A strengthening in the rand contributed to bullish sentiment surrounding a stable interest environment, which positively impacted on interest-income generating investments cash, bonds and listed property.

The Provest Property Equity Fund was actively managed during the month of July and this translated to above-market average performance.

Provest's stock-picking ability has translated into the fund's outperformance.

Cash will be invested where specific stocks are believed to offer above-sector average value. The portfolio will be actively managed to contribute to its outperformance.

The drop in repo rate by 50 bpts caught most of the market by surprise. The subsequent reaction has been a firming in long bonds and a further rerating of listed property stocks with share prices firming across the board and yields strengthening.

During the month, the PPEF sought to exploit some of the good buying and selling opportunities that presented themselves in this market, and Provest continued to aggressively manage the portfolio, exploiting opportunities as and when they presented themselves.

Barclays plc's recent announcement to take-out ABSA has positive indirect implications for the SA listed property sector. The projected inflow of more than R20 billion by Barclays into South Africa would indicate a potential further strengthening of the rand. While interest rate decreases have proved a relatively "blunt instrument" in curbing rand strengthening, they are considered one of the only tools available for managing the rand. On this basis, the possibility of further interest rate cuts is not unlikely.

Provest repeatedly reminds listed property investors of the correlation between interest rates and listed property yields. The correlation exists given the interest income generating nature of listed property stocks, specifically Property Unit Trusts and Property Loan Stocks. In line with this, a cut in interest rates would translate into a further reduction in listed property yields and an increase in share prices.

The Provest Property Equity Fund is a new unit trust and a historical track record is therefore not available. The Fund Manager, however, has both extensive experience and a successful track record of segregated listed property portfolio management, and the intention is to apply this expertise to the management of this specialist fund. Provest's stock-picking ability will be paramount to the fund's outperformance.

The aim is to be fully invested in listed property stocks in the current environment, where earnings growth is expected to translate into capital appreciation from certain listed property stocks.

Cash will be invested where specific stocks are believed to offer above sector average value. The portfolio will be actively managed to contribute to its outperformance.