The fund aims to achieve returns above the STeFI Call Index, while minimising the risk of any underperformance. Importantly, the Fund is managed conservatively and it aims to maintain capital stability and liquidity.

Minister Gordhan tabled his much-awaited Budget for 2016 in parliament last month. On the one hand, markets were looking for signs of government's commitment to its fiscal consolidation plans, while rating agencies wanted to see if the minister could curb spending and increase revenue to rein in the country's ever burgeoning budget deficit. The tone of the budget was one of caution. The Minister's plans with regard to the fiscla consolidation and budget deficit seemed, on the face of it, achievable, but the risks lay in the execution. The deficit compression comes on the back of an increase in revenue estimates which is highly dependant on an assumed growth path and the continued expansion of the taxation base. Following the 2016 Budget, ratings agency Standards & Poor offered some solace to the markets and investors stating that they were unlikely to make any immediate moves on the sovereign rating of South Africa. The ratings agency has however pointed out that "The budget lacks significant policy announcements that we think would immediately spur GDP (gross domestic product), or provide much-needed business confidence to the private sector."

Consumer prices in South Africa ticked up from 5.2% y/y in December 2015 to 6.2% y/y in January 2016 as consumers started to feel the pass-through effects of a depreciating local currency. The annual core inflation rate, which excludes prices of food, non-alcoholic beverages and energy, also ticked up from 5.2% y/y, in December 2015 to 5.6% y/y in January 2016. The PPI print overshot the Bloomberg consensus with a sharp uptick in PPI to 7.6% y/y in January from 4.8% y/y in December, its fastest pace in 18 months. The increase comes on the back of the worst drought in more than a century, which has pushed up food prices. The Rand continues to be very volatile ending the month at R16.15 to the US Dollar. This was due to the uncertainty in world markets, concern with regard to growth in Chinese economy, a further decline in commodity prices overall US Dollar strength and muted investor confidence in the local economy as well as local political uncertainty. 3 month Jibar ticked up 2bps over the month from 6.98% to 7%while 12 month Jibar ticked up 34bps from 8.4% to 8.74%. The FRA's (forward rate agreements) shifted around 30 basis points higher across the curve. Currently, the market is pricing in 150 bps worth of rate hikes over the next 12 months and 175bps over the next 18 months.

The Fund outperformed the benchmark in February due to the good yield pickup. The Fund holds a mix of yield enhancing assets including bank floating-rate notes, bank step-up nootes, corporate paper and short dated fixed and floating rate bonds, Credit exposure remains conservative, primarily with the big banks. We increased duration via fixed rate asset purchases in early January as rates ticked up to attractive level and will look to do more as rates continue to drift higher. The Fund is currently yielding 8.1% versus Jibar at 7%.