In general, 2022 represented a truly awful year for financial markets. In the USA equity market, for example, we witnessed the fourth worst annual performance of the S&P500 since WWII. The index lost 19.4% for the year - an aggregate loss of market capitalisation of USD 8.2 trillion.

Bond returns did not provide any reprieve; in fact, 10-year US treasuries had the worst annual performance since 1788! Globally, bond markets fell into a bear market
for the first time in 70 years. The much-heralded 60/40 stock/bond portfolio fell by 24%, the worst return for this mix since 1930. The biggest driver of this asset repricing was much stronger-than-expected inflation, which hit multi-decade highs and led central banks to embark on their most aggressive tightening cycle in a generation.

Investors also had to grapple with geopolitical turmoil. Russia’s invasion of Ukraine led to massive spikes in energy and food prices that particularly hit emerging market economies. This meant that commodities were among the few assets that ended the year in positive territory.

South African Investors witnessed some reprieve from the equity carnage relative to developed markets - the FTSE/JSE Capped SWIX returned 12.2% for the last quarter of the year to give investors a total return of 4.4% for 2022. Property, as measured by the SAPY, had a nice bounce of 19.3% in the quarter but the full-year performance disappointed at 0.5%.

South African bonds gained 5.6% over the last quarter, but the total return for 2022 amounted to a disappointing 4.2%. Inflationlinked bonds gained 1.9% and 4.2% for the quarter and the full year respectively, while cash measured by the STeFI, yielded 5.2% for the year (1.6% for the quarter).