Investment outcomes in 2025 were driven less by broad market exposure and more by active regional positioning, currency dynamics and disciplined diversification. Global equity markets displayed marked divergence across regions. European equities were among the stronger performers, supported by relative economic stability, improving earnings momentum and the benefit of a weaker US dollar.

This environment rewarded investors who reduced concentrated US exposure and diversified into attractively valued developed markets. US large-cap equities generated positive but more moderate returns. While corporate earnings remained resilient, fiscal uncertainty and easing growth expectations limited valuation expansion, resulting in steady but less compelling performance relative to other regions.

Emerging markets delivered some of the strongest absolute returns of the year, led by China and Brazil. These markets benefitted from improving domestic fundamentals, reform momentum and supportive commodity trends, with a softer US dollar enhancing equity and currency returns. However, dispersion remained elevated, reinforcing the importance of selective country allocation rather than broad exposure. Fixed income performance was mixed. Developed market government bonds were challenged by yield volatility, limiting total returns. Credit markets were more supportive, with high-yield bonds delivering attractive income as default risks remained contained.

Locally, South African assets performed strongly. Equities benefitted from improved sentiment, while domestic bonds were standout performers amid moderating inflation, a stable policy outlook and better-than-expected fiscal outcomes. Overall, 2025 highlighted the value of diversification, income and active asset allocation in delivering resilient portfolio outcomes.

The portfolio delivered a positive return for December, outperforming its peer group. Performance was underpinned by the fund’s overweight positioning in local asset classes, which were among the strongest contributors over the period.