One decision that made millions for Magnus Heystek’s clients

Brenthurst Wealth Management director Magnus Heystek’s decision to invest his clients’ money internationally over the last 15 years proved a brilliant strategy.

Heystek co-founded Brenthurst in 2004 with Brian Butchart and Sue Heystek and initially advised they advised their clients to invest in South African stocks.

During this period, there was a commodity boom, the rand strengthened, the property market produced excellent returns, and local stocks hit all-time highs.

However, their view changed after the global financial crisis and when President Jacob Zuma took office in South Africa.

As the devastation of the Zuma years quickly became evident and the commodity cycle turned, Heystek looked for better places to invest.

Brenthurst partnered with some of the biggest global fund managers, including Franklin Templeton, Fidelity, and Vanguard, to access international markets.

The company also established two offshore funds: the Brenthurst Global Balanced Fund and the Brenthurst Global Equity Fund.

This was an inspired choice. Through these initiatives, Brenthurst’s clients benefitted from the decade-long bull cycle in United States technology shares.

Despite the great returns Heystek provided for his clients, he was widely criticised for his negative investment outlook on South Africa.

He was outspoken about his view that South Africa was not conducive to long-term investment and safeguarding their clients’ wealth.

Many of his critics, who argued his pessimism about South Africa was unfounded, even gave him the nickname Doctor Doom.

Heystek was not deterred and continued to advise his clients to invest offshore, specifically in technology stocks.

He was proven right. International equity returns, especially those of the S&P 500 and Nasdaq 100, dwarfed those of the South African market.

In a recent Biznews Conference discussion, Heystek said he proudly wears the Doctor Doom nametag, and the data proved him right.

Heystek said he works for his clients, who expect the truth to ensure good investment returns. The truth about South Africa served them well.

JSE Top 40 versus S&P 500 and Nasdaq 100

If R100 had been invested in the JSE Top 40 fifteen years ago, it would have been worth R342 today.

The same R100 investment in the S&P 500 would be worth R1,253. If it was invested in the Nasdaq 100, it would be R2,698.

Over the past five years, the JSE Top 40 delivered a total return of 102%. The S&P 500 delivered 122%, and the Nasdaq 100 delivered a total return of 157% in rand terms.

The 5-year annualised return for the JSE Top 40 is 15.09%, while the S&P 500 delivered 17.34% and the Nasdaq 100 delivered 20.77%.

Over the past 10 years, the JSE Top 40 delivered a total return of 79%, the S&P 500 delivered 309%, and the Nasdaq 100 delivered a total return of 581% in rand terms.

The 10-year annualised return for the JSE Top 40 is 5.98%, while the S&P 500 delivered 15.13% and the Nasdaq 100 delivered 21.16%.

Over the past 15 years, the JSE Top 40 delivered a total return of 242%, the S&P 500 delivered 1,153%, and the Nasdaq 100 delivered a total return of 2,409% in rand terms.

The 15-year annualised return for the JSE Top 40 is 8.55%, while the S&P 500 delivered 18.36% and the Nasdaq 100 delivered 23.97%.