The unit price of the fund increased during the month as local equities recovered following the sell-off during the second quarter. The fund also had a good quarter relative to its competitors.
We have managed the fund with low liquidity holdings throughout the quarter. However, we trimmed equity exposure late in the quarter following the decent recovery in equity prices. The overweight positions in diversified miners and gold shares were trimmed, while the holdings in industrial rand hedges were increased. We have also selectively added to the holdings in banks on value considerations.
Despite the volatility in share prices, we still believe that equity funds should reward investors over time. As a result, investors are not advised to disinvest from the asset class at this point, provided their risk profile allows for equity exposure.

The unit price of the fund, which is largely invested in equities, fell during the second quarter. Although the fund had a very promising start to the quarter, the unit price came under pressure as equity prices retreated from their initial lofty levels.

We transacted actively in the fund during the quarter, taking advantage of attractive switching opportunities generated by the highly volatile share price movements. The fund's exposure to platinum shares was increased and we switched from Impala to Angloplats. We trimmed the fund's exposure from geared consumer plays to more defensive consumer shares. Holdings in Massmart and Foschini were trimmed in favour of increased exposure to Tiger Brands. We also took advantage of attractive buying opportunities that were generated after the severe decline in equity prices, buying Mittal and Kumba following their sell-off.

Despite the volatility in share prices, we still believe that equity funds should reward investors over time for taking on that risk. As a result, investors are not advised to disinvest from the asset class at this point, provided their risk profile allows for equity exposure.

The fund rewarded equity investors during the first quarter, producing doubledigit nominal returns during the first three months of the year. However, the fund lagged the competitors' performance somewhat as it had a lower weighting in precious metal shares and the diversified miners. The fund also breached the N$10 mark per unit for the first time although it ended the quarter just short of that.

We switched some of the fund's overweight position in diversified miners into direct precious metal counters. Within industrials, we moved into more defensive shares following the run in the geared industrial plays. However, we have increased the fund's weight in gross domestic fixed investment (GDFI) shares without increasing the weighting in pure construction counters. Following the robust performance of local equities, we need to caution investors against "irrational exuberance". Investors in equity funds should expect returns to be more volatile than lower risk funds. However, equity funds should reward investors over time for taking on that risk. As a result, investors are not advised to disinvest from this asset class at this point if their risk profile allows for equity exposure.

The fund's unit price experienced the same roller-coaster ride as local share prices did during the quarter but managed to close comfortably above the R8.80 level, posting a good nominal return for the period. The fund also managed to hold its own against competitors, despite not holding any Venfin shares and having only a small stake in popular gold shares.

It was an extremely active quarter for the fund. We added to the mining shares in the fund by buying platinum and gold producers, as well as the diversified miners. Although it could be argued that increasing the fund's holding in mining shares may be belated, it is difficult to ignore the strength of commodity prices in dollar terms, given the better economic figures released across the world. Small cap counters were trimmed to provide funding for the fund's increased mining exposure. During the quarter, we also introduced more focus to the consumer stocks in the portfolio. We added to technology, media and telecom (TMT) as well as electronic shares, as we believe that these counters should benefit from increased investment spending by corporates.

Investors in equity funds should expect returns to be more volatile than lower risk funds. However, these returns should reward investors over time for taking on that risk. As a result, investors are not advised to disinvest from this asset class at this point if their risk profile allows for equity exposure.