Volatility across global financial markets increased over the quarter following heightened speculation around the timing and extent of US monetary policy normalisation. Economic growth in the Eurozone remained stagnant despite attempts by the European Central Bank to intervene. The rand dropped sharply in September, posting a 5.7% decline for the quarter against a generally strong US dollar.

Against this backdrop, global markets delivered a weak performance with the MSCI World Index closing the quarter down 2.1% in dollar terms. Emerging markets performed poorly with Russia (-15.1%) and Turkey (-11.8%) as the standouts, however India (2.3%) and China (1.5%) were able to deliver small positive gains. Developed markets were also down for the quarter with the exception of the US markets; the Dow Jones, S&P500 and FTSE 100 closed up 1.9%, 5.4% and 1.1% respectively. In the commodities space, prices were down across the board with platinum (-12.2%), nickel (-14.4%), tin (-10.0%) and Brent Crude (-14.2%) all experiencing double digit declines. Aluminium and zinc posted small positives of 3.9% and 3.1% respectively.

While the SA equity market reached an all-time high in late July, it experienced a sharp pull-back in September, resulting in a 2.1% quarterly loss. This decline was led by the Resources sector with the platinum mining down nearly 20%. Within the Industrials positive performances from the global defensives, assisted by the weaker Rand, helped outweigh the 7.8% decline in Naspers. Financials were flat with banks negative, generally strong insurance performance and strong property performance. For the quarter the FTSE/JSE Financials Index was up 0.4%, the FTSE/JSE Industrial index down 1.8% while the FTSE/JSE Resources sector was down 7.1%.

The fund slightly underperformed its benchmark over the quarter, driven by costs incurred from flows and significant index changes that necessitated trading. The fund continues to closely track its benchmark, the FTSE/JSE Top 40 Index, which closed the quarter down 2.9%.

Global and local equity markets continued their grind higher as global monetary policy developments continued to influence asset prices. The US Federal Reserve left its tapering programme unchanged, the Bank of Japan continued with asset purchases and the European Central Bank cut short-term rates and announced it was looking at quantitative easing-style interventions.

Against this backdrop, global markets delivered a strong performance with the MSCI World Index closing the quarter up 6.2% in dollar terms. Emerging markets were relative outperformers over the quarter with India (+13%), Russia (+11%) and Turkey (+15%) all delivering double digit returns. Developed markets had a solid quarter with the S&P500 and FTSE 100 closing up 5.2% and 5.8% respectively. In South Africa, the rand ended the quarter only slightly weaker, with the country acting as a relative safe haven in the emerging market context. The crippling five-month platinum sector strike, which came to an end during the quarter, has had broad negative consequences for several sectors of the local economy. NUMSA's subsequent strike in the metals and engineering sector will place further pressure on SA's uncomfortably large current account deficit and economy.

Despite this challenging economic and labour environment, the FTSE/JSE All Share Index continued its impressive run with the local bourse closing the quarter up 7.2%. Industrials and Financials were the best performing sectors with Resources once again the laggards as the strife in the platinum sector continued to weigh on investor sentiment. For the quarter the FTSE/JSE Financials Index was up 7.8%, the FTSE/JSE Industrial index up 9.1% while the FTSE/JSE Resources sector was up 2.9%.

The fund slightly underperformed its benchmark over the quarter, driven by costs incurred from flows and significant index changes that necessitated trading. The fund continues to closely track its benchmark, the FTSE/JSE Top 40 Index, which closed the quarter up 7.4%.