The Fund grew by R1.1bn during the quarter and ended the quarter at R21.6bn.

The MPC surprised the market by cutting the Repo rate by 50bp. The Money Market yields curve went inverse as the market started to expect further interest rate cuts. At one stage the long end of the curve discounted a further 0.5% cut in interest rates. At that point fundamentals were sound, with CPIX at a record low, the PPI barely positive, the Rand remaining strong and the oil price of no concern to Governor Mboweni. All these factors contributed to the bullishness in the market.

Duration in the fund was kept below benchmark due to our concern on the oil price going forward, as well as the weakness in the current account. STANLIB is expecting money market interest rates to move sideways to slightly up over the next quarter. This is as the weakness in the oil price and its possible effect on CPIX becomes more of a concern.

The fund grew by R2bn during the quarter and ended the quarter at R 20.5bn.

The sentiment in the Money Market changed to more bearish as fears of a higher oil price and a weaker Rand emerged and the effect that it could have on inflation. The yield curve steepened as the rates stayed unchanged in the short end and increased by 50bp in the long end. The MPC left rates unchanged at both their March and June meetings. At the last meeting the Governor commented that inflation might temporarily breach the target later in the year.

With the STANLIB view that interest rates will stay unchanged to at least to at least early 2005, the Fund duration was kept at the longer end to benefit most of the higher rates at the longer end of the curve.

The duration of the fund will be kept long with expectations of the Rand staying strong against the dollar.

The fund generated a return of 9.1% for the 12 months to June 2004.

The fund ended the quarter at R18.5bn, after merging with the Liberty Money Market Fund, maintaining the position of second largest fund in the category.
The sentiment in the Money Market changed from the bullish outlook that was evident during the previous quarter after no change in the Repo rate was announced at the January MPC meeting. The curve steepened as the market became more liquid at the end of February, following the inflow of R40bn from RSA bond coupon payments and the maturity of the first tranche of the R150. This resulted in a 50 basis point cut in call rates. As banks perceived this to be the bottom of the interest cycle they started issuing at higher levels in the longer end of the curve.
The duration of the Fund was kept to a maximum to benefi t the most from the higher rates at the longer end of the curve, considering that the fi rst interest rate increase is only expected during the fourth quarter.
The Fund yielded a return of 10.5% for the 12 months to March 2004.
Duration: 87 days

Due to the STANLIB amalgamation (27 Feb 2004), the Liberty Money Market Fund and the Standard Money Market Fund merged to form the Standard Bank Money Market Fund. The history of the Standard Bank Money Market Fund has been retained.

The fund grew by R1.8bn during the fourth quarter of 2003, ending the quarter at R15.5bn. The fund maintained the position as second largest fund in the category for Money Market Funds.
The duration of the fund was run down towards year-end on expectations that South Africa was nearing the bottom of the interest rate cycle. Rand weakness was also expected towards year-end that would put pressure on short-term interest rates and the SARB surprised the market by cutting the repo rate by only 50 basis points versus consensus expectations of 100 basis points. Other factors that were considered negative for short-term interest rates was the lack of liquidity over the December month end as well as various banks having their year-ends. The short duration position improved performance as call rates increased to above the Repo rate at the end of December and one year rates went up to 8.05% at year end from a low of 7.15% early December.
Short- term interest rates are expected to move sideways for most of 2004. It is expected to be a volatile year with elections in April and short-term interest rates is expected to be driven by the rand. The fund will be actively managed to make use of the opportunities that may occur in the market over the year.