The Absa Inflation Beater Fund has returned 8.6% p.a. for the 5 years to 30 Sep-tember 2010, comfortably ahead of Headline CPI over this period of 6.7% p.a. The Fund has also returned 9.2% p.a. over the past 3 years.

Persistently high food and oil prices, along with inflation in the services sector, kept CPI out of the South African Reserve Bank's (SARB) target range for some time, but the stronger Rand and generally slowing economy have provided some relief on the inflation front. Inflation is now running well below 6%.

After its September meeting, where rates were cut by 50 basis points, in aggregate the Monetary Policy Committee of the South African Reserve Bank (SARB) has now cut interest rates by 600 basis points from their peak. The high indebted-ness of local consumers, coupled with the effects of the National Credit Act, job losses and the generally tough economic environment, will likely mean that despite rate cuts, personal consumption figures will remain depressed for some time.

Currency volatility has traditionally been a significant aspect for South African investors to consider, and the local currency has been exceptionally strong of late, particularly against the US Dollar. In September, the Rand strengthened from 7.28 to 6.95 against the Dollar, and from 11.25 against the Pound to 10.92, but weakened against the Euro from 9.33 to 9.47.

Equities advanced in September, with the All Share Index finishing the month al-most 9% higher. Of the major sectors, Oil and Gas gained 11.4%, Consumer Goods gained 11.2% and Consumer services 14.2%. On the negative side, Technology lost 0.8% in the month.

Over the last couple of years, there has been dramatic stimulus by central banks and governments worldwide, and markets now appear to be realizing that fiscal consolidation is needed. A big issue at present is the extent to which a real business recovery will be able to "carry the baton" once governmental stimulus programmes start to wane. Growth in many European countries will be very sluggish for the next number of years, and there is increasing concern that China's growth is slowing. Whilst profit growth by companies, which turned negative in many in-stances, has now "turned the corner", we continue to feel that the prospects for a sustained economic recovery at a "main street" level remain unclear.

The equity market as a whole is not in cheap territory. Whilst there are still pockets of value amongst some local stocks, they are fairly difficult to find. Nonetheless, some stocks are trading at parity (or at a discount) with the market at large, yet have higher earnings and dividend yields, strong business franchises and balance sheets, and better visibility of cash flow.

The Absa Inflation Beater Fund continues to be positioned so as to minimize the risk of capital loss, while targeting a return in excess of inflation.

The Absa Inflation Beater Fund has returned 8.7% p.a. for the 5 years to 30 June 2010, comfortably ahead of Headline CPI over this period of 6.8% p.a. The Fund has also returned 8.8% over the past year. Persistently high food and oil prices, along with inflation in the services sector, kept CPI out of the South African Reserve Bank's (SARB) target range for some time, but the collapse of the oil price from its peak and generally slowing economy have provided some relief on the inflation front. Inflation is now running below 6%. After its March meeting, where rates were cut by 50 basis points, in aggregate the Monetary Policy Committee of the South African Reserve Bank (SARB) has now cut interest rates by 550 basis points from their peak. The high indebtedness of local consumers, coupled with the effects of the National Credit Act, job losses and the generally tough economic environment, will likely mean that despite rate cuts, personal consumption figures will remain depressed for some time. Currency volatility has traditionally been a significant aspect for South African investors to consider, and the local currency has been strong of late. In June, the Rand was virtually unchanged against the Dollar, but weakened against the Pound from 11.12 to 11.44, and strengthened against the Euro from 9.43 to 9.37. Equities were hit once again in June, with the All Share Index finishing the month over 3% lower. Of the major sectors, Technology was down almost 8%, Telecommunication was down almost 6% and Industrials and Basic Materials were both down by over 4%. On the positive side, Consumer Goods was up by almost 2%. Over the last couple of years, there has been dramatic stimulus by central banks worldwide, and markets now appear to be realizing that fiscal consolidation is needed. A big issue at present is the extent to which a real business recovery will be able to "carry the baton" once governmental stimulus programmes start to wane. Growth in many European countries will be very sluggish for the next number of years, and there is increasing concern that China's growth may slow at some stage. Whilst profit growth by companies, which turned negative in many instances, has now "turned the corner", we continue to feel that the prospects for a sustained economic recovery at a "main street" level remain unclear. The equity market as a whole is not in cheap territory. Whilst there are still pockets of value amongst some local stocks, they are fairly difficult to find. Nonetheless, some stocks are trading at parity (or at a discount) with the market at large, yet have higher earnings and dividend yields, strong business franchises and balance sheets, and better visibility of cash flow.

