Note: Given this fund’s objective, the manager recommends a minimum time horizon of four years for it to achieve its strategic objective.

The H4 Diversified Fund (‘the fund’) gained 0.4% in Q3-2019, and has delivered 6.2% over the past 12 months. In terms of the major asset classes to which the fund was exposed during the quarter, the local equity market (measured by the FTSE/JSE All Share Index) was down 4.6%, outperforming the FTSE/JSE Capped Top 40 Index (to which the fund is exposed) which lost 6.1%. Local bond prices (All Bond Index) gained 0.8% during this risk-off phase in global financial markets; while the local listed property market (FTSE/JSE SA Listed Property Index) ended down 4.4%. Global equities (MSCI All Country World Index in US dollars) ended the quarter flat, while global listed property (MSCI World REITs Index in US dollars) gained a stellar 6.2% on the back of a further decline in global bond yields amid concerns about the global economic growth outlook. During the quarter the US dollar strengthened 7.5% versus the rand; supporting the performance of global assets when measured in rand terms.

One of the stated primary objectives of the fund is to achieve capital appreciation over the medium term, at a risk level roughly half that of a pure equity investment. When measured over the past one and three year periods, the fund’s standard deviation (which is a generally accepted measure of risk/ volatility) was 7.1% over both periods. This compares reasonably well with the local equity market’s standard deviation of 12.8% over one year and 11.4% over three years, and global equity measured in rand’s standard deviation of 27.9% over one year and 22.4% over three years.

There were no marked asset allocation changes in the fund in recent months. Essentially, net inflows were used to marginally increase the fund’s SA enhanced cash and global- and domestic equity exposures. In terms of foreign currency exposure, the manager initiated a new zero cost currency hedge during August on a portion of the fund’s offshore exposure in order to protect it from possible marked rand strength. This protection is in place until mid- December 2019. At quarter-end, the fund held a diversified mix of assets which the manager deems appropriate for the current investment climate. Sizeable exposures included domestic bonds, domestic and global equity, domestic and US protected equity, global listed property, limited South African preference shares and domestic listed property.

The fund continues to adhere to its policy.

Note: Given this fund’s objective, the manager recommends a minimum time horizon of four years for it to achieve its strategic objective.

The H4 Diversified Fund (‘the fund’) was up 3.3% during Q2-2019, and has delivered 8.1% versus 8.7% for its SA CPI +4% p.a. benchmark over the past 12 months. In terms of the asset classes to which the fund was exposed during the quarter, the local equity market (measured by the FTSE/JSE All Share Index) delivered 3.9%, lagging the FTSE/JSE Capped Top 40 Index (to which the fund is exposed) which gained 4.9%. Local bond prices (All Bond Index) increased by 3.7%, while the local listed property market (FTSE/JSE SA Listed Property Index) ended up 4.5%. Global equities (MSCI All Country World Index in US dollars) gained 3.6%, while global listed property (MSCI World REITs Index in US dollars) ended the quarter up 2.2%. During the quarter, the rand strengthened 2.3% versus the US dollar; suppressing the performance of global assets when measured in rand terms.

One of the stated primary objectives of the fund is to achieve capital appreciation over the medium term, at a risk level roughly half that of a pure equity investment. When measured over the past one and three year periods, the fund’s standard deviation (which is a generally accepted measure of risk/volatility) was 8.1% and 7.2% respectively. This compares reasonably well with the local equity market’s standard deviation of 12.3% over one year and 11.4% over three years, and global equity measured in rand’s standard deviation of 30.4% over one year and 23.3% over three years.

In recent months the manager sold some of the fund’s SA preference shares following exceptional returns from this asset class over the past year, and also took profit in global real estate. Net inflows were allocated to a combination of SA and US protected equity, and SA enhanced cash. At quarter-end, the fund held a diversified mix of assets which the manager deems appropriate for the current investment climate. Sizeable exposures included domestic bonds, domestic and global equity, domestic and US protected equity, global listed property, limited South African preference shares and domestic listed property.

The fund continues to adhere to its policy.