MARKET UPDATE
Things to keep your eye on
As the festive season begins, we are programmed to be more optimistic about everything. The current rally could very well continue for some time. However, there are a few factors to bear in mind:
- The strength of GDP growth once governments' stimuli expire. A considerable proportion of the 2.8% (annualised) growth in the US for the third quarter was as a result of the "cash-for-clunkers" stimulus. Although this programme has ended, tax credit for first-time home buyers has been extended into 2010. A true test of recovery is whether or not the world's largest economy can stand on its own when the government eventually removes the proverbial crutches.
- The ability of consumers to spend. Consumer spending accounts for a considerable proportion of economic growth in most countries. As such, ever-increasing levels of unemployment (10% in the US, 24.5% in South Africa) are cause for concern. It remains to be seen whether consumer demand can strengthen sufficiently to absorb the impact of discontinued government stimuli.
- Sustainability of company profits. Staff reduction has contributed to the profitability of companies in the short term. The maintenance of company profits after this one-off cost saving is yet to be proven.
FAIRBAIRN CAPITAL'S COMMITMENT TO EXCELLENCE
Fairbairn Capital is Old Mutual's premier investment offering, presenting the discerning investor with a range of sophisticated local and global investment solutions.
As an investor, you can expect:
- Outstanding and responsive customer service - our target is to answer telephone calls within 30 seconds and respond to e-mails within 2 hours.
- Up-to-the-minute market and investment intelligence - our website (www.fairbairncapital.com) is regarded as amongst the best in the industry.
- Solutions tailored to your individual investment needs - all available through a single centre of investment excellence.
In order to ensure that we maintain our high service standards and continue to provide you with a premier investment experience, we have reviewed our fee structure and are now introducing a minimum level to the ongoing administration fees on the various products within Fairbairn Capital.
How will this affect you?
For Investment Frontiers products a R50 per month minimum level will apply to administration fees from the end of November 2009. For Galaxy products a R50 (excl VAT) per month minimum level will apply to fees from the end of March 2010. These minimum levels may increase in future years.
We feel it is necessary to emphasise that the ongoing administration fees for Galaxy and Investment Frontiers have not been increased in more than 10 years. For the same period inflation has resulted in prices nearly doubling. Still, this change has no effect on most Fairbairn Capital contracts, and will only impact those contracts with relatively small investment balances.