SA equities corrected by 2.6% in September. A sharp drop in the rand during the month extended this pullback to 9.1% in US dollars. The resource sector was particularly hard hit; being down by 6.3%. Our holdings in Naspers (-7.8%) and Richemont (-7.6%) detracted from performance, while our holdings in AVI (+14.6%), Aspen (+10.1%) and SAB (+7.4%) aided our performance.

The prospect of an end to quantitative easing by the Fed, slowing Chinese growth data, and growing geopolitical concerns around Russia weighed heavily on sentiment placing global markets under pressure. Quantitative easing is set to end this month with focus moving to the timing of a potential Fed rate hike. FOMC commentary however indicated that there will be a 'considered period' between the end of the QE and the beginning of the rate hiking cycle.

In South Africa, rates were kept on hold during the month, as Gill Marcus also announced that she would be stepping down as governor of the Reserve Bank. A wide current account deficit of 6.2% added to the pressure on the rand. This widening is mostly attributed to the impact of the strikes in the platinum sector compounded by weakening domestic demand.

Richemont reported their five-month sales number during the month which was below market expectations. Sales in Asia were particularly disappointing being flat in constant currency terms. This was mainly due to softness in the key Hong Kong market. Consumer confidence seems to have weakened in China due to a slowing economy and a housing market under pressure. A clamp-down on 'gifting' has also affected sales. Despite the short term trading difficulties, Richemont remains one of our core holdings. They have a high quality brand portfolio, superior pricing power, a strong balance sheet and strong long-term growth prospects which demand a premium to the market. For a South African investor, it also offers the added benefit of being a 100% rand hedge.

Fragile global investor sentiment, geopolitical tensions and fears of policy normalisation continues to weigh on markets. Within this environment a cautious approach is advocated, with a focus on stock selection.

The Nedgroup Investments Rainmaker Fund currently trades on a forward PE ratio of 14 times and a dividend yield of 4%.

Despite economic growth downgrades, credit rating downgrades, and continued concerns surrounding the current account deficit, the South African equity market continued its inexorable march upwards in June with the FTSE/JSE All Share (ALSI) appreciating by 2.8%. The conditions that delivered strong returns from the major equity markets in 2013 (easy money and a search for yield) persist in 2014.

SA interest rate sensitive sectors such as banks and retailers have rallied strongly since February 2014. While our holdings in Firstrand and Nedbank enhanced the Nedgroup Investments Rainmaker Fund's performance, our underweight retail stance has detracted. From a macro perspective, activity in the domestic economy remains lackluster and the consumer faces several headwinds over the medium term given higher inflation, higher interest rates and slower real wage growth. We thus retain our underweight position, with the Fund's only meaningful retail exposure via Woolworths.

Woolworths recently announced the proposed acquisition of David Jones (an Australian department store business). Our initial skepticism around the strategic rationale and implied valuation of this deal has been allayed by our recent site visit to Australia. If the transaction is approved, the effect would increase the significance of clothing and provide greater geographic diversification to Woolworths. In addition, management has signaled they will deliver sizable synergies - given their track record we believe the deal benefits could be higher and come through in a shorter timeframe.

With equity markets grinding higher (many at all-time highs) and volatility at all-time lows there is growing concern of an imminent and sizeable market correction. While we do not attempt to 'time' the market we have taken advantage of this by hedging a part of the Fund for almost no cost. Should volatility return or the market experience a substantial correction, the fund will enjoy some protection.

The Nedgroup Investments Rainmaker Fund currently trades on a forward rolling Price/Earnings (P/E) ratio of 13.5x and a dividend yield of 3.5%. June 2014

SA equities (especially banks) have powered ahead over recent weeks. For the month of March, the FTSE/JSE All Share (ALSI) gained 1.8% on a total return basis. Financials posted a return of +6.3%, with Industrials (+1.3%) and Resources (-0.1%) lagging.
As a consequence, our holdings in Nedbank (+8.6%) and Firstrand (+7.9%) enhanced the Fund's performance. Our select retail exposure via Woolworths (+16.5%) ensured our consumer exposure also made a strong positive contribution.

Our holding in Naspers detracted from performance in March. The Naspers (-10.6%) share price fell significantly due to a sell-off in China's Tencent Holdings (Naspers owns 34% of Tencent). There is growing concern that valuations in the internet industry are overstretched. In addition, China's central bank ordered a halt to certain mobile payments used by internet companies, amid concern over payment security and verification procedures. We remain positive about the long term prospects for both Tencent and Naspers. Further weakness could therefore provide a buying opportunity.

For the first quarter of 2014, the ALSI is up 4.3%. The Oil & Gas Sector (+14.6%) has performed particularly well and thus our holding in Sasol has been a solid contributor to returns so far this year. David Constable (CEO) appears to be ushering in a new era for Sasol, long burdened by bureaucracy and the constraints of corporate and operating inefficiencies. His transparent drive to stabilise plant performance, re-focus capital spending and human initiative, and drive on-time, on-budget delivery of new growth projects has been a refreshing change for the market. Off a high base, Sasol is poised to post record earnings and cash flows in the year to June, and the shares remain attractively valued relative to the market and on a dividend yield basis.

