Although the global economic is stuttering as a result of a number of unusual occurrences so far this year, signs of recovery are on the cards. The political unrest in North Africa and the Middle East (MENA) caused a sharp rise in oil prices, boosting food inflation even more, from already high levels, which was aggregated by extreme weather conditions in many countries. The Japan earthquake in March caused a sharp decline in output in Japan, with nasty knock-on effects on global production. The sovereign debt crisis in Europe (PIIGS) is flaring up from time to time, as was the case with Greece during June, which is adding to market uncertainty. Volatility in financial markets therefore remains high. Nevertheless, the rising inflationary pressures are starting to force central banks to normalise monetary policy. We, however, expect the normalisation of monetary policy to be gradual and to remain accommodative. On the domestic front the recovery has become more broadly based, but also still remains uncertain and the Reserve Bank has noted in the May MPC meeting that the risks to the inflation outlook have increased. The Reserve Bank however, given the government's strong focus on job creation and growth, should be in no rush to hike rates on the first round effects arising from supply side shocks. This will add even more stimulus to the consumers. The local bond market has already starting to discount higher inflation, resulting in the yield curve steepening and negatively effecting bond returns. The SA equity market in general is furthermore not expensively priced, i.e. we foresee a positive environment for equities. Volatile and uncertain times like these, when sector rotation direction is unclear and stock-picking difficult, are relative good times for Index Trackers. 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.

The global economic recovery, although uneven, is broadening, gaining strength and is expected to continue. Markets typically had a knee-jerk reaction on the March 11 earthquake and tsunami in Japan and although it will initially accelerate the slowdown in the East, the rebuilt may have positive spinoffs for especially commodity suppliers. The geopolitical tensions in the Middle East and North Africa (MENA), as well as the sovereign debt crisis in Europe (PIIGS), both remain as concerns driving market volatility. Rising inflationary pressures, fuelled not only by strong commodity demand, but also as a result the natural disasters and MENA unrests, are starting to force central banks to normalise monetary policy. We expect the normalisation of monetary policy to be gradual and to remain accommodative. Although, domestic growth prospects appear to have improved, it is still too weak to make an impact on unemployment. As a result the Reserve Bank, given the government's strong focus on job creation and growth, should be in no rush to hike rates on the first round effects arising from supply side shocks. This will add even more stimulus to the consumers. The local bond market has already starting to discount higher inflation, resulting in the yield curve steepening and negatively effecting bond returns. The SA equity market in general is furthermore not expensively priced, i.e. we foresee a positive environment for equities. Volatile and uncertain times like these, when sector rotation direction is unclear and stock-picking difficult, are relative good times for Index Trackers.

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.

Over the last quarter, global investor focus has shifted to and fro between the sovereign debt crisis in Europe on the one hand and US growth and "QE2" on the other. It has become apparent that the Fed is prepared to adopt extraordinary measures to stimulate the US economy. On the back of this, double-dip fears have subsided and commodity prices strengthened, resulting in renewed dollar weakness and stronger commodity and emerging market currencies. Synchronised global growth is on track. The local economy is to continue improving, supported by the recovery in consumer demand and the production sectors, but for growth to remain below trend. We therefore foresee local interest rates to remain on hold during 2011. This will add to the relief that consumers are experiencing from lower inflation. The local bond market has already starting to discount higher inflation, resulting in the yield curve steepening and negatively effecting bond returns. The SA equity market in general is furthermore not expensively priced, i.e. we foresee a positive environment for equities. Volatile and uncertain times like these, when sector rotation direction is unclear and stock-picking difficult, are relative good times for Index Trackers.

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.