​Dear client

A lot has happened since we last spoke. Of course, air strikes on Iran by the US and Israel, retaliatory attacks by Iran and the associated spike in energy prices have since clouded the outlook and weighed on financial markets globally, not to mention the humanitarian impact. 

The situation in the Middle East remains fluid, and the narrative might have shifted again by the time you read this. But for now, I wanted to update you on how the experts at Morningstar are assessing the situation and how the developments are affecting your investments. 

Oil prices break through $100/barrel

The attacks on Iran and its retaliation against Israel and other neighbouring countries have significantly affected energy markets. Oil prices were extremely volatile in March – whipsawing sharply higher and lower as investors digested the latest comments from US President Donald Trump – but Brent crude prices rose 38% in March to more than US$100 per barrel. Natural gas prices have risen more. 

These moves reflected concerns about current and potential disruption to energy supplies; specifically, damage to the Qatar Gas Fields and Iran’s ability to restrict traffic through the Strait of Hormuz – a narrow shipping lane out of the Gulf. Around 20% of global seaborne oil passes through the strait on its way to end markets. On the other side of the ledger, there are some important factors keeping a lid on rising energy prices. The US is more energy self-sufficient, China has extensive stockpiles and continued oil supply from Iran, and most importantly, the world is far less reliant on oil and gas than in prior energy shocks, because of efficiency gains and greater use of renewable energy to power electricity and transport.

So, there is much less scope this time around for a long-lasting, large rise in energy prices, such as those of 2022 and during the 1970s. 

Inflation and interest rates

Even so, we should all expect higher oil and gas prices to flow through to higher overall inflation rates, though by much less than we saw in the last energy crisis in 2022. Inflation expectations have been revised up, and investors are now pricing in fewer interest rate cuts this year across major economies.

A modest rise in inflation has changed the outlook for interest rates. Cuts to interest rates that were expected for global economies are in doubt, with central banks waiting to see how economies respond to the reduction in energy supply. The same is said for South Africa, which kept interest rates on hold this month as they assess the impact of higher oil prices coupled with a weaker rand. Again, compared with 2022, the situation is much more benign because back then, interest rates were extremely low globally, as governments were trying to stimulate economic activity levels following the pandemic.  

Investment markets

The change in the outlook for interest rates has pushed the price of bonds down. We suspect this may well be overdone as bond markets are now priced for interest rates to rise from what are already restrictive levels, currently above the rate of inflation. The US dollar has risen in value vs the rand and most other currencies, due partly to its safe haven status and energy self-sufficiency. 

Share prices have also moved lower around the world, with the exception of oil and gas companies. That said, while it can be unsettling watching markets move lower, in many cases, the weakness in March only chalked off the positive returns delivered in January and February. At the time of writing, some equity and bond markets were negatively impacted, including in South Africa, where the FTSE JSE All Share and FTSE/JSE All Bond were marginally negative on a calendar-year-to-date basis (to end March). 

Your portfolios  

The drop in equity and bond prices has pared back gains in your portfolio, so returns are close to flat for the year to date. There have been some offsets that have reduced the impact of the energy shock, such as currency gains from the rise in the value of the US dollar and rising share prices in energy companies. 

Your global portfolio continues to remain well diversified with investments such as inflation-linked bonds, energy and alternative strategies to provide support if inflation moves higher and more defensive assets that can withstand an economic slowdown, such as high-quality bonds and shares in companies that make essential goods and services, like healthcare.  

Despite recent market volatility in South Africa, portfolios have been supported by earlier profit-taking locally and offshore exposure, with a weaker rand helping to offset some global market weakness. 

The investment team at Morningstar have been managing portfolios in periods of shocks and uncertainty before, using stress tests and scenario analysis to manage risk and identify great buying opportunities. This general approach means they are assessing the possible implications of wide-ranging scenarios, from an imminent ceasefire at one end of the spectrum to a more prolonged period of conflict and even higher energy prices at the other. They consider what markets have already priced in, the likelihood of extreme scenarios materialising and, most importantly, how portfolios would likely behave in these environments.

They remain prepared to make adjustments, if necessary, but for now, no meaningful changes to portfolio positioning have been made. Importantly, the diversified nature of existing exposures is expected to prove resilient across a broad range of possible scenarios. And while emerging market equities were among the worst performers in March, they remain strong contributors to overall performance on a year-to-date basis, particularly as Morningstar had banked some profits in markets that had performed most strongly, such as Korea and Latin America, towards the end of February. Positioning in the energy sector – one of the few beneficiaries of the conflict – was also helpful.

