wukan wrote:Ericsson wrote:wukan wrote:Ericsson wrote:Britam says they want to diversify into property and real estate development,move away from equities and stock market.
CIC insurance is meanwhile investing in the equities and stock market to boost income and profits.
Who will emerge biggest gainer among the two?
The size of the portfolio is what matters. When the pool fund is small then investing in equities make sense but as the size of the fund increases equities bring wild swings. Real estate comes in to stabilize. Britam lost good fund managers and has become more conservative. Cic insurance has good fund managers for the size of the their portfolio. Who emerges the winner will depend on how the economy evolves. Unless you are doing active management (buy low sell high) equities as an asset class in Kenya have not done that well over the last 50 years in terms of capital appreciation, yields and liquidity when compared to real estate.
In terms of capital appreciation equities do better than real estate in the long run even in kenya ceteris paribas assuming economy is okay
Yes ideally in the long run equities should do well. But the market can remain irrational more than the insurance firm can remain solvent. Rufus Mwanyasi had done an article on the risk of buy and hold.
Quote:Consider averages of the investment period dating back to 1999. Over 17 years equity investors earned a yearly average of 3.27%. During this period, 5-year rolling returns showed no returns above 10% (commonly used benchmark return for long-term stock investments) except in the periods ending in 2005 and 2006. Even with these outperforming years, someone might argue as representing periods of irrational exuberance.10-year rolling returns had only the period ending in 2010 with a return above 10%.Think about that. Buy-and-hold fell flat on its face. Obviously, no investor would want such low returns.
That Rufus Mwanyasi article seems vague.Can he give us a sample of a listed equity he used.
If in my case I take an example of a company that was listed in 1999;KCB or Stanchart or EABL or NMG the capital appreciation/mkt cap has been more than 100 times.
Give me a property that has that appreciation.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle