It seems the long-awaited pullback in the market has finally arrived, with a return of -0.5% from the Shareholder Weighted All Share Index (SWIX) over the third quarter ending September 2014. This has been the result of, amongst others, geopolitical tension in Syria and Ukraine and weak demand from China.

Adding to this is the strong data released from the United States, which has investors worried that interest rates might be hiked sooner rather than later. And to top it all, our main trading partner, Europe, seems to have lost steam as growth data continues to disappoint. Even Germany, considered to be the engine of Europe, released weaker manufacturing PMI data of 49.9 in September - anything below the 50.0 threshold indicates a contraction in the economy.

In South Africa, news flow was dominated by African Bank being placed under curatorship by the South African Reserve Bank (SARB). The economy is struggling with a depreciating rand, inflation trending outside their target range of 3% to 6%, a large current account deficit and low GDP growth. While this all sounds very negative, a pullback in the market gives us a good opportunity to buy equities at cheaper prices.

The fund's performance relative to its benchmark improved in the third quarter. The resources sector was the worst performer on the JSE, with a return of -7.1%. The fund was underweight this sector, which added to its performance relative to benchmark. Industrials were the second worst performers, with a quarterly return of -0.7%, which also played in the fund's favour as our model was underweight the sector. We were also underweight financials (0.4%) relative to benchmark. The fund was quite cash heavy for the quarter, which boosted returns and gave us a good buying opportunity after the pullback.

Our top 10 holdings performed reasonably well over the third quarter, with FNB Namibia being the top performer with a return of 11%. The biggest detractor in our top 10 holdings was Sasol, with a quarterly return of -3%.

The Namibian listed companies, which form part of our portfolio, all delivered positive returns over the quarter, with Oryx up 5.25%, Namibian Breweries up 0.67%, FNB Namibia up 11%, Bank Windhoek up 6.95% and Bidvest Namibia up 5.5%. The Namibian shares usually do well during market pullbacks as they tend to stay stable or increase in value. Our overweight position in these shares have aided us in the third quarter.

The fund is currently well positioned to take advantage of the pullback in the market, due to its high cash position.

The crisis in the Ukraine dominated headlines in the first quarter of 2014. Markets have taken a dip in January after unrest flared up and the president was ousted following Russia annexing the Crimea region in southern Ukraine. The annexation caused a major standoff with Western powers, resulting in sanctions impacting the still fragile global growth assumptions.

The currency depreciation in Argentina also contributed to the decline in global markets. This was as a result of policies imposed by their president Cristina Fernandez de Kirchner. These included keeping utility rates frozen, as well as nationalising the oil companies. This led to Argentina importing oil, despite their large reserves of oil and gas. Inflation figures were also misreported and did not reflect the true situation in the country.

Locally, the best performing sector in the first quarter of 2014 on the JSE was the resources sector with 10.6%. The fund was underweight in this sector, due to rebalancing, and lost out on some gains. In second place was the financial sector, with returns of 7.1%, which the fund was overweight in, adding to the overall returns. Industrials lagged this time round and were only up 0.8%. Our top 10 holdings' returns for the first quarter ranged between -1.3% (from SAB) and 14.6% from Sasol. SAB was the only top 10 stock with a negative return, while MTN, BHP Billiton and all the other top 10 holdings beat the benchmark return.

The majority of Namibian listed companies released reasonably good results, with Oryx up 4.76%, Namibian Breweries up 0.55%, FNB up 6.49% and Bank Windhoek up 6.42%. Bidvest Namibia disappointed with 2.70%, releasing poor results due to constraints in its fishing division.