Looking ahead

As I always say, the best thing to do during periods of uncertainty is to stay invested, as this is the best way to reach your financial goals. Swings in markets are a normal part of investing that occur routinely, even though they can be uncomfortable to live through. Anybody cashing out risks missing out when the market rebounds. 

We’re living through uncertain times; nobody really knows what’s coming next. But while the latest developments are unsettling for us all, please be assured that your finances are in safe hands. Remember, we’re partnered with some of the most seasoned investment professionals in the industry, who’ve kept people’s investments on track through many previous market crises. And while markets remain extremely unpredictable in the near term, we know that volatility normally creates fresh investment opportunities for skilled investors to exploit. I’m reassured that Morningstar’s 400-strong research team remain committed to doing exactly that, through good times and bad.

Please don’t hesitate to contact me if the news deteriorates further and you’re concerned about your investments, or if you have any questions on how they are being managed through this turbulent period. 

Kind regards, 

Kevin Yeh, CFP®
Director

Key points

• Spike in oil and gas prices
• World less driven by energy prices than in the past
• Focus on risk management

The outbreak of a wider war in the Middle East has reawakened fears of inflation, as energy prices have rocketed. This is a classic example of unpredictable and impactful events that continue to occur. In the short time since the start of the Iran war, equity and bonds have sold off while the US dollar and share prices rose for oil and gas companies.

Divorce is common in South Africa, reflecting changing societal attitudes towards marriage. According to Statistics South Africa, the average age of individuals going through a divorce is in the early-to-mid 40s—often a time when many are at the peak of building their wealth.

While divorce is an emotional process, it also has significant financial implications. Legal costs, division of assets, potential loss of income, and the need to establish separate households can all place considerable strain on finances. In many cases, the financial challenges don’t end with the divorce—they simply evolve into a new set of realities that require careful planning.

This is where financial advice becomes especially valuable. During this transition, it’s important to take a step back and understand the full financial picture. Key considerations often include how retirement savings are affected (particularly under South Africa’s two-pot system), ensuring all financial information is properly disclosed, and adjusting to a new lifestyle that aligns with available resources.

For many, divorce also presents the need to rebuild—whether that means restarting retirement planning or accelerating savings to make up for lost ground. Having a clear, structured plan can help bring a sense of control during an otherwise uncertain time.

Equally important is recognising that decisions made during emotionally charged periods can have long-term consequences. Taking a measured, forward-looking approach can help ensure that short-term pressures don’t derail long-term financial security.

Ultimately, while divorce marks the end of one chapter, it also provides an opportunity to reassess priorities and lay the foundation for a more secure financial future. With the right guidance and a holistic view of their finances, individuals can move forward with clarity and confidence.

Equity markets have weathered numerous periods of turbulence over the years — from the 2008 global financial crisis to the COVID‑19 pandemic, the brief market dip in April 2025 following newly announced US tariffs, and more recently the US‑Israel conflict with Iran. These events can understandably cause concern among investors who view volatility as a threat. However, uncertainty does not need to derail a well‑constructed investment strategy.

Market fluctuations are a normal part of investing, and for long‑term, value‑focused investors, they can present meaningful opportunities: buying quality assets at discounted prices and benefiting as they recover toward their intrinsic value.

Matching Your Investment Strategy to Your Risk Profile
As your financial adviser, my role is to guide you through uncertain times and help you stay on track to achieve your long‑term goals. A key part of this process is ensuring your investment mix reflects your personal risk tolerance and time horizon.

Below are three portfolio options designed to cater for different risk appetites:
Morningstar Capped All Seasons Portfolio
​Suitable for investors seeking long‑term capital growth with exposure to both local and global equity markets. This option is ideal for those comfortable with short‑term market ups and downs and who have an investment horizon of at least five years.

Morningstar Balanced Portfolio
Designed to deliver long‑term, equity‑like returns but with lower volatility than a pure equity strategy. This approach suits investors with a medium‑term horizon who want balanced exposure to equities, bonds, cash and other asset classes.

Morningstar Cautious Portfolio
With equity exposure kept at more moderate levels, this option is well‑suited to cautious investors focused on capital protection over periods of two years or longer, while still aiming to outpace inflation.

Multi‑asset portfolios such as the Balanced and Cautious options help smooth out the impact of equity market swings by investing across a diversified range of asset classes.

Staying Focused on the Long Term
Short‑term losses can be uncomfortable, even when they remain unrealised. However, it is important to view them within the context of broader market cycles. History shows that periods of volatility often create opportunity — not only for recovery, but for long‑term wealth building.

