundamentals. A disciplined and forward-looking investment approach remains essential, ensuring that portfolios remain appropriately positioned without overreacting to short-term global noise.

Conclusion: Discipline in an environment of constant noise

The defining feature of the current investment landscape is not uncertainty itself, but the frequency with which markets react to it.

In such an environment, it is understandable that there is pressure to do more and to demonstrate visible change. But the most effective investment responses are often the least dramatic: careful adjustments, measured positioning and a continued focus on long-term objectives.

Because while markets may be increasingly driven by headlines, retirement outcomes are not.