If you are investing in US dollar-denominated bonds with rands, then the perfect storm is a world where the US yields are increasing, while the rand strengthens. That basically sums up September, where US yields started at 1.44%, rose 0.40% to 1.84%, then settled to end at about 1.65%. Naturally, this rising yield environment has put a little pressure on the bond prices. At the same time, the rand strengthened by 0.50% against the dollar (at least that is where the accountants marked the portfolios).

With both bond prices and the currency working against us, we benefitted from our portfolio construction rules, allowing us to report a gain of 0.15% for the month.