Over the first quarter of 2013 the SA equity market delivered subdued returns, resulting in a negative real return. The market was pulled down by Resources shares (RESI delivered -5.6%), offsetting the performance by INDI (6.6%) and FINI (5.4%).

The quarter was also not a good one for Bonds (1.0%), which also delivered a negative real return over the quarter. Listed Property was the best performing asset class over this period, delivering a return of 9.1%. The R/$ exchange rate also depreciated significantly over the quarter by 10.0%.

Fund Review
The equity market returned 3.2%, -1.9% and 1.2% for January, February and March respectively. The fund returned 2.1%, -0.9% and 0.9% for the same months. This illustrates our philosophy of gaining exposure in rising markets and limiting losses in falling markets.
Looking Ahead
Despite the recent market performance we continue to believe, based on how asset classes are currently priced, that structurally we may remain in a low return environment and that investors are unlikely to be compensated for excessive risk taking. We therefore believe that investors will increasingly consider both return and risk (prospect of losses) in their investment choices, which speaks squarely to the mindset of Absolute Return funds. Our current fund positions take consideration for the investment environment that we have articulated above and our target during these times remains to preserve client capital during the difficult market environments, there will surely be some, whilst also ensuring that we deliver healthy CPI + returns during the good times. This combination of defence and offense outcomes we believe will allow for the continued compounding of fund returns and over time, the delivery of equity type returns but only with bond type risk/ losses.