The Nedgroup Investments Global Balanced Feeder Fund will change it's name to Nedgroup Investments Global Flexible Feeder Fund, effective from 01 August 2013

Global economic momentum continued to improve as leading indicators in China and Europe stabilised and the US housing market rebounded from a low base. The Chinese improvement was mostly driven by domestic demand, which set into motion a positive inventory cycle that benefited Asian exports. Despite the better macro backdrop, the ongoing political drama over the US fiscal cliff created an environment of excessive uncertainty and cast a cloud over investor confidence. Businesses and households remained in a "wait and see mode" unwilling to commit to major spending decisions. The result has been a very hesitant economic recovery.

We made relatively few changes to the portfolio during the month, and the portfolio once again outperformed its composite benchmark as markets around the world were eagerly awaiting news on the US fiscal cliff. We maintained an AA- rating on the bond portfolio, continuing with our relatively aggressive preference for corporate credit over Treasuries. Within the equity book, we reduced Home Depot (Corporate Restructuring), which has posted exceptional performance, up almost 50% for 2012. While the company continues to benefit from signs of recovery in the US housing market, we were beginning to become concerned with the valuation following such strong performance. Generally, the equity performance was positive throughout the portfolio, once again beating the benchmark, although we did see a sharp fall in Saipem during the early part of the month following the departure of the CEO over corruption allegations. Given the risks in the stock we had sized it appropriately and it was only a small position and was more than offset by positive moves elsewhere.

Moving into 2013, the portfolio remains risk facing as real assets continue to look attractive relative to nominal bonds and the economic picture looks to be improving. However, we will be closely monitoring our longstanding overweight credit positioning, which has performed very well during 2012, but would certainly be vulnerable if we are to see a sharp back up in government bond yields.

The first quarter of 2013 began and ended with politics, though there were positives in-between. In the US, despite tax increases and an only partially resolved fiscal cliff, consumer spending was strong, as were labour and housing markets. UK government debt was downgraded, although the move was widely anticipated. Japan’s new government took aim at the strong yen, and nominated known ultra-loose monetary policy proponent Haruhiko Kuroda as central bank governor. However, Europe fared less well and the quarter closed with Cyprus on centre stage, its financial markets in free fall as Cypriot and EU leaders scrambled ineptly to a bailout solution.

Following on from a strong start to the year in terms of both absolute and relative performance, during March the Fund was broadly in line with the benchmark. Having participated in the very strong rally in corporate credit last year, we feel that - while credit will continue to outperform government bonds - future returns are no longer as attractive versus equities. We had selectively taken profits earlier in the year and increased the Fund’s overall equity weighting. This positioning remained unchanged during March.

Having had exceptionally low turnover last year, we made a number of changes to our equity portfolio despite keeping the headline asset allocation broadly unchanged. We took profits and sold United Overseas Bank and reduced our position in Prudential, which remains one of our larger holdings following its 24% rally so far this year. We sold our position in Microsoft, which had lagged following disappointing sales of both Windows 8 and its Surface tablet. In addition, Warren Buffet successfully bid for HJ Heinz (in which we had a sizable position), at a 20% premium. Kabel Deutschland was also the target of takeover speculation and moved up strongly. We initiated new positions in UTX (a leading US industrial conglomerate), Valero (US oil refiner) and Megafon (Russian Telcommunications), which is in an ideal position to benefit from increased data consumption due to rapid smartphone uptake in Russia.

We recently reduced the extent of our risk taking within the Fund, but the broad tenants of our strategy to be positioned in real assets remains. However, after such a strong move in markets so far this year, and the reminder that Europe is far from resolved, in the shorter term a degree of caution is warranted.

The fund changed sectors from Global--Multi Asset--High Equity to Global--Multi Asset--Flexible on 05 Feb 2013