The Absa Inflation Beater Fund has returned 9.2% p.a. for the 5 years to 28 February 2010, comfortably ahead of Headline CPI over this period of 6.8% p.a. The Fund has also returned 10.8% over the past year.

Persistently high food and oil prices, along with inflation in the services sector, kept CPI out of the South African Reserve Bank's (SARB) target range for some time, but the collapse of the oil price from its peak and generally slowing economy have provided some relief on the inflation front. Inflation is expected to dip below 6% in the short term.

The Monetary Policy Committee of the South African Reserve Bank (SARB) has now cut interest rates by 500 basis points from their peak. However, the high indebtedness of local consumers, coupled with the effects of the National Credit Act, job losses and the generally tough economic environment, will likely see personal consumption figures remain depressed for some time.

Currency volatility has traditionally been a significant aspect for South African investors to consider, and the local currency strengthened sharply in the prior year. In February the Rand weakened slightly against the Dollar - from 7.61 to 7.69; however it strengthened from 12.17 against the Pound to 11.73, and against the Euro from 10.56 to 10.48.

Equities were fairly flat in February after falling in January, with the All Share Index up by 0.4% in the month. Sectors that performed well included Consumer Services, which gained 6.6%, and Technology, which gained almost 10%. On the negative side, Oil & Gas lost 1.8% and Financials lost 1.1%.

Feelings of outright panic in the market, which characterized the depths of the credit crisis, have largely subsided. Nonetheless, we continue to be somewhat cautious on the prospects for a speedy economic recovery at a "main street" level. A big issue at present is the extent to which a real business recovery will be able to "carry the baton" once governmental stimulus programmes start to wane. Furthermore there is still some uncertainty surrounding the economic fundamentals within South Africa, and the equity market as a whole is now in expensive territory.

The equity market as a whole is fairly expensive. Whilst there are still pockets of value amongst some local stocks, they are becoming more and more difficult to find. Nonetheless, some stocks are trading at parity (or at a discount) with the market at large, yet have higher earnings and dividend yields, strong business franchises and balance sheets, and better visibility of cash flow.

The Absa Inflation Beater Fund continues to be positioned so as to minimize the risk of capital loss, while targeting a return in excess of inflation.

The Absa Inflation Beater Fund has returned 9.5% p.a. for the 5 years to 31 December 2009, comfortably ahead of Headline CPI over this period of 6.7%.

Persistently high food and oil prices, along with inflation in the services sector, kept CPI out of the South African Reserve Bank's (SARB) target range for some time, but the collapse of the oil price from its peak and generally slowing economy have provided some relief on the inflation front. Inflation has finally dipped below 6%.

The Monetary Policy Committee of the South African Reserve Bank (SARB) has now cut interest rates by 500 basis points from their peak. However, the high indebtedness of local consumers, coupled with the effects of the National Credit Act, job losses and the generally tough economic environment, will likely see personal consumption figures remain depressed for some time.

Currency volatility has traditionally been a significant aspect for South African investors to consider, and the local currency has strengthened sharply in the current year. The Rand was virtually unchanged against the Dollar in December, but it strengthened from 11.12 against the Euro to 10.50, and from 12.20 against the Pound to 11.87.

Equities had yet another up-month in December; the JSE All-Share Index has now not only rebounded sharply from its March lows, but ended calendar 2009 up by over 32%. Some of the noteworthy performances in the month were Platinum, which gained over 12.5%, and Health, which gained 9.7%. Underperforming sectors were Telecomms, which lost 0.8%, and Technology, which lost almost 1%.

Although profit growth by companies across sectors has slowed down, or even turned negative in some cases, there has been huge stimulus by central banks worldwide, and equity and commodity markets have been amongst the beneficiaries.

However, despite commodity price increases, we envisage that cost increases at mining companies, coupled with the strong rand, will likely eat into the margins of resource companies, and affect exporters. The level of final demand worldwide still seems to be fairly subdued, yet resource shares have been rampant since March.

Feelings of outright panic in the market, which characterized the depths of the credit crisis, appear to have disappeared. Nonetheless, we continue to be somewhat cautious on the prospects for a speedy economic recovery at a "main street" level. A big issue at present is the extent to which a real business recovery will be able to "carry the baton" once governmental stimulus programmes start to wane. Furthermore there is still some uncertainty surrounding the economic fundamentals within South Africa, and the equity market as a whole is now in expensive territory.