Looking ahead, we continue to apply our tried and tested investment approach and remain confident of our ability to deliver healthy investment performance.
The Nedgroup Investments Rainmaker Fund currently trades on a forward rolling Price/Earnings (P/E) ratio of 13.5x and a dividend yield of 3.1%.

December brought 2013 to a close with a strong bull market, the FTSE/JSE ALSI gained +3% over the month. Media (+12.6%) and Household Goods (+11.7%) were the best performing equity sectors. Gold mining (-11.4%) and Construction (-4.8%) posted the worst returns over the month.

The FTSE/JSE ALSI gained +21.4% for the year, reaching an all-time high on 31 December 2013. The 19.2% fall in the rand against the US dollar over the last 12 months was a significant factor behind the strong gains. The market was led by Industrials (+35%) and Financials (+19.1%), with Resources (+1.4%) lagging. The dispersion in sector performance was high, with Media (+101.7%) and Paper (+76.1%) significantly outperforming Gold Mining (-54.6%) and Industrial Metals (-13.1%). As a consequence our holdings in Mondi (+104%) and Naspers (+102.6%) enhanced the Fund's performance, however our holdings in AngloGold (-52.9%) and Anglo American (-8.9%) detracted.

Going into the New Year, tapering and the impact it will have on global equity markets remains a key theme. In December, the US Federal Reserve has taken the first step with the decision to taper its monthly asset buying from $85bn to $75bn. The taper comes 15 months after the Fed began its unprecedented third round of asset purchases (QE3) in September 2012. The goal of QE3 was to drive down long-term interest rates and stimulate the economy. Recent economic indicators would suggest that this has been achieved, with the third-quarter US GDP growth being revised up to +4.1%. Pleasingly, the pick-up in activity is not limited to the US. For the first time since the end of the 2008 recession, the global economy should show some synchronized growth, especially among the four important economic regions: the US, Europe, China and Japan.

In South Africa, the outlook for monetary policy continues to be dominated by the counterbalancing forces of low growth and inflation. Concerns about the impact of currency weakness and its associated pass-through effects on inflation may force the SARB to tighten policy much earlier than expected.

Heading into 2014, we are mindful that the equity market is certainly not cheap after the past year's gains. However the conditions that have driven prices higher are likely to persist in the year ahead. Our cautious long term investment strategy will continue to be followed and we look forward to 2014 with guarded optimism. Notwithstanding their strong contributions delivered in 2013 we retain large positions in Sasol, Naspers, BAT and Mondi and look forward to all four counters continuing to make positive contributions to relative performance in the year ahead. We have select exposure to Resources, and remain cautious of the fractious labour environment in South Africa and anticipate that 2014 (an election year) will be another period of disruption for such labour intensive companies.

The Nedgroup Investments Rainmaker Fund currently trades on a forward rolling Price/Earnings (P/E) ratio of 13.3x and a dividend yield of 3.1%. December 2013

September was characterised by a broad based bull market with the FTSE JSE All Share Index rising 5.1%. Consumer Services (+8.8%), Telecommunication (+6.4%) and Financials (+6.3%) were the best performing sectors. As a consequence, our holdings in Steinhoff (+21.8%), Firstrand (+11.4%) and Naspers (+9.9%) aided our performance. Our holdings in Sasol (-0.6%), BHP Billiton (0.0%) and Mediclinic (+0.8%) detracted from overall performance.

The combination of rising growth and accommodative monetary policy continues to be supportive of risk assets (i.e. equities). Economic activity has been gaining momentum in the largest economies of the world - the US, the Eurozone, China and Japan. In addition, the Fed recently decided to postpone tapering its QE programs, thus maintaining their accommodative monetary stance.

Conditions in emerging markets are mostly difficult. Activity levels in the South African economy remain lackluster, as evidenced by weak consumer confidence numbers and a falling Purchasing Managers Index (PMI).

Consumer confidence for the third quarter of 2013 fell sharply to -8 points from +1 in the second quarter - this marks the worst reading since 2003. In September, the Kagiso Manufacturing PMI collapsed to 49.1 from the 56.5 reading in August. During the month, the Reserve Bank's monetary policy committee indicated that domestic growth will remain below potential over the coming two years. Balancing weak growth prospects and rising inflation will remain a challenge for the Reserve Bank. As a consequence, the repo rate was left unchanged.

A strengthening world economy and a stabilising Chinese economy are clear positives. However, the Fed's decision to maintain the current pace of asset purchases is also an acknowledgement that the near-term economic outlook remains unclear. While it will be a long time before monetary policy is normalised, it is inevitable. Investors should be mindful about this process and its potential consequences.

As 2013 heads into its final quarter we are comfortable with the balance in the Nedgroup Investments Rainmaker Fund and the relative value of our share selections. The Fund continues to comprise reasonably priced and well run businesses that our research shows will be able to grow their profits and dividends in uncertain times.

The Nedgroup Investments Rainmaker Fund currently trades on a forward rolling Price/Earnings (P/E) ratio of 13.9x and a dividend yield of 3.1%.