By maintaining a disciplined approach and ensuring your portfolio aligns with your risk tolerance, you can remain well‑positioned to benefit from the long‑term growth potential that markets continue to offer.

Kevin Yeh, CFP®
Director

What it means for your investments

Morningstar has implemented a series of strategic portfolio adjustments to ensure client portfolios remain well positioned for current market conditions while continuing to target strong long-term outcomes.

Key Portfolio Changes

1. Reduced reliance on South African equities
Morningstar has trimmed exposure to local equities, particularly where markets have become highly concentrated and strongly valued.

• This reduces dependence on a small group of dominant shares
• Improves diversification and lowers concentration risk 

2. Increased global exposure
Capital has been reallocated to global markets where valuations are more attractive.

• Greater access to global opportunities
• Enhanced diversification across regions and sectors
• Benefit from favourable currency conditions 

3. Taking profits in bonds and repositioning income strategies
After strong performance in SA government bonds, Morningstar has:

• Taken profits where valuations appear less compelling
• Introduced more flexible, actively managed income strategies
  These strategies can adapt to changing interest rates and credit conditions 

4. Blending active and passive investments more efficiently

• Added low-cost passive exposure (e.g. Satrix SWIX) for broad market access
• Retained active managers where they add the most value
• Overall result: improved cost efficiency without sacrificing return potential 

5. Broader manager diversification
New managers and funds have been introduced to:

• Reduce concentration risk
• Access different investment styles (including global value opportunities)
• Strengthen overall portfolio resilience 

What This Means for Investors

These changes are not a shift in strategy, but a refinement of positioning:

• Better diversification across asset classes and geographies
• Reduced risk from concentrated local exposures
• Improved balance between growth and stability
• Continued alignment with long-term investment objectives 

The Role of Morningstar in Managing Your Portfolio

One of the key benefits of these portfolios is that they are actively managed on your behalf.

Morningstar continuously:

• Monitors market conditions and adjusts portfolios proactively
• Identifies risks early (such as concentration or overvaluation)
• Reallocates capital to areas with better long-term return potential
• Blends active and passive strategies to optimise cost and performance
• Uses both global research and local expertise to inform decisions 

This disciplined, ongoing process ensures that your portfolio is not static—but actively evolving to improve outcomes over time.

For a more detailed breakdown of the changes and underlying fund adjustments:
👉 Download the full Morningstar report here:
Morningstar Portfolio Change Rationale – February 2026

Bottom Line

These updates reflect a proactive approach to managing risk and enhancing returns:

• Locking in gains where markets have run ahead
• Positioning for global opportunities
• Strengthening diversification and resilience

For investors, this reinforces the value of having a professionally managed portfolio that adapts as markets change, rather than trying to time these decisions individually.

As we approach the new tax year, understanding how your investments are taxed is more important than ever. Small changes in tax rules—and how you structure your portfolio—can have a meaningful impact on your long-term returns.

To help you stay informed and make better decisions, we’ve created a 2026 Tax Guide for Investors, summarising the key tax considerations that affect your wealth.

👉 Read the full guide here:
View the 2026 Tax Guide

Key Takeaways for Investors

1. Tax efficiency matters more than returns alone
It’s not just about how much your investments grow—but how much you keep after tax. Structuring your portfolio correctly can significantly improve net outcomes.

2. Understand how different investments are taxed
Different asset classes are taxed differently:

• Interest income is taxed at your marginal rate
• Dividends may attract dividend withholding tax
• Capital gains are taxed separately and often more favourably

Knowing this helps you choose the right mix for your situation.

3. Make full use of tax allowances and exemptions
There are annual thresholds and exemptions available to investors. If these are not fully utilised, you may be paying more tax than necessary.

4. Diversify by investing more offshore
Investors should also take note of the recent increase in the Single Discretionary Allowance (SDA) from R1 million to R2 million per calendar year, which significantly enhances the ability to invest offshore without requiring prior SARS tax clearance. This change provides greater flexibility to diversify portfolios internationally, streamline the investment process, and take advantage of global opportunities more efficiently within the higher allowance limit.

5. Align your investment strategy with your tax position
Your optimal strategy depends on your income level, tax bracket, and financial goals. A one-size-fits-all approach rarely works.

Why This Matters in 2026

Tax frameworks are regularly adjusted for inflation and policy changes, which can affect thresholds, deductions, and overall tax liability. Staying informed allows you to plan proactively rather than reactively. 

Take Action

If you’re unsure whether your current investment structure is tax-efficient, now is a good time to review.

📧 For a personalised consultation, contact: [email protected]

Make sure your investment strategy is not only growing your wealth, but also protecting it from unnecessary tax.