Best-performing asset class in South Africa

Investing in equities has produced the best return of any asset class since 2000, producing over double the returns from bonds, and nearly four times that from cash.

This was revealed in AlexForbes’ Manager Watch Survey 2022, which compared the performance of major asset classes in South Africa from 2000 to the end of 2022. 

The data shows that, over the long term, all assets appreciated in value. However, some appreciated at a far greater rate than others. 

AlexForbes’ client investment specialist, Joannie Maas, said the data emphasised the importance of investing over the long term and the improbability of timing the market.

Declines in asset values, particularly in equities, tend to be short-term. This is shown in the graph below, with significant downturns in the value of equities circled. 

During stock price declines, people often turn to cash or money market investments, as they offer stability and safety and guarantee the initial investment amount. 

Maas said this is a mistake over the long term. Cash and money market investments are unlikely to beat inflation in the medium to long term, making it difficult for an investor to grow their capital at the rate required to reach a savings goal. 

Equities are the only asset class likely to significantly outperform inflation over the long term. The longer one invests in equities, the more likely one is to beat inflation. 

The opposite is true for bonds and cash – the longer the investment horizon, the less likely one is to beat inflation. 

Since 2000, equities have been the only asset that has been able to beat inflation and beat it significantly – far outstripping the CPI+5% benchmark in the graph below. 

R100 invested in the JSE All Share Index would have turned into R1,846 at the end of 2022, while CPI+5% would equal R1,035.

Bonds performed well compared to inflation, with a R100 investment almost matching CPI+5% with R906 at the end of 2022. 

R100 left in a normal savings account from 2000 to the end of 2022 would result in a paltry R552. 

The performance of these asset classes is compared below.