Markets do not move on numbers; they move on narratives. That’s a line often heard, but in a world flooded with large volumes of data, models, and market noise, what still shapes investor behaviour is the story that they believe about the future. Meet the Managers 2025, which is known as the TED Talk of the investment industry, again provided a forum for asset managers across SA and beyond to take a step back and reflect, challenge assumptions, and share how they are adapting their strategies to the ever-changing market landscape.
Falling interest rates create new alignments
Globally, 2025 started with a tentative recovery, diverging central bank paths, and renewed geopolitical risks. While inflation continues to moderate across most developed markets, the pace and sequencing of monetary easing have become region-specific. The US Federal Reserve has begun cutting rates cautiously due to sticky services inflation, while the European Central Bank has moved more decisively due to declining goods and services inflation. In contrast, the Bank of Japan’s slow pivot away from ultra-loose policy has added to the complexity of global capital flows. From an emerging market perspective, most Emerging Market (EM) central banks, like the South African Reserve Bank (SARB) and People’s Bank of China have started cutting interest rates.
In this environment, investment themes have increasingly gravitated toward investor resilience and selective growth exposure. EMs are attracting selective interest, especially in countries with improving balance of payments dynamics and reform momentum. However, asset managers are highly sensitive to capital flow volatility, EM currency fragility and political event risk, which continues to influence allocation sizes and time horizons.
In the first half of 2025, SA’s investment narrative was shaped by a fragile but improving macroeconomic environment. As inflation has moved to the SARB’s target band of 3-6%, and the first-interest rate cuts are being implemented in nearly two years, asset managers appear to be cautiously optimistic about this cyclical recovery. Political stability under the newly formed Government of National Unity (GNU) has buoyed sentiment, particularly as structural reforms are beginning to deliver tangible results in infrastructure and logistics. Surging prices of gold and platinum have boosted both company earnings and equity performance, drawing strong interest from natural resource-focused funds. Meanwhile, early signs of recovery in household spending and vehicle sales are creating selective opportunities in domestic consumption and financial shares.
Despite these tailwinds, investor flows are mixed. Foreign direct investment is rising but equity and bond outflows persist, reflecting lingering concerns about global protectionism, local execution risks and financial constraints.
The search for under-priced assets
It is generally accepted that markets reflect a point of efficiency. In more developed markets, efficiency is defined as between semi-strong and strong, which means all public and price information is already reflected in asset prices. For example, a tweet from an influential key person travels within minutes, unnerving investor sentiment almost immediately. In developing markets, efficiency is defined as between weak and semi-strong. As a result, no investor should be able to consistently achieve above-average market returns in developed markets, since all opportunities have already been priced in. However, if markets are not fully efficient, then opportunities might exist in underappreciated sectors or regions.
Fixed income managers argue that fixed income investments provide more predictable returns at risks that are lower than or equivalent to investing in equity. They are able to use strategies that reduce overall portfolio risk, such as cash plus futures or barbell strategy approaches.
The shift towards monetary policy easing has reopened a window for capital appreciation across the yield curve. In SA, the appeal is even more pronounced because inflation is easing, real yields remain particularly attractive, and the SARB has begun its interest rate cutting cycle. These dynamics, coupled with improving fiscal signals and low offshore positioning, have set the stage for strong performance in local government and corporate debt. On an annualised basis, SA bonds at current levels provide higher reward and greater certainty than the average return from equities, while cash has been expensive in general. Credit exposure should be focused on high-quality issuers with deep liquidity, well in line with the current market environment, provided that this environment persists.
Global risks have largely driven erratic investor behaviour, especially in traditional asset classes, which are where most investors hold investments. More attention should be given to private markets. Private markets in general exhibit greater growth and uncorrelated risk. Although they are costly to access, this can be improved by taking them out of silos, creating tactical defences and investing in businesses that demonstrate potential for sustainable growth, so that the portfolio is positioned for circular economic tilts.
Managers recalibrate in this new market phase
Diversification can also be achieved in different ways. Some of the managers who spoke at the Meet the Manager 2025 event were strongly in favour of thematic investment. Building portfolios according to themes requires a specific craft. One way is to use a core-satellite approach, where the core is traditional asset classes and the satellites are thematic funds and ETFs. Adopting this approach means that managers can tactically shift in and out of themes.
While global and local landscapes may appear fragmented, it appears that asset managers are recalibrating, not only their portfolios but how opportunity is redefined in this new phase of the market.
Disclaimer
Glacier Financial Solutions (Pty) Ltd is a Licensed Discretionary Financial Services Provider, trading as Glacier Invest FSP 770.
Sanlam Multi Manager International (Pty) Ltd FSP 845 is a Licensed Discretionary Financial Services Provider, acting as a Juristic Representative under Glacier Invest.
As Juristic Representative of Glacier Invest, Sanlam Multi Manager International (Pty) Ltd manages the retail investment solutions offered by Glacier Invest.
