Mandate Overview26 May 2016
The fund offers investors a high income yield, accompanied by capital growth over the medium to longer term.
Old Mutual Namibia Property Comment - Mar 2016 - Fund Manager Comment26 May 2016
Equities started the year off on the back foot, tumbling roughly 10% in January, only to recover during February and March to end higher for the first quarter, with the FTSE/JSE Shareholder Weighted All Share Index (SWIX) returning 5.9% by the end of the quarter.
The health of the global economy was the main reason for the global sell-off. The price of Brent crude oil spiralled lower to reach levels last seen in 2004 and 2005. Even during the 2008 financial crisis, the price of oil never reached these low levels. A key driver of the drop in price was the huge oversupply of oil, which brings with it the basic demand and supply theory that, when something is in oversupply, the price will fall. Equities followed the path of oil as global growth concerns deepened.
Equities did, however, start recovering during February and March 2016, mainly on the back of more central bank policy support from the likes of the Bank of Japan and the European Central Bank, which surprised with a much more aggressive programme of quantitative easing than the market had anticipated. This gave more impetus to the rally in equities.
Commodities did well during the first quarter, and were the top performing sector after having underperformed for a considerable period. The main reasons for the rebound were the weakening of the US dollar and the increased optimism about the Chinese economy, as the Chinese Central Bank stated that they still had more tools available to spur on their economy.
The fund slightly underperformed its benchmark during the quarter, trailing by 25 basis points. Our underweight positions in Stenprop Ltd and Pivotal Fund Ltd contributed to fund performance relative to our benchmark. Meanwhile, the underweight position in Forttress Income Fund Ltd was the biggest detractor from fund performance relative to benchmark during the first quarter. The fund continues to be quite closely aligned to its benchmark, due to the current volatile market conditions.