The major themes of 2018 persisted into the 1st Quarter of 2019. A notable change came from the US Federal reserve Open Market Committee, changing their monetary stance to a much more accommodative view. This was a catalyst for a strong correction in equity markets, recovering substantially from the draw down in 2018, as well as strong positive performance in global bonds, notably the US 10 year bond. The slowdown in global trade, mainly driven by the US-Sino trade dispute is filtering into global growth necessitating more stimulus from monetary authorities.

The Fund positioning remained defensive over the quarter reflecting uncertainties, especially the potential risk around the Moody’s South African credit rating assessment close to quarter end. Fund risk allocating was increased somewhat post the ratings announcement. We still expect substantial volatility around the election

The quarter was plagued by negative sentiment, especially towards emegerging markets. The effect of a tighter US monetary policy is being felt, as dollar liquidity shrinks and the carry trade unwinds. This is placing the South African rand and domestic bonds under pressure. Domestic politics are still highon the agenda and will most probably stay there until next year's midyear election.

Fund performance over the quarter did not excel, but is outperformng the benchmark. The third quarter did not excel but is outperforming the benchmark. The third quarter will be challenging MTBS and Moddy's assessment in October. We expect a lot of volatility driven especially by emerging markets sentiment and will maintain our cautious positioning.