Your portfolio has a net exposure of 55% to the stockmarket, after hedging. Our hedging activities - which we consider prudent at this late stage of the bull market - continue to cost the fund money. It is like insurance which seems wasted if the house doesn't burn down. Whilst the Rand may strengthen in the short term, we believe it will be weaker than most people think over time. We advise Clients to increase their offshore exposure.

Even though the shares in your portfolio have outperformed the market index over the past three months, our regular hedging activities to protect the portfolio from large losses have reduced the returns. The absolute returns achieved remain at a high level.

We expect increased market volatility, and will continue to apply hedging to the portfolio.

In market conditions like these we are tempted to throw away our typical cautious approach - but we don't, because it is exactly in such times - when no one can think of a reason why the market should decline - that it does.