September was a significant month for financial markets as China, Europe and the US took action in order to stimulate their respective economies. China was first, approving an estimated $156 billion infrastructure spend as a form of fiscal stimulus. Next was Mario Draghi, European Central Bank President, who outlined a scheme enabling central bankers to make "unlimited" purchases of government debt. Finally, Ben Bernanke, US Federal Reserve President, announced that the Fed would launch a third round of so-called quantitative easing, or QE3 - an aggressive bond-buying program designed to lower long-term interest rates in the hopes of stimulating economic activity and reducing unemployment. The aforementioned measures are set to provide financial markets with a noteworthy underpin for the forthcoming months. Overall, the S&P 500 TR Index (6.35%); Stoxx 600 Index (6.89%); MSCI Emerging Markets GR Index (7.89%) and JSE All Share TR Index (7.26%) all ended the third quarter strongly positive. During the same period, the Efficient Equity Fund returned 7.53%.

Turning our attention to companies, in this month's commentary we focus on Sasol Ltd. Sasol (South African Coal and Oil) commissioned its first plant in 1955 in Sasolburg. Employing over 33 000 people, the company today is a multinational business with joint listings on the Johannesburg and New York stock exchanges. Sasol's closing share price on the Johannesburg Stock Exchange on 31 January 1985 was R4.87 and its closing price at the end of this quarter was R372.29, demonstrating a remarkable return of approximately 16.97% per annum!

Sasol has factories in South Africa (Sasolburg and Secunda), Qatar, Iran and Nigeria. Its primary business is based on coal-to-liquid and gas-to-liquid technology. Apart from this, Sasol also has a widely diversified chemical business. Using our in-house proprietary tool to assess the quality of different businesses, Sasol scores the highest compared to peers Royal Dutch Shell, British Petroleum, Exxon Mobil and Chevron. On the whole, we consider Sasol to be a quality company and one which we are pleased to hold across our entire fund range.

When reviewing performance for the quarter, you will note that the fund's top performing shares included Naspers (19.07%); New Europe Property Investments (18.00%) and Old Mutual (17.13%) whilst Exxaro (-13.60%), Anglo American (-8.90%) and Astral (-7.97%) were under strain during the quarter. With a high degree of uncertainty inherent in financial markets during the quarter, we took the decision to increase the cash weighting from 2% to 6% while we wait for opportunities to up-weight quality businesses.

Whilst we believe that the "real" economy has revealed some worrying signs in recent months with economic data points weaker than expected, the recent action taken by the US, Europe and China should serve as stimulus to fortify financial markets, as past experience has demonstrated. Nonetheless, we choose to favour defensive businesses over the forthcoming months, pending a clearer economic outlook.

Looking back at the second quarter of 2012 the word "uncertainty" springs to mind. With ever-increasing political scheming taking place in Europe on account of the Eurozone's mounting debt crisis, the formation of a "last-minute" Greek government and weaker than anticipated US and Chinese economic data, uncertainty was prevalent in financial markets. After an exceptional first quarter, equity markets conceded most of their gains during the second quarter. Year-to-date, major indices including the S&P 500 Index (10.91%), Stoxx 50 Index (-3.18%), MSCI Emerging Markets Index (3.62%) and JSE All Share Index TR (7.04%) all reflect muted returns. Over the same period, the Efficient Equity Fund returned 6.61%.

Our commentary this month focuses on Discovery Holdings Limited (Discovery), a company we have invested in during the past two years and one we continue to favour. Discovery is an integrated financial services organisation with interests in South Africa, the United Kingdom and United States of America. Its key areas of business include health insurance, life assurance, investments as well as health and wellness markets. A distinctive feature of Discovery Holdings is its ability to innovate. A clear example is Discovery Health's Vitality Program. Vitality, along with other innovative features of the associated medical aid scheme, has led Discovery Health to its position as the largest medical aid scheme in the country. Over the past two years, Discovery Holdings' share price has increased by more than 50 per cent. Our outlook remains positive as we believe that the company's defensive qualities and innovative management team should continue to provide investors with superior returns over the long term.

During the second quarter the top performing stocks in the Efficient Equity Fund included Brait SA (24.84%), New European Properties (13.34%) and Firstrand (11.35%). Companies under strain during the quarter included Impala Platinum (-10.49%), Steinhoff (-10.36%) and African Rainbow Minerals (-8.59%).

We expect to see continued volatility in financial markets. Investors face multiple hurdles, including the Eurozone's mounting debt problem, an upcoming election year in many countries (including the US) and the fiscal debate surrounding the US debt ceiling. Accordingly, given the level of risk dominating financial markets, we have downgraded our outlook from Stable Positive to Stable, yet continue to favour quality companies which are able to withstand volatile market conditions.