It was another positive monthly return for equity investors as the local market earned 2.98% for December, taking the All Share Index annual return to an impressive 21.43%. The Efficient Equity Fund met its objective by outperforming the local market over the year, returning 24.88%. This strong year improves the fund's already impressive track record, which has seen it outperform the local market for the last four consecutive years.

On the macro front, the US Federal Reserve (Fed) announced (against the market's expectation) a $10 billion reduction in its monthly bond buying program. The decision was anchored on the Fed's view that the US economic recovery is on a sustainable path and therefore the need for additional monetary support is reducing. This 'perceived' strength in the US triggered a reversal of capital flows out of emerging markets and into improving developed markets. The outcome of this reversal is weakness in emerging market currencies. This unintended consequence of tapering was the reason behind the rand depreciating to the lowest level experienced in over four years.

As mentioned above, the local market reacted positively as the larger constituents of the index benefitted from a weaker rand - given that the majority of their sales are derived outside of South Africa. MTN, British American Tabacco and SABMiller were the standout beneficiaries of the currency weakness in the fund. Life Healthcare also performed well for the fund, returning 3.67% for the month. We have built a sizeable position in the company as we value its high quality characteristics of strong management, excellent margins and consistent cash flow generation. The healthcare provider's low cost business model makes its expansion strategy across the country's less developed regions more appealing as it attempts to meet the demand of the lower LSM healthcare consumer.

The Efficient Equity Fund is attracted to high quality businesses because their operations are largely unaffected by the wave of macroeconomic drivers. Holding these types of companies across our fund gives us exposure to our preferred asset class, equity, in addition to reducing the risks of unfavourable macroeconomic events in the short term.

The Efficient Equity Fund will change it's name to Efficient BCI Equity Fund, effective from 29 January 2014