The SA Listed Property Index (J253) recorded a total return of + 3.35% in March 2011. SA listed property recorded the highest total return (+3.35%) of the four traditional asset classes for March In the first three monthly reports for the 2011 calendar year we commented that the risk to total returns in the short term was a further weakening in capital markets. There is a high correlation between listed property yields and other fixed income asset yields. Like bonds, there is an inverse relationship between yields and price. Since 31st December 2010 the long term government bond index yield to maturity has weakened by 60 bps. Over the same period the historic rolled yield of the SA Listed Property sector has weakened by 37bps. This weakening in capital market yields, and the similar directional move in SA listed property yields, is the major driver of the reason why SA listed property has recorded a negative total return of -2.16% for the year to date. As at the 31st March 2011 the historic rolled income yield of SA listed property was 8.07%. The outlook for distribution growth in 2011 remains reasonable and the sector is likely to deliver real growth in income distributions. Listed property is a long term investment and over the long term the total return from listed property will be driven by the income yield plus growth in that income

Global equities put in a very strong showing in December, with both developed and emerging markets ending on a high for the year. The sharp increase in prices was spurred on by some better than expected economic data and a strong rise in commodity prices. The MSCI World Index ended the month up by 7,3% and the MSCI Emerging Markets Index by 7,0%. Of the major markets, the strongest performance came from the S&P500 and the London FTSE 100, while the German Dax, the Japanese Nikkei and Hong Kong Hang Seng lagged.

In US dollar terms, the best performing emerging market index was the MSCI South Arica, which gained 14,8% in December. The strong rand, which gained 5,1% against the US dollar, resulted in the FTSE/JSE All Share Index returning 6,2% for the month. The strongest performance came from mining and resources shares, which yielded 7,4% and 7,7% respectively on the back of the strong rise in commodity prices. The CRB Commodity Index rose by 10,4%, the price of Brent oil by 10,3% and the Economist Metals Index by 9,7%.

The better than expected economic data in the USA resulted in bond yields spiking, and the US 30 Year Treasuries declined by 5,1% over the month. However, a weaker dollar resulted in global bonds yielding a positive return of 1,5% for the JP Morgan Global Bond Index, but the JP Morgan Emerging Markets Bond Index lost 0,7%.

Continued strong demand from foreign investors pushed the yields on South African bonds down and resulted in the BESA All Bond Index gaining 1,7% for the month, while cash yielded its usual paltry 0,5%.

While equity markets do appear to be somewhat overbought in the short term, most equity markets are still trading above their 200-day moving averages, indicating that the current bull market is still intact. We will therefore continue to hold equity exposure close to benchmark while monitoring the situation closely.