The global economic and financial climate deteriorated markedly in the third quarter, with recession likely in many industrialised countries, notably the US, the UK and Europe. The dislocation caused by the sub-prime crisis intensified, prompting drastic action by governments and central banks to keep the global banking system functional. South Africa has not escaped the fallout of global financial market developments, but the impact has been indirect and relatively limited so far. Inflationary pressures have become more endogenous and the depreciation of the Rand lately, raises the threat that inflation can stay higher for longer. The consensus view is that inflation and interest rates have peaked locally and expectations are for the MPC to leave rates unchanged for the remainder of this year and to start easing towards the middle of 2009. Domestic demand should remain positive thanks mainly to strong fixed investment spend, driving further real growth in the local economy. The SA equity market in general is furthermore not expensively priced after the recent pull backs, i.e. we foresee a positive environment for equities.

The Gryphon All Share Tracker Fund, due to its tracker mandate, tends to be fully invested more often than not, and is only slightly tilted to certain sectors and shares, so as to achieve the most efficient replication of the SA All Share Index with an optimum number of shares.

We expect global growth to moderate in 2008 as a result of the struggling US economy, the global credit squeeze and climbing global inflation on the back of the rocketing oil price. However, thanks to still strong growing economies in China and India, as well as low commodity stock levels, commodity prices are likely to remain resilient, at least for the next few months. As a result commodity markets (like SA) should benefit. We are, however, increasingly concerned about the consumer-related sectors of the local economy. The cumulative effect of ten interest rate hikes and material price increases in food and fuel have all had an impact on consumer confidence and will increasingly impact spending. The chance of further rate hikes remains high given the poor short-term inflation outlook. Domestic demand should remain positive thanks mainly to strong fixed investment spend, driving further real growth in the local economy. The SA equity market in general is furthermore not expensively priced, i.e. we foresee a positive environment for equities and more so for commodity and infrastructure spend shares, especially given the uncertain interest rate environment. This should benefit tracker funds due to their higher exposure to commodity shares versus that of the average equity fund. The Gryphon All Share Tracker Fund, due to its tracker mandate, tends to be fully invested more often than not, and is only slightly tilted to certain sectors and shares, so as to achieve the most efficient replication of the SA All Share Index with an optimum number of shares.

We expect global growth to moderate in 2008 as a result of the ailing US economy, the sub-prime lending scare and the global credit squeeze. However, thanks to interest rate cuts in the US and elsewhere, a strong Chinese economy and low commodity stock levels, commodity prices are likely to remain resilient, at least for the next few months. As a result commodity markets (like SA) should benefit. While we believe that the local economy remained fairly buoyant throughout 2007, we are increasingly concerned about the consumer-related sectors of the economy going into 2008. The cumulative effect of eight interest rate hikes, the introduction of the National Credit Act and material price increases in food and fuel have all had an impact on consumer confidence and will increasingly impact spending. Inflation is forecast to remain around the top end of the 3-6% range targeted by the Reserve Bank, throughout 2008, due to the exogenous factors of the high oil and maize prices. While our base case is for neutral monetary policy going forward, the risks of a further rate rise remain high given the poor short-term inflation outlook. Domestic demand should remain positive thanks mainly to strong fixed investment spend, driving further real growth in the local economy. The SA equity market as a whole is furthermore not expensively priced, i.e. we foresee a positive environment for equities and more so for commodity and infrastructure spend shares. This should benefit tracker funds due to their higher exposure to commodity shares versus that of the average equity fund. The Gryphon All Share Tracker Fund, due to its tracker mandate, tends to be fully invested most of the time and is only slightly tilted to certain sectors and shares, so as to achieve the most efficient replication of the South African All Share Index with an optimum number of shares.

We expect global growth to moderate in 2008 as a result of the ailing US economy, the sub-prime lending scare and the global credit squeeze. However, thanks to interest rate cuts in the US and elsewhere, a strong Chinese economy and low commodity stock levels, commodity prices are likely to remain resilient, at least for the next few months. As a result commodity markets (like SA) should benefit. While we believe that the local economy remained fairly buoyant throughout 2007, we are increasingly concerned about the consumer-related sectors of the economy going into 2008. The cumulative effect of eight interest rate hikes, the introduction of the National Credit Act and material price increases in food and fuel have all had an impact on consumer confidence and will increasingly impact spending. Inflation is forecast to remain around the top end of the 3-6% range targeted by the Reserve Bank, throughout 2008, due to the exogenous factors of the high oil and maize prices. While our base case is for a neutral monetary policy going forward, the risks of a further rate rise remain high, given the poor short-term inflation outlook. Domestic demand should remain positive; thanks mainly to strong fixed investment spend, driving further real growth in the local economy. The JSE as a whole is furthermore not expensively priced, i.e. we foresee a positive environment for equities and more so for commodity and infrastructure spend shares. This should benefit tracker funds due to their higher exposure to commodity shares versus that of the average equity fund.

The Gryphon All Share Tracker Fund, due to its tracker mandate, is only slightly tilted to certain sectors and shares, so as to achieve the most efficient replication of the South African All Share Index with an optimum number of shares.