2016 brought a number of global and local surprises, especially on the political front as populism, protectionism and rising global inequality took centre stage. Volatility and macro uncertainty have made it a very challenging year for markets which has weighed on returns.

Bonds, had stellar performance with the ALBI returning 15.4%, quite the turnaround considering the bond sell-off in 2015 and the ALBI returning -3.9%. SA Listed Property returned 10.2% for the year, followed by cash at 7.4%. The ALSI disappointed once more, failing to beat cash for a second year in a row, returning a meagre 2.6%. After many years of rand weakness and a welcome tailwind to offshore asset returns, the rand appreciated almost 13% against the USD in 2016 which caused offshore asset to underperform local holdings. The MSCI World returned -4.6% and Global Real Estate -7.6%, quite the turnaround from 2015 when Global Equity and Property returned 33.5% and 33.4% respectively.

A more hawkish Fed and a stronger USD has raised the probability of US bonds moving higher and have therefore reduced risk to long duration assets by lowering our exposure to the Coronation Bond Fund. Our exposure to resources through the Nedgroup Mining and Resources fund has performed well after the Trump victory reflation-trade and was the stand out performer amongst our managers returning 38% in 2016.