Mandate Limits10 Oct 2019
Maximum equity exposure of 60%; maximum offshore exposure of 30%; complies with pension fund investment regulations (Reg 28).
Foord Conservative comment - Sep 19 - Fund Manager Comment10 Oct 2019
- Global equities (+2.1% in US dollars) recovered August¡¦s losses, led higher by Japan (+4.0%) on solid earnings and Europe (+2.7%) on lower interest rates and a central bank stimulus surprise ¡V the US (+1.7%) also rose on the second Fed interest rate cut in two months, while emerging markets (+1.9%) also advanced.
- Developed market bond yields were mostly unchanged after expected interest rate cuts from the US Federal Reserve and European Central Bank ¡V US markets have priced in a further quarter-point interest rate cut in 2019 despite more hawkish Fed comments.
- The oil price (+0.6%) ended slightly higher after initially spiking following a missile strike on a Saudi refinery generating 5% of world supply ¡V the price fell back through month end despite escalating US/Iran tensions with output expected to resume fairly quickly.
- The FTSE/JSE Capped All Share Index (+0.3% in rands) rose as unexpectedly benign comments from Moodys pushed financials (+3.5%) higher ¡V industrials (-0.7%) fell and resources (-1.1%) were dragged lower by a sharply weaker gold mining (-14.9%) sector as precious metals fell on improved risk sentiment.
- The All Bond Index (+0.5%) was marginally up as the South African Reserve Bank kept interest rates steady ¡V the excessively steep yield curve provided a buying opportunity for options on longer dated government bonds given the rising probability of a shift down in long-term rates.
- Property (+0.3%) was up slightly with a strong performance contribution from core holding Capital & Counties (+15.6%) ¡V the fund has a low exposure to the sector with its investment in select niche property companies.
- The rand (+0.4% vs the US dollar) advanced strongly intra-month but weakened latterly ¡V SA recorded a surprisingly robust trade surplus in August on improved commodity exports.
- The fund is defensively constructed given the elevated global risk environment and weak South African economy ¡V good diversification and high levels of liquidity position the portfolio exceptionally well for the unfolding environment.