Fund Review
During the quarter under review, money market rate continued on a downward trend from quarter-3, with the quarter closing for Banks 12 month quoted rate yields at 8.05 % (Q3: 8.43 %) and Government 12-month Treasury bill yields at to 7.64 % (Q3:8.22 %). These rate reduction were expected following a rate cut in August and high liquidity in the market. Although market rates decreased significantly and 3-moth JIBAR edged down wards causing floating rate instrument to reprise lower, the portfolio returns only reduced slightly, as more fixed deposit instrument were held at the far end of the curve. Maturing funds were not reinvested, but parked into a high yielding call accounts, as expectation is that market liquidity will subside leading to banks quoting rates upwards. Despite these obstacle to maintain stable returns the portfolio outperformed the bench mark with gross annual returns of 8.82% against bench mark return of 6.84%.

Market review
Moody's downgraded Namibia's rating to Ba1, with a negative outlook, thus Namibia placing the sovereign on junk states investment grade. The key factors for downgrading the rating are: 1. Erosion of Namibia's fiscal strength due to sizeable fiscal imbalances and an increasing debt burden, 2. Limited institutional capacity to manage shocks and address long-term structural fiscal rigidities and 3. Risk of renewed government liquidity pressures in the coming years. Furthermore, The Monetary Policy Committee (MPC) of the Bank of Namibia (BON) cut the Repo rate by 25 basis points to 6.75 on 16 August. The MPC took the decision in order to support domestic economic growth, while maintaining the one-to-one link between the Namibia Dollar and the South African Rand. NCPI indicates that July 2017 annual inflation continued with its downward trajectory which commenced in February 2017 to reach 5.4% from 6.1% in June, but remained flat at 5.4 % for the month of August. The Namibia Statistics Agency (NSA) revised the GDP growth for 2016 from 0.2% to 1.1%.

Going Forward
We will continue to maintain a short portfolio duration due to low offered rates as a result of excess liquidity, as in previous quarter, and still believe that rates will tick-up higher in the space of coming months. Thus we will balance portfolio weighting between keeping floating rate instrument and fixed deposit, but remain overweight cas