The Absa Inflation Beater Fund has returned 8.2% p.a. for the 3 years to 30 September 2013, comfortably ahead of CPI over this period of 5.5% p.a. The Fund has also returned 8.4% p.a. over the past 5 years. In aggregate the Monetary Policy Committee of the South African Reserve Bank (SARB) has cut interest rates by 700 basis points since their peak. Local inflation has been running at 6.4% over the past year, which means it is now above the upper limit of the South African Reserve Bank's target range. The recent weakening in the Rand, the likelihood of above-inflation labour settlements in coming years, along with high administered price increases make it unlikely that there will be further cuts in short-term interest rates. Largely due to unrest in the mining sector and fears around policy stability in South Africa, the Rand weakened further in the 3rd quarter of 2013. The local currency moved from 9.91 against the dollar to 10.03, from 15.09 to 16.24 against the pound, and from 12.97 to 13.55 against the euro. As we have previously pointed out, history has shown that the Rand can both strengthen beyond consensus expectations, and also sell off strongly in a short space of time, particularly when sentiment of foreign investors towards South African financial assets turns negative. Over the past number of years, worldwide governments and central banks have created a generally positive backdrop for risk assets by means of accommodative monetary policy. This stimulation has come at a price, however - ratings agencies have previously downgraded sovereign debt of both the US and various European countries, and the debt ceiling for the US will once again have to be increased in the near future. The global economic recovery continues to be uneven at a "main street" level, and there is still doubt about the extent to which a real business recovery will be able to "carry the baton" once governmental stimulus programmes start to wane. There is an increasing awareness that interest rates are set to move higher at some stage in the developed world (particularly in the US). In many quarters, there are still concerns that intensity of commodity usage by China will slow in coming years. There are also various risks being faced by South African miners, which has impacted local commodity producers and created fears about local economic growth and stability. In terms of equity exposures, we continue to focus on companies that 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, whilst targeting a return in excess of inflation.

The Absa Inflation Beater Fund has returned 8.6% p.a. for the 3 years to 30 June 2013, comfortably ahead of CPI over this period of 5.2% p.a. The Fund has also returned 9.4% p.a. over the past 5 years. In aggregate the Monetary Policy Committee of the South African Reserve Bank (SARB) has cut interest rates by 700 basis points since their peak. Local inflation has been running at 5.5% over the past year, which means it is still below the upper limit of the South African Reserve Bank's target range. The recent weakening in the Rand and the likelihood of above-inflation labour settlements, along with high administered price increases make it unlikely that there will be further cuts in short-term interest rates. Largely because of fears of labour unrest in the mining sector, the Rand weakened further in the 2nd quarter of 2013. The local currency moved from 9.19 against the dollar to 9.91, from 13.99 to 15.09 against the pound, and from 11.80 to 12.97 against the euro. As we have previously pointed out, history has shown that the Rand can both strengthen beyond consensus expectations, and also sell off strongly in a short space of time, particularly when sentiment of foreign investors towards South African financial assets turns negative. Over the past number of years, worldwide governments and central banks have created a generally positive backdrop for risk assets by means of accommodative monetary policy. The global economic recovery continues to be uneven at a "main street" level, and job creation around the world continues to be sluggish. Ratings agencies have already downgraded sovereign debt of both the US and various European countries, and GDP growth for the Eurozone has continued to be subdued. There is still doubt about 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 an increasing awareness that interest rates are set to move higher at some stage in the developed world (particularly in the US). There has been major volatility in commodity markets of late, caused in part by fears that the intensity of commodity usage by China will slow. There are also various risks being faced by South African miners, which has impacted local commodity producers and created fears about local economic growth and stability. In terms of equity exposures, we continue to focus on companies that 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, whilst targeting a return in excess of inflation.

