“Greater rewards, lower costs”



In the early 1990s I started my career as an economist at one of SA’s leading banks, specifically working in their Agricultural Division evaluating and assessing business and investment risk.


In 1995 I joined a family-owned business in Cape Town, a financial advisory firm, Martin Eksteen Jordaan Wessels.


In 2004 I completed my MBA (cum laude) at the University of Stellenbosch Business School with a study project titled: Active Investing versus Passive Investing: An Evaluation of Investment Strategies. Among the main findings from the study:


“Index investing normally implies a diversified investment approach; however, in a South African context it is not necessarily valid due to market concentration where the mining and resources sector on its own make up 45% of the market. Active unit trust funds on the other, normally assume a much more diversified and equally weighted profile than the market on its own.


The study revealed that index investing indeed yielded volatile returns to investors, but, more importantly, over time index investing and active management alternated one another as the dominant investment strategy. Therefore, index investing at least in the South African context might not be a solution as a standalone strategy, but should rather be combined with active investing strategies.


The extent to which index investing (including enhanced index funds) should be used in an investment portfolio depends on one’s perceptions or expectations of active management’s performance. For example, from the study it was shown that when the performance contribution of active management was expected to be in the top quartile of investment returns that at least a 30% exposure to passive investing would be a prudent strategy.


Further, when different combinations of index investing with top quartile active fund performance were backtested over various rolling periods the results indicated that the allocation of index investing in the combined portfolio should increase the longer the investment horizon, in general confirming the belief that over the long run it is difficult for active managers to beat the market.”


In 2005 I started a website, The South African Index Investor, with its main objective to educate and foster investment knowledge. I thought it would be sensible to share my experience and knowledge with a potentially wider audience than just my personal client base. This website is a sincere attempt to “live the dream”.

Today I am a regular contributor to various financial publications in both English and Afrikaans media where often some of my latest research findings are published together with practical advice for everyday investors.