Fund review

The fund returned 7.51% in rand terms for Q3 2019 compared with the benchmark return of 7.57%. The fund’s market value increased to R352 million during the quarter, up from R299 million at the end of June 2019. The rand weakened during the quarter to end at R15.17/$ (R14.08/$ at the end of June 2019). This was a key contributor to the positive return of the fund. The rand remains volatile due to economic uncertainty and a low growth environment in SA. The fund aims to maintain capital value and liquidity while producing a return for investors in line with money market rates.

Market overview

US macroeconomic indicators were mixed. US GDP was 2% in the second quarter, unchanged from preliminary estimates and lower than the 3.1% expansion reported in the first quarter. Investor sentiment also took a hit after the US manufacturing gauge contracted for the first time in three years. The Institute for Supply Management’s (ISM) Purchasing Managers’ Index fell to 49.1 in August. The group’s gauge of new orders dropped to a more than seven-year low, while the production index hit the lowest level since late 2015. Consequently, the US Federal Reserve (Fed) cut interest rates twice during the quarter by 0.25 percentage points each time. Government bond yields slumped to record lows amid renewed fears over a trade war and as the Fed adopted an accommodative monetary policy stance.

Meanwhile, the University of Michigan’s consumer sentiment index gained slightly towards the end of the quarter to 93.2, driven by favourable income trends. This was after it fell from 98.4 to 89.8 between July and August, marking the largest monthly decline since 2012, as US trade tariff policies, which are subject to repeated reversals and an ongoing overhang of higher future tariffs, dented consumer sentiment.

Looking ahead

The fund continues to focus on high-quality issuers, with about 45% invested in entities rated Aa3 or higher. The fund’s weighted average maturity was decreased to 40 days from 49 days previously. The fund continues to invest mainly in commercial paper and certificates of deposit with investment companies and banks.

The commentary gives the views of the portfolio manager at the time of writing. Any forecasts or commentary included in this document are not guaranteed to occur.

Fund review

The fund returned 0.76% in rands for the first quarter of 2019 compared to the benchmark return of 0.9%. The fund’s market value increased from R283 million at the end of 2018 to R323 million at the end of March 2019. The rand ended the quarter weaker, at R14.50/$, after trading at R14.38/$ at the end of 2018. The rand remains volatile due to economic uncertainty and a low growth environment in SA.

The fund aims to maintain capital value and liquidity while producing a return for investors in line with money market rates.

Market overview

Macroeconomic indicators were largely mixed in the US. The second estimate of fourth-quarter GDP came in at 2.2%, well below the previous estimate of 2.6%. This was mainly because personal consumption expenditure and non-residential fixed investment rose less than expected, as well as due to a decline in public spending.

Nonetheless, full-year GDP growth of 2.2% is one of the highest on record since 2015. Consumer sentiment jumped after declining for two consecutive months, bolstered by rising household income and lower inflation expectations, which indicates higher real income. The unemployment rate fell in February to 3.8% from 4.0%, while the participation rate stood at 63.2%. The ISM manufacturing Purchasing Managers’ Index (PMI) beat market expectations in March and recovered from the two-year low seen in February. Faster growth in new orders, production and employment offset a slowdown in inventories and a backlog in orders. Housing starts and building permits declined. Nonetheless, housing affordability is improving and will drive demand, although it may remain somewhat volatile.

On the policy front, the US Federal Reserve’s Open Market Committee (FOMC) unanimously voted to maintain its target range for the federal funds rate at 2.25–2.50% and no longer expects to raise interest rates this year.

Looking ahead

The fund continues to focus on high quality issuers, with about 37% invested in entities rated Aa3 or higher. The fund’s weighted average maturity was increased to 35 days from 17 days previously. The fund continues to invest mainly in commercial paper and certificates of deposit with investment companies and banks.

The commentary gives the views of the portfolio manager at the time of writing. Any forecasts or commentary included in this document are not guaranteed to occur.

Fund review

The fund returned 0.76% in rands for the first quarter of 2019 compared to the benchmark return of 0.9%. The fund’s market value increased from R283 million at the end of 2018 to R323 million at the end of March 2019. The rand ended the quarter weaker, at R14.50/$, after trading at R14.38/$ at the end of 2018. The rand remains volatile due to economic uncertainty and a low growth environment in SA.

The fund aims to maintain capital value and liquidity while producing a return for investors in line with money market rates.

Market overview

Macroeconomic indicators were largely mixed in the US. The second estimate of fourth-quarter GDP came in at 2.2%, well below the previous estimate of 2.6%. This was mainly because personal consumption expenditure and non-residential fixed investment rose less than expected, as well as due to a decline in public spending. Nonetheless, full-year GDP growth of 2.2% is one of the highest on record since 2015. Consumer sentiment jumped after declining for two consecutive months, bolstered by rising household income and lower inflation expectations, which indicates higher real income. The unemployment rate fell in February to 3.8% from 4.0%, while the participation rate stood at 63.2%. The ISM manufacturing Purchasing Managers’ Index (PMI) beat market expectations in March and recovered from the two-year low seen in February. Faster growth in new orders, production and employment offset a slowdown in inventories and a backlog in orders. Housing starts and building permits declined. Nonetheless, housing affordability is improving and will drive demand, although it may remain somewhat volatile.

On the policy front, the US Federal Reserve’s Open Market Committee (FOMC) unanimously voted to maintain its target range for the federal funds rate at 2.25-2.50% and no longer expects to raise interest rates this year.

Looking ahead

The fund continues to focus on high quality issuers, with about 37% invested in entities rated Aa3 or higher. The fund’s weighted average maturity was increased to 35 days from 17 days previously.

The fund continues to invest mainly in commercial paper and certificates of deposit with investment companies and banks.

The commentary gives the views of the portfolio manager at the time of writing. Any forecasts or commentary included in this document are not guaranteed to occur.