STANLIB International Aggressive Fund of Funds has closed and merged into STANLIB International Balanced Fund of Funds.

The Stanlib International Balanced Fund of Funds changed name and is now the Stanlib Global Balanced Feeder Fund

Fund Review
The fund delivered a small positive dollar return of 0.3% in what has been a very volatile quarter. Because of rand depreciation, the return in rands was a more impressive 7.3%, making it 19.6% for the six months to end June and 34.8% for the year to end June. The rand lost 21.3% against the dollar in the year to end June and the fund's dollar return was 11.2%. During the quarter the MSCI developed markets delivered a small positive dollar return of 0.8%, where your fund is overweight, while the MSCI Emerging Markets Index did -8%, where your fund is underweight (3.3% of equities versus 12% in the benchmark). We cut our equity holdings before the correction began in late May, but remain 2% overweight, while we are 5% underweight in bonds relative to benchmark. Global bonds returned -2.9% in dollars during the quarter, making it -4.8% so far in 2013 and -2.2% for the year to end June. The most volatile asset class was global listed property which did -4.9% in the quarter in dollars, but still returned 10.2% for the year to June. We are slightly overweight.

Looking Ahead
One usually expects plenty of volatility and a fair amount of negativity during the May to August period, which coincides with the languid Northern Hemisphere summer months. So far there has been more volatility in bonds and listed property than in equities because of the US Federal Reserve's mention of cutting back its $85bn bond-buying program called quantitative easing. One gets the impression that the volatility has been overdone and that markets should be calmer going forward, including both bonds and property. Thus far the bull market in equities remains intact and we continue to prefer developed market equities.

Fund Review
The fund produced a positive dollar return during the quarter of 1.9%, after dollar returns of 6.2% in the September quarter and 2.9% in the December quarter. Interestingly, in euros the latest quarter's return was 4.3% and in pounds it was 10.9%. Rand depreciation led to a much better rand return for the quarter of 11.4%. The rand lost 9% against the dollar, 6.4% against the euro and just 0.5% against the pound during the quarter. During the year to end March the fund did 27.2% in rands, one of its best annual returns. In dollars the return was 5.6% for the year, whereas in euros it was 10% and in pounds 10.5%. The fund is in early April trading at an all-time record high in rand terms, in euro terms and in pound terms and is very close to its record in dollar terms. It was mostly "risk-on" during the quarter, with global equities gaining 6.6%, global property gaining 3% and global bonds losing 3.1%. The big disappointment was emerging market equities losing 1.6%. The fund continues to be overweight in equities and in property and underweight in bonds.

Looking Ahead
US equities, which comprise around 46% of the MSCI World index, reached a record high in early April and still offer decent value, assuming the US economy continues to grow around 2%. Japanese equities are picking up nicely in line with their economy, so it is Europe and the UK that are struggling a bit. Overall we still prefer equities and listed property offshore to bonds. Could this be one of the few years when the May to August period is positive rather than negative for risk assets like equities?