After a correction in global equity markets during August, equity markets surged during September with the domestic equity market advancing 8.7% for the month. Global equities also had stellar returns with developed market equities yielding 9.1% in USD and emerging market equity yielding 10.9% in USD. Markets benefitted from an increase in risk appetite from investors and markets providing higher yielding assets were the largest beneficiaries. This was clearly reflected in the ZAR strengthening by 5.9% against the USD, while other emerging market currencies experienced similar gains. The VIX Index (measure of global risk appetite) also decreased during September, at a level of 23.70%, down from the 26.05% level at the end of August. Global bonds continued to perform well during September and were supported by investors' perceptions of the probability of the next round of quantitative easing by the US Federal Reserve. Global bonds yielded 2.2% in USD in September, while domestic bonds only yielded 0.76% in ZAR. Global bond returns were however severely diluted for Rand investors due to the strengthening of the Rand against the USD.

The fund continues to perform admirably, producing a return on 0.90% in September, outperforming the benchmark by 0.40%. Given the market rally in September, the Protected Equity strategy (Prescient Positive Return) produced a return of 1.58%, the best out of the strategies employed in the fund. The Fixed Interest Absolute Return strategy (SIM Absolute Return Income), marginally outperformed cash, as the duration of the fund has been significantly reduced. The Portable Alpha strategy was the laggard in the portfolio, as their equity alpha detracted from overall performance. SMMI believes the fund is appropriately positioned to outperform its benchmark.

ASISA did not approve the Domestic--Asset Allocation--Flexible sector and the fund moved into the Domestic--Asset Allocation--Prudential Low Equity on 18 Nov 2010