The year 2011 had its fair share of factors playing havoc with investor sentiment and financial markets. It started off with the political unrest in North Africa / Middle East (MENA), then the natural disasters in the form of the Japan earthquake in March and fluids elsewhere hid, whilst the sovereign debt crisis in Europe (PIIGS) remained a concern throughout. Early in August this was aggregated by the debt-ceiling debacle and much debated S&P downgrade of the US long-term credit rating to AA+ from AAA, which triggered a sell-off in risky assets. Recently US economic data have surprised on the upside, but Europe will probably dip into a recession and Chinese growth is slowing down. Uncertainty remains high and with global growth as a whole slowing down, we expect monetary policy to remain accommodative and coordinated across the globe for a prolonged period. On the domestic front the recovery has moderated on the back of the global happenings, while inflation is accelerating. This is pushing out expectations on when the local hiking cycle will start. We believe the Reserve Banks preference is to keep rates on hold for as long as possible as to encourage growth and job creation. We expect the hiking cycle to start only after 2012. However, if the sovereign debt crisis pushes Europe into a recession, it will have a knock-on effect on global and SA growth, which may force the MPC to rather cut rates. This may give some stimulus to local consumers. The SA equity market relative to its longer-term average 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.

Uncertainty in financial markets remains sticky and therefore also does volatility. The sovereign debt and banking crisis in Europe dominates market sentiment, with bailout talks continuing and details on the European Financial Stability Fund (EFSF) uncertain. Although the outlook for US and global growth has softened, the latest indicators point to a stronger possibility of avoiding another recession, as long as the Euro zone crisis can be resolved quickly and effectively. We still expect monetary policy to remain accommodative and coordinated across the globe for a prolonged period. This may finally rekindle confidence levels as to keep an economic recovery intact, although protracted. On the domestic front the recovery has moderated on the back of the global happenings. This is pushing out expectations on when the hiking cycle in interest rates will start. We believe the Reserve Bank's preference is anyway to keep rates on hold for as long as possible as to encourage growth and job creation and we expect hiking may start later in 2012, if at all. This will add even more stimulus to local consumers. The SA equity market relative to its longer-term average is furthermore not expensively priced and is rather already pricing in a lot of negativity, 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