Note: Given this fund’s objective, the manager recommends a minimum time horizon of two years for it to achieve its strategic objective. The H4 Stable Fund (‘the fund’) delivered 0.8% in Q4-2019, and has delivered 11.4% versus 6.2% for its SA CPI +2% p.a. benchmark over the past year. 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) gained 4.6%, slightly behind the FTSE/JSE Capped Top 40 Index (to which the fund is exposed) which was up 5.2%. Local bond prices (All Bond Index) ended the quarter up 1.7% despite the Moody’s rating agency’s announcement of a downgrade in the country’s rating outlook from Stable to Negative; while the local listed property market (FTSE/JSE SA Listed Property Index) gained 0.6%. Global equities (MSCI All Country World Index in US dollars) delivered 9% during Q4-2019’s renewed risk-on phase; while global listed property (MSCI World REITs Index in US dollars) was flat. During the quarter the rand strengthened 8.4% versus the US dollar; detracting significantly from the performance of global assets when measured in rand terms.

There were no marked asset allocation changes in the fund during the quarter. The manager essentially used net inflows to increase the fund’s offshore exposure and further trimmed domestic preference shares into strength. 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 was 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 asset class exposures included domestic money market and enhanced cash, local and (limited) global government bonds, domestic and global equity, domestic and US protected equity, South African preference shares, as well as limited exposure to global and domestic listed property. The fund continues to adhere to its policy.