COVID-19 NOTICE

Through this notice we want to assure all our investors that Apio will continue to adopt best practice measures to control the spread of the Covid-19 virus in our business. An internal Covid-19 committee has been established to ensure that Apio, its employees and other stakeholders comply with certain decisions and actions, based on credible information provided by local and international authorities. We have already taken measures to assist in the national and global effort to prevent the spread of the virus in our business, our employees’ homes and in their communities through a combined team effort with our employees and other stakeholders such as key suppliers.

COVID-19 AND YOUR INVESTMENTS

In terms of your investments, caution should be exercised in overreacting to this event.  Investment success is largely achieved by keeping calm, practising investment discipline and not losing sight of your long-term investment goals. Consider the information below. There is wisdom in the words of Warren Buffett who said: “The stock market is designed to transfer money from the impatient to the patient.”

On Friday the JSE corrected by 29.5% off its previous high of 27 Dec 2019 and the S&P 500 corrected by 18% off its previous high of 14 Feb 2020. A correction is any downward movement larger than 10%.

WORLD MARKETS

Source: Index Solutions 2020

SOUTH AFRICAN MARKETS

Source: Index Solutions 2020

Remain invested for the long term AND PARTICIPATE in the market recovery

The COVID-19 virus market event represents the kind of event that long-term investors constantly must deal with. Our investment strategy focusses on maximum diversification and maximum utility of our range of portfolio managers within products such as savings plans, investment portfolios, retirement and living annuities, to enable us to weather this kind of event. Whilst we will not be protected from the full impact of the event, we are positioned to fully participate in the expected recovery. During these events markets have historically shown to take up to 170 days on average to reach their low, and another 270 days to recover to their previous peak. Patience is the key to this time ahead.

Disinvestment during this time exposes one to the very real possibility of participating only in the decline, and not fully participating in the recovery. Remaining invested offers the chance of full recovery later. Disinvestment will double you risk simply because you may miss out on the expected recovery.

PARTICIPATE in the market recovery

Market corrections are normal and in fact occur more frequently than one realises. For instance, in more than half of all calendar years since 1980, the S&P 500 had suffered a correction of more than 10% in contrast to delivering a cumulative recovery of over 75%. The S&P 500 has therefore never yet failed to recover from a previous low.  The JSE, which is strongly coupled to US markets during downturns and corrections, fares no differently, with the exception that it is traditionally a more volatile, emerging market country index and for this reason we expect the movements to be slightly larger.

Maximum Diversification

Products linked to our range of portfolios are maximally diversified across all asset classes using only those that have proven maximum utility. Our asset classes include domestic cash, bonds and equity and property. We include foreign asset classes such as cash, equity, property and bonds. Our portfolios are therefore well positioned to participate in a market recovery and have provided our investors with more comfort during this downturn that those invested purely tracking various markets.

Stimulus

Most governments are expected to inject stimuli and lower interest rates to buoy up the market. The South African government may not be able to afford the full extent of the required stimuli, but we shall participate in international stimuli with respect to our offshore exposure, just as we have in the past.

Lessons

The world has reacted to the Corona virus as quickly as it has spread. It is during times such as these that human ingenuity comes to the fore. The world is implementing sound strategies, such as social distancing, medical support, drug research and containment measures. We urge you to apply good decision making in your own circles of influence, and wait the event out, keeping yourselves and your family healthy, whilst we look after your portfolios.

Together we are stronger.

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