In early October the JSE All Share Index (ALSI) posted a new all time high of 12 115, but failed to hold these levels, closing at 11 655, slightly down for the month. The total return (-0.6%) disguises a sharply bifurcated market. Domestic stocks performed strongly while the Large Cap Resources weighed down the overall market return. The split is evident when considering the returns of the size and sector indices. From a size perspective we see Large Caps down 1.8%, Mid Caps up 7.3% and Small Caps up 8.4%. Looking at the major sectors, Industrials (+6.3%) had a great month, Financials (+2.7%) a reasonable month, but Resources (-8.7%) faltered. This has been the general trend year-to-date, and the major driver behind the relative Resource weakness has been a stubbornly strong currency. In October we witnessed a renewed bout of rand strength. From a starting level of R6.44/$, the rand first sold off slightly before appreciating steadily to flirt with the R6/$ level by month end.
The funds tracking error is 1.4% annualised, on a rolling 36-month basis. The correlation coefficient over the same period is 1.00. The fund makes use of equities, index futures and money market instruments in tracking the ALSI.

The fund is a clear choice for investors who want to make use of an index fund, as it invests in the broader all share, giving exposure to mid caps as well as large caps. And it has outperformed its direct competitors from Gryphon and Stanlib as it has used its 1,4% tracking error to tweak returns at the margin. Annual fee is just 0,35% and there's no initial fee.

Financial Mail - 19 November 2004

It has been a bumper third quarter! The JSE All Share Index (ALSI) gained 17.4%, and eclipsed its mid 2002 peak of 11 561 to close out the quarter at a new all time high of 11 761. Resources (+23.7%) lead the third quarter recovery. Financials (+16.5%) and Industrials (+11.4%) followed through with solid gains. With market performance driven by the Large Cap Resources, it's no surprise that Large Caps (+18.2%) outpaced Mid (+12.4%) and Small Caps (+12.9%).

Year-to-date the ALSI is now up 16%. Resources (+6.7%) have lagged; their third quarter gains failing to offset their dismal first half performance. Financials (+27.5%) and Industrials (+20.2%) have posted very respectable numbers. An analysis of global equity returns reveals that year-to-date, investing locally yielded favourable results.

In US Dollar terms, MSCI SA (+16.7%) outperformed the UK's FTSE (+7.73%), MSCI Europe (+4.69), the US's S&P 500 (+1.51%) and Japan's TOPIX (+3.65%).

The Investec Index Fund's tracking error is 1.4% annualised, on a rolling 36-month basis. The correlation coefficient over the same period is 1.00. The Fund makes use of equities, index futures and money market instruments in tracking the ALSI.

This is a tracker fund, following the JSE Alsi index, with a tracking error of 1,4% annualised. Its performance is of course going to be correlated with the index and there is no risk of a fund manager underperforming the Alsi. During the past three months, this was undoubtedly the right place to be, rather than attempting to outperform the Alsi, as demonstrated by the outstanding short-term performance.

After topping out at just below 11 200 in early March, the JSE All Share Index (ALSI) drifted lower through the second quarter to close at 10 108. The 4.7% second quarter decline was driven by poor performance from the Resources Sector (-13.6%). Financials and Industrials managed to post gains of 2.9% and 1.0% respectively. Resources suffered on two fronts; firstly US Dollar commodity prices declined, and secondly the Rand strengthened slightly.

In April the Chinese authorities announced further steps to slow the rampant growth of their economy. As a major consumer of global commodities, the anticipated reduction in demand had an immediate impact on prices. Over the quarter, platinum has lost around 130$/oz from over $930/oz in early April to 780$/oz by quarter end. Similarly, gold dropped from $420/oz to $375/oz mid May before recovering to $395/oz by quarter end. Internationally, as in the first quarter, markets have moved essentially sideways.

The funds tracking error is 1.4% annualised, on a rolling 36-month basis. The correlation coefficient over the same period is 1.00. The fund makes use of equities, index futures and money market instruments in tracking the ALSI.

