The Fund achieved a return of 0.16% over the past 12 months, and 65.38% over the period since inception in mid-May 2013. This compares to the benchmark return of 11.2% and 44.5%, respectively. The Fund’s performance over the past 12 months can also be compared against the S&P 500 Index (in rand terms), up 4.2%, and the FTSE All World Index (in rand terms), up 2.5%.

During the quarter (1Q17) the existing holdings in Admiral and Royal Dutch Shell were increased to 3.7% and 4.3%, respectively. These are amongst the best-run businesses we have found in the UK and Europe - Admiral in car insurance in the UK, Europe and the US, and Shell, the oil major. Our holding in Walmart (2.0% at 31 December 2016) was sold during the quarter under review. Although the company has made strides in facing the major ecommerce threat from companies like Amazon, we believe that the retail market will continue to experience fierce competition in the years ahead.

Equity content at the end of March 2017 was 77.1%, up from 71.9% at the end of December 2016, with roughly 49% invested in the US, 24% in UK/Europe and 4.1% in emerging markets (EMs). Exposure to UK/Europe and EMs has risen from prior periods although the EM exposure has scope to increase further assuming we are able to identify attractive companies with durable qualities.

The rand portion of the portfolio remained steady at 1.7% of assets. The balance of the liquid assets is invested primarily in US dollar, and euro. As we have stated before, our intention is clearly to invest more of this cash in the equity market when opportunities arise.

The fund achieved a return of -5.7% over the past 12 months, and 61.9% over the period since inception in mid-May 2013. This is compared to the benchmark return of 10.9% and 39.3%, respectively. The fund’s performance over the past 12 months can also be compared against the S&P 500 Index (in rand terms), down 2.7%, and the FTSE All World Index (in rand), down 6.0%.

During the quarter the existing holding in Unilever was increased from 2.2% as at 30 September 2016 to 4.3% by the end of 2016. Various other investments were increased, largely prior to the date of the US presidential election. A small holding was also established in Rolls-Royce, the British jet-engine manufacturer. Equity content accordingly rose materially during the quarter from 60.7% at the end of September to 71.9% at the end of December 2016. Included in this figure is a 2.2% direct exposure to emerging market (EM) equities.

The rand portion of the portfolio declined further during the period to close the year at a 1.4% weighting. The only other notable change to the portfolio was an adjustment to the offshore liquid assets (26.7% of the Fund at year-end) with some diversification away from the US dollar to other currencies such as the euro.

Since inception the fund has housed almost all offshore liquid assets in US dollar, but with the US dollar now trading at multi-year highs relative to a basket of currencies and the proposed policy mix of the next US president, Donald Trump, being potentially dollar subversive over the long term, we decided to shift a minority portion of these assets to other currencies like the euro.

We note that at 31 December 2016, the US dollar still represented two-thirds of offshore cash. Our view is that Trump’s proposed policies are likely to be supportive of a stronger US dollar in the short term, but the opposite is more likely over the longer term. Our intention is clearly to invest more of this cash in the equity market when opportunities arise.