The Investec Managed Fund Namibia follows the Investec house-view asset allocation, within the constraints of pension fund prudential requirements, and maintains a minimum investment of 35% in Namibian assets in compliance with Regulation 28 of the Namibian Pension Funds Act.

The fund posted a return of 4.4% in the month, bringing the total return for 12 months to 36.3%. The good return over 12 months was due to strong market performance and good stock-picking.

The asset allocation that the fund currently maintains is as follows: 70% equities, 14% bonds and 16% money market across three regions with 36% in Namibia, 52% in SA and 12% offshore. The fund's international exposure is housed in the Investec Global Managed Fund, a balanced fund of which 69% is invested in equities.

Global equities, as measured by the MSCI Global index posted positive returns in US$-terms during the month and the quarter of 2.1% and 7.1% respectively. Emerging equity markets outperformed the developed markets quite substantially over the quarter - the MSCI Emerging Market Free Index achieved a total return of 12.1%, while the MSCI Developed Index delivered only 6.7%. Within the emerging market universe the SA market (MSCI SA) performed very well over the quarter with an 18% return in US$-terms. The fund is positioned to take advantage of this positive domestic economic and market trend.

The NAD and ZAR appreciated against the USD by 3% during the quarter, contributing to the good relative performance of the SA market. However, for the year as a whole it was virtually unchanged with a slight appreciation of 1.6%. These currency trends detracted slightly from the returns on the international component of the fund, however, in NAD-terms it still contributed positively to overall performance with a healthy 16.4% over the 12 months.
The South African equity market returned 13.3% over the quarter, with all of the industry groups gaining ground. The total return for the 12 months amounts to 57.4%. Within equities, the fund remains overweight the industrial and financial sectors, following a domestically oriented theme.

The SA bond market lost 0.2% over the month resulting in a return of 1.5% and 12.8% for the quarter and 12-month periods respectively. The fund's underweight position in bonds therefore proved to be a good call.

In Namibia the equity market performed much in line with the SA market with the Overall Index returning 13.4% for the quarter, while the NSX Local Index was up by 11.8%. In the Namibian equity context the fund is also overweight financial and industrial counters.

Against the current macroeconomic backdrop of a strong currency (the NAD is again hovering around N$6 to the US$), low interest rates, low inflation and robust consumption spending, we maintain a stance of being overweight industrials and financials.