Quarterly Commentary
Global equity markets started the year on a positive note. The +5.7% return generated in January in US dollars was the third-best start to a year since the inception of the MSCI AC World Index in 1988.

This optimism quickly abated after the US released their January jobs report, which showed that wage inflation had increased by 2.9% year-on-year, the highest in 9 years. This led to the first negative month for global equity markets since October 2016, as the market started to speculate that the FEDs quantitative tightening process might be sped up. The magnitude of the panic was also evidenced by the 115% increase in the VIX index (which measures market volatility) to 37, a level which was last seen in 2015. The MSCI AC World Index pared most of the January gains, delivering a return of -4.16% during February in US Dollars.

In March, global risk assets continued to face headwinds as fears heightened over a potential global trade war following Trump's proposed 25% tariff on steel and aluminium imports and $50 billion tariff on Chinese goods imported into the US.

Technology companies, which make up close to 20% of the global index, added further negative pressure following the Facebook data scandal. The sector fell 3% as markets begin to price in the prospect of increased regulatory scrutiny which may hamper their growth prospects.

Global equity markets declined by 2.1% in March, to end the quarter down 0.8% in US Dollars.

In line with global markets, the JSE All Share index also had a difficult quarter, exacerbated by the strengthening Rand following the euphoria post Ramaphosa’s election victory. The Rand strengthened by 4.3% to end the quarter at R11.85 to the US Dollar and R16.62 to the Pound, negatively impacting the heavily-weighted Rand hedge shares in the index.

The negative sentiment on global technology shares also had an impact on the index through Naspers’ exposure to Tencent. Naspers dropped 16% during the quarter which weighed heavily on the JSE ALSI Index given the significant exposure in the index (i.e. approx. 20%).

Local Equities declined 6% during the quarter, in Rands.

The Ginsburg SCI Worldwide Flexible Fund generated a return of -3.47% in Rands over the quarter, outperforming the ASISA Worldwide Multi-Asset Flexible peer group (-5.39%), but slightly underperforming the strategic benchmark (-3.27%).

The appreciation of the currency continued to have a negative impact on the aggregate return over the quarter owing to the Fund's bias towards global equity markets. Notable strong performers during the quarter included Egerton and Contrarius, who still managed to generate positive returns in their base currencies (USD) despite the negative sentiment towards risk assets.

As we enter into the second quarter of 2018, we expect continued volatility in this uncertain political and economic climate. We remain confident that the Fund’s asset allocation and complementary blend of active managers provide the necessary diversified exposure to generate long-term value for our clients.

The Ginsburg SCI Worldwide Flexible Fund will change it's name to Selby SCI Worldwide Flexible Fund, effective from 01 March 2018