This month has been dominated by the continuation of the search for yield in the international investment arena. The key event for the month was the Rand strengthening by 4.40% in reaction to the continued foreign appetite for South African yield instruments. As expected, this significant Rand strength acted as a drag on the returns on your portfolio.

Against this, we have benefitted from a compression of credit spreads abroad as the bonds have traded to higher prices. Net, the impact of the 4.40% gain in the Rand was more meaningful, with the portfolio reporting a loss of 1.46% over the month.

We are seeing the current Rand levels as attractive for further reducing the currency hedges on the portfolio, though this will be done with moderation and caution. Your portfolio yield has been increased to 11.26% at the time of writing.

It is staggering how an event that once seemed so improbable has become reality. This month will go down in history as the month where Great Britain voted to leave the European Union. No one really knows what this means for the British or the world at large.

This shock event and the associated uncertainty will manifest in the financial markets with additional risk premium being demanded for all but the safest assets.

The repricing of financial assets has been swift, with the Rand initially trading to a low of 15.60 against the dollar. Some later recovery in the Rand has resulted in the markets closing at 15.05 against the dollar.

It is these extreme moves that have had significant impacts on your portfolio. Whilst we were defensively positioned, the impact still was negative.

The Anchor BCI Africa Flexible Income Fund’s objective is to maximize income for investors by investing in mainly African interest bearing securities.

We are delighted to have launched the Anchor BCI Africa Flexible Income Fund during the month. This fund is designed as a building block for investors seeking exposure to US Dollar denominated assets. The fund is credit cautious and seeks to earn the attractive income yields that are available in Africa, but with a strong aversion towards credit risk where possible.

We have constructed the portfolio to comprise largely government bonds. South African corporates that have issued bonds in Africa and also in African Development Bank (the only AAA rated entity on the continent). The bulk of the portfolio comprises duration assets. The portfolio's duration is 3.96 years, whilst 35.7% of the portfolio is exposed to Rand/Dollar movements with the rest of the dollar assets hedged back into rand at the moment.