The monthly performance numbers would have one believe that May was a pedestrian uneventful month. The overall market was flat (0.3%) and there was very little to separate the major sectors. Financials rose 1.31%, resources were flat (0.25%), as were industrials (-0.34%). Looking at daily data shows a very different picture - one of extreme volatility. We had some of the biggest days (both up and down) in years. On the 10 th the market was down a massive 3.3%, only to bounce back up by 3.5% on the 19th. We have to go back to 2001 to find larger daily moves. Why the extreme volatility? It is indicative of the uncertainty in financial markets globally, and the polarity of possible outcomes. In the US, economists are debating whether we are entering a period of inflation or deflation. Add to this, China's moves to cool its economy, an increasingly messy Iraq situation, an upcoming US election, arguably stretched US valuations, and we have much uncertainty. In financial markets uncertainty manifests itself in volatility.

The funds tracking error is 1.4% annualised, on a rolling 36-month basis. The correlation coefficient over the same period is 1.00. The fund makes use of equities, index futures and money market instruments in tracking the JSE All Share Index.

The high-resource weighting of the all share index (Alsi) tracked by the Investec index (INF) has hit returns. But before abandoning index tracking, consider that from September 1998 to May 2002 (at the Alsi's peak) INF's 111% capital growth beat the 89% general equity sector average. Since May 2002 INF's capital value has fallen 5% against the sector's 12% gain, and since the Alsi's April 2003 low INF has gained 38% and the sector 44%.

For the second month running our market was down on the month. In April the JSE All Share Index lost 2.4% to close the month at 10 386. The decline was led by the Resources sector (down 7.3%). Financials were flat while Industrials managed to post gains (1.7%). On the Resources side, the declines were in response to falling commodity prices. The Chinese authorities announced further steps to slow the rampant growth of their economy. This had knock on effects to the demand side equation of commodities since China is a major consumer of global commodities. Gold lost over 35$/oz from its peak of 425$/oz early in April to close the month below 390$/oz. Similarly, Platinum ended the month below 800$/oz after posting levels as high as 942$/oz early in the month.

Besides China growth concerns, global markets appear quite jittery at the moment. US (and Global) markets are starting to discount interest rate hikes. It' s not so much a matter of 'i f' but rather 'when' and 'by how much'? This is evident in the performance of the major markets. Most of these markets peaked in Jan/Feb and have been moving sideways or trending lower since.

The funds tracking error is 1.3% annualised, on a rolling 36-month basis. The correlation coefficient over the same period is 1.00. The Fund makes use of equities, index futures and money market instruments in tracking the JSE All Share Index.

The equity market remained buoyant into the fourth quarter, returning 17.1%. After a shaky start, this puts the year's return at a respectable 16.1%. The JSE All Share Index closed out the quarter at 10 387, the highest level of the year, and in fact the best level we have seen since mid 2002. The index has recovered strongly (+41%) off the April low of 7361. Over the quarter, all three of the main sectors advanced more or less uniformly with Financials, Industrials and Resources returning 18.4%, 20.6% and 14.0% respectively. Resources have lagged slightly, but less than one may have expected given the performance of the Rand. The mitigating factor has been rising commodity prices, largely offsetting the effects of Rand strength. Platinum has risen steadily from around 705$/oz to 810$/oz over the quarter, reaching as high as 841$/oz in Mid December. Gold, too, has been strong, advancing from 385$/oz to 415$/oz. At the time of writing Gold is trading above 425$/oz, a sixteen year high.

The Rand traded steadily stronger through the quarter. Starting from R6.93/$ it looked set to break through R6/$ early in December before fading back on thin volume to close out the year at R6.68/$.

Internationally, equity markets have continued with the rally that has been in place since April. In the US, the Dow and the NASDAQ were up 13% and 12% respectively. In the UK, the FTSE 100 gained 9% while the German DAX rose 20%. In Japan the NIKKEI 225 gained 4.5%