The South African equity market had a better final quarter thanks to a good last month of the year. The one-year return, however, is still not good compared to the global return numbers. The Shareholder Weighted Index (SWIX) increased by 4.12% during the third quarter of 2019, with property shares continuing on their negative path returning -3.19% for the quarter. The South African economy is still under pressure with the third quarter GDP number for 2019 reading -0.6% annualised quarter on quarter. The rand had a good run against the US dollar and other major currencies during the final quarter of 2019.

Strengthening by 7.8% against the US dollar over the last three months of 2019. The stronger rand can mainly be attributed to trade war tension decreasing with some positive news coming from the negotiations. FUND COMMENTARY Globally, we have seen an uptick in the market throughout the quarter except for a small negative start at the beginning of the quarter. The S&P 500 Index increased by 8.53% over the quarter, slightly less than the all-time high reached just a few days prior. The trade war is not over yet, but there are some positive signs for the market as negotiations have a positive outlook.

The fund underperformed the SWIX over the final quarter of 2019 returning 3.57% against the SWIX’s total return of 4.12%, gross of fees, for the quarter. The underperformance was mainly due to the overweight positions in Prosus, Capricorn Investment Group and Fortress Reit B, and the underweight in Anglo American Platinum also contributed to the underperformance. The best performing sector in the benchmark for the final quarter of 2019 was healthcare, returning just over 20% for the quarter. The fund was underweight in this sector, thus detracting from performance relative to benchmark. The communication services sector was the weakest performing sector contracting 11% for the fourth quarter. The fund was underweight in this sector, thus adding to Of our top 10 holdings Standard Bank, ABSA, FirstRand Ltd, Capricorn Investment Group, Namibia Breweries, Prosus and FirstRand Namibia all detracted from performance for the quarter, with the remaining three contributing towards performance relative to benchmark. Anglo American was the top contributor relative to benchmark, with a return of 13.39% for the quarter. Prosus was our worst performer, contracting 4.79% during the fourth quarter of 2019.

The Namibian listed companies which form part of our portfolio, such as Letshego Holdings (-0.9%), FirstRand Namibia (-0.15%), Namibian Breweries (-0.17%), Capricorn Investment Group (-4.57%) and Oryx Properties (-0.34), had a very poor quarter relative to the SA market.

The fund maintains its overweight allocations to Namibian primary listed shares. The fund has slightly reduced its cash position to the benchmark weight.