Fund review

The STANLIB Balanced Cautious Fund delivered a return of +1.4% for the quarter ended 30 September 2019.

Market overview

Global assets continued their recovery from 2018 levels, as equities and fixed income markets continued where they left off in the first six months of the year. Recent comments and actions from central banks added to the positive sentiment prevailing in equities and bonds. Global equities delivered a strong performance year to date (+23.8% in rand terms), MSCI EM (+16.1% in rand terms) and the FTSE/JSE SWIX All Share Index (+4.3%). The Resource Sector remain the biggest positive contributor to SA performance, with a YTD performance of +13%. SA bonds also delivered positive returns in September, taking YTD performance for the ALBI to 8.4%, while the rand depreciated by a disappointing -7.1% against the dollar for the quarter.

Looking ahead

The outlook for 2019 has weakened from a global growth perspective, however a positive feature is the continued lack of inflationary pressure globally, allowing central banks to maintain accommodative monetary policies, which should act as a tailwind for risk assets. SA and Emerging Market equities have been supported by the Fed’s dovish stance (this should limit further dollar strength) and selective stimulus by Chinese policymakers, while uncertainty around US-China trade talks has swayed market sentiment. In SA, the SARB reacted to slow growth and low levels of business and consumer confidence by reducing interest rates by 0.25% during Q3. We expect further easing in Q4. Lower interest rates and positive developments such as the restructuring and refinancing of Eskom together with further fiscal policy announcements should be mildly positive for growth in the medium term.