The Absa Inflation Beater Fund has returned 9.5% p.a. for the 3 years to 31 March 2013, comfortably ahead of CPI over this period of 5.2% p.a. The Fund has also returned 9.9% p.a. over the past 5 years. In aggregate the Monetary Policy Committee of the South African Reserve Bank (SARB) has cut interest rates by 700 basis points since their peak. Local inflation has been running at 5.8% over the past year, which means it is still below the upper limit of the South African Reserve Bank's target range (but steadily creeping upwards). The recent weakening in the Rand and the likelihood of above inflation wage settlements, along with high administered price increases make it unlikely that there will be further cuts in short-term interest rates. Largely because of the recent violent labour unrest in the mining and transport sectors, the Rand has weakened further in the 1st quarter of 2013. The local currency moved from 8.40 against the dollar to 9.19, from 13.96 to 13.99 against the pound, and from 11.15 to 11.80 against the euro. As we have previously pointed out, history has shown that the Rand can both strengthen beyond consensus expectations, and also sell off strongly in a short space of time, particularly when sentiment of foreign investors towards South African financial assets turns negative. Sustained cost-push pressures in South Africa, relating particularly to the higher oil price and wage-cost inflation, and as well as impacts from the weaker Rand, could still pose upside risks to inflation. Over the past number of years, worldwide governments and central banks have created a generally positive backdrop for risk assets by means of accommodative monetary policy. The global economic recovery continues to be uneven at a "main street" level, and job creation around the world continues to be lackluster. There is still doubt on the extent to which a real business recovery will be able to "carry the baton" once governmental stimulus programmes start to wane. However, global central banks and government are aware of this dynamic, which means that interest rates, particularly in the developed world, are likely to remain low for quite some time. Ratings agencies have now downgraded sovereign debt of both the US and various European countries, which shows how serious the fiscal situation of many countries has become. There has been a recent flare-up of fears about the stability of the Eurozone (centered around Cyprus) and GDP growth for the region has been subdued. In South Africa, the recent strikes in the mining and transport sectors have led to growing fears about local economic growth and stability. In terms of equity exposures, we continue to focus on companies that 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, whilst targeting a return in excess of inflation.

The Absa Inflation Beater Fund has returned 9.7% p.a. for the 3 years to 31 December 2012, comfortably ahead of CPI over this period of 5.1% p.a. The Fund has also returned 9.7% p.a. over the past 5 years. In aggregate the Monetary Policy Committee of the South African Reserve Bank (SARB) has cut interest rates by 700 basis points since their peak. Local inflation has been running at 5.7% over the past year, which means it is comfortably below the upper limit of the South African Reserve Bank's target range. However, the recent weakening in the Rand and the likelihood of above-inflation labour settlements, along with high administered price increases make it unlikely that there will be further cuts in short-term interest rates. Largely because of the recent violent labour unrest in the mining and transport sectors, the Rand has continued to be soft, and weakened slightly against other major currencies in the 4th quarter. The local currency moved from 8.35 against the dollar to 8.40, from 13.47 to 13.72 against the pound, and from 10.77 to 11.06 against the euro. As we have previously pointed out, history has shown that the Rand can both strengthen beyond consensus expectations, and also sell off strongly in a short space of time, particularly when sentiment of foreign investors towards South African financial assets turns negative. Sustained cost-push pressures in South Africa, relating particularly to the higher oil price and wage-cost inflation, and as well as impacts from the weaker Rand, could still pose upside risks to inflation. Over the last few years, there has been dramatic stimulus by central banks and governments worldwide, which provides a generally positive backdrop for risk assets. The global economic recovery continues to be uneven at a "main street" level, and the lack of job creation around the world is casting doubt on the extent to which a real business recovery will be able to "carry the baton" once governmental stimulus programmes start to wane. However, global central banks and government are aware of this dynamic, which means that interest rates, particularly in the developed world, are likely to remain low for quite some time. Ratings agencies have now downgraded sovereign debt of both the US and various European countries, which shows how serious the fiscal situation of many countries has become. Events in the Eurozone seem to be slightly more stable than they were a few months ago, but the situation remains precarious, and GDP growth for the Eurozone has been subdued. In South Africa, the recent strikes in the mining and transport sectors have led to growing fears about local economic growth and stability. In terms of equity exposures, we continue to focus on companies that 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, whilst targeting a return in excess of inflation.