We hear a lot about the need to invest offshore. And it is an easy sell, especially now, when the infrastructure around South Africa is crumbling. Live in South Africa, but your assets should be in hard currency jurisdictions.So it was interesting to see a Nedgroup Investments graphic that painted a rather different picture. Going back to 1925, South African equities have been the best-performing asset class. They have provided a 14.1% annualised return over the century, above the 13.2% from global equities.This might not sound like much. But compounded, it makes a huge difference. R1,000 in South African equities would have grown to R537m; the same amount invested in global equity to R248m. It’s worth noting that R1,000, or £500 as it was then, was a small fortune back in 1925, more than a year’s income for most professionals. Yet, the long-term case for equity investment is compelling.This doesn’t demonstrate any special skills from South African management. We have had our fair share of entrepreneurs, such as the Oppenheimers, the Ruperts and more recently the likes of Raymond Ackerman, Brian Joffe and Michiel le Roux, who kick-started the Capitec phenomenon.But a more important differentiator has been the high proportion of gold shares on the JSE, which protected our stock market during the global recessions of the 1970s and early 1980s. This was followed by the weak economy in the late apartheid sanctions era, though this affected the real economy much more severely than the JSE itself, which more than kept up with inflation.I am quite frustrated that against the conventional wisdom spouted by my former boss, Magnus Heystek, the recent returns from global investments have been underwhelming. The global balanced fund in which I have invested is subadvised by Sanlam Multimanager. It is a competent outfit, with returns acceptably close to the benchmark.But the global balanced fund is down 1.2% over six months, about a percentage point behind the benchmark. The return over five years is an annualised 6.9%. To put this in perspective, the hyper-dull low-risk Flexible Income Fund, in which I am also invested, has given a 9% annualised return over five years and a 3.7% over the past six months, while the global balanced fund is down.I am in what’s called “the decumulation” phase of my investment, where I need steady income with limited capital risk. My brother in London is quite envious that I can get 10%-11% annually tax-free in my living annuity from a portfolio of cash and low-duration bonds. Such a portfolio might yield 3%-4% in sterling. The capital in my living annuity is virtually unchanged from the day it started paying an income two years ago. My brother in London is quite envious that I can get 10%-11% annually tax-free in my living annuity from a portfolio of cash and low-duration bonds. For years the Association of Unit Trusts — now buried in the spider’s web of committees known as the Association for Savings & Investments South Africa (Asisa) — argued that investors should remain fully invested in the JSE. To invest in cash or bonds was simply to dilute returns. Listed property was a tiny sector until about 2000.But it had to change its tune when it became clear that there were benefits to diversification. There is the increasingly popular “smartie box”, which shows that in many years local, or even global, equities are not the best-performing asset class. Since Chris Stals, then governor of the South African Reserve Bank, began a serious campaign to reduce inflation, there has been a secular bull market in bonds, locally and globally.It is all very well to say investors should ride the dips in the market, but investors who are close to retirement cannot afford a sudden 40% dip in the market, as took place several times in my adult life, starting with the 1987 crash.The high equity fund remains a good vehicle for investment. This is the old-school regulation 28 balanced fund — call it 65% equities, 35% bonds. It’s the close cousin of the American 60/40 (equity to bond) fund. The balanced funds on average provided a 12.8% annualised return.The returns fall well below that in the other categories, though. The low-equity, or stable, category — 40% equity — provided a 10.6% return, so the R1,000 would have grown to R24m, almost exactly a tenth of an investment into global equities.The good news is that — assuming you invested in a tax-protected vehicle — all asset classes would have outperformed inflation. South African inflation, one of the worst in any sophisticated financial market globally, was 5.7%. Rand cash gave a 6.8% return, dollar cash 7.5%.The cliché that it’s time in the market, not timing the market, that matters is true enough. What you hear less often is how much capital is eroded by fees. I wonder how easy it will be for active managers to add value now that markets are more efficient. Index funds will inevitably grow, so the need for manager selection “advice” will diminish.It will be boring for financial journalists if there are no Peter Lynch-style stock pickers left. I am not sure who will be the counterparts of Simon Marais, John Biccard and Tony Gibson in the millennial generation of fund managers. They may well turn out to be quant fund managers such as Rademeyer Vermaak at Stanlib, who can’t talk about the impact of a new hotel on the Sun International share price or a new hypermarket on Pick n Pay. His secret sauce is in an opaque black box, which is a lot less fun than reading about how Peter Lynch discovered the Body Shop when he visited his local shopping mall in Marblehead, near Boston. But that’s the new world of investment.• Cranston, a financial journalist, is the author of ‘The Mavericks’, a new book about South African fund management.