Cautious Conservative Consistent

Transcription

1 e-noted Cautious Conservative Consistent

2 MARKET SUMMARY 1 Index total returns as at 30 June 2018 Index Close YTD 1-month 6-month 1-year 3-year 5-year 7-year FTSE/JSE All Share % 3.2% -1.7% 15.7% 6.7% 10.9% 12.3% FTSE/JSE Resources % 8.2% 15.0% 42.9% 5.0% 3.3% -0.2% FTSE/JSE Financials % -2.4% -9.4% 10.6% 3.6% 11.6% 14.9% FTSE/JSE Industrials % -2.8% -10.9% 8.1% 5.4% 5.7% 10.9% FTSE/JSE SA Listed Prop % -2.8% -21.3% -9.8% 1.4% 6.9% 11.5% FTSE/JSE Mid-Caps % -1.0% -10.3% 4.9% 4.4% 8.4% 11.4% FTSE/JSE Small Caps % -2.8% -5.7% 1.0% 2.6% 9.5% 12.8% MSCI World Index $ % 0.5% 0.7% 11.5% 9.1% 10.4% 9.7% MSCI Emerging Market $ % -4.6% -6.6% 8.2% 6.5% 5.4% 2.0% Currency appreciation as 30 June 2018 Currencies Close YTD 1-month 6-month 1-year 3-year 5-year 7-year ZAR/USD R % -8.1% -10.8% -5.4% -3.9% -6.8% -10.6% ZAR/GBP R % -7.8% -8.4% -7.0% 1.9% -3.8% -7.5% ZAR/EUR R % -9.5% -8.0% -7.6% -5.2% -4.5% -7.3% Fund returns as at 30 June 2018 Funds YTD 1-month 6-month 1-year 3-year 5-year 7-year Stable Portfolio 2.83% 2.18% 2.83% 8.52% 7.49% 8.15% 9.43% Multi Asset Low Equity 1.50% 1.41% 1.50% 6.89% 5.73% 7.31% 8.36% Benchmark: CPI + 3% 4.40% 0.43% 4.40% 7.51% 8.50% 8.59% 8.64% Moderate Portfolio 0.17% 2.19% 0.17% 8.59% 6.16% 8.59% 10.65% Multi Asset Medium Equity 0.50% 1.92% 0.50% 6.88% 4.80% 7.57% 8.94% Benchmark: CPI + 5% 5.40% 0.59% 5.40% 9.60% 10.61% 10.70% 10.75% Aggressive Portfolio -2.72% 1.30% -2.72% 10.38% 4.65% 9.52% 11.49% SA - Equity - General -3.68% 1.30% -3.68% 7.91% 2.67% 7.89% 9.10% Benchmark: CPI + 7% 6.39% 0.75% 6.39% 11.68% 12.72% 12.81% 12.86%

3 Commodity returns as at 30 June Commodity Close YTD 1-month 6-month 1-year 3-year 5-year 7-year Oil Brent Crude Spot $ % 5.3% 22.3% 57.7% 3.5% -1.8% -1.7% Gold $ % -3.6% -3.9% 0.6% 2.0% 0.3% -2.3% Platinum $ % -5.8% -8.1% -7.3% -6.6% -6.4% -6.0% Silver $ % -1.5% -4.8% -3.0% 0.7% -3.4% -6.3% Aluminium $ % -6.2% -6.0% 11.4% 7.8% 3.8% -2.1% Copper $ % -3.4% -8.6% 11.5% 4.6% -0.4% -3.7% Corn $ % -12.4% -0.1% -2.6% -2.8% -8.2% -5.9% Sugar $ % -4.8% -21.8% -10.8% 0.1% -5.0% -6.9% Iron Ore $ % -1.3% -14.6% -2.2% -0.6% -8.1% -6.5% Economic indicators as at 30 June 2018 Repo Rate 6.50% South African 10-year Bond 8.84% Prime Rate 10.00% US 10-year Treasury Bond 2.86% PPI Inflation 4.60% US Fed Fund Rate 1.90% CPI Inflation 4.40% Euro Area REFI 0.00% ECONOMIC HIGHLIGHTS Local SA business confidence slumped in Q after increasing modestly in Q suggesting that "Ramaphoria" may be fizzling out. SA recorded an improved trade surplus in May of R3.5 billion, with exports rising faster than imports. Welcome improvement relative to the dismal Q trade deficit. SA consumer inflation surprised on the downside in May 2018, easing to 4.4% year on year despite the higher fuel price. Lower food inflation helped, but overall little sign of upward pressure on prices. Still expect rates on hold. SA retail sales fell more than expected in April 2018, declining in four out of the past five months. Delayed increase in government salaries could boost retail through the middle of 2018, but the sector is likely to struggle to gain momentum. Global US Federal Reserve decided to increase interest rates by 25 basis points, as expected. Four rate hikes expected in Powell made some very positive statements about the performance of the US economy. US consumer inflation increased to 2.8%y/y in May, in-line with expectations, pushed higher by oil. Core inflation up slightly to 2.2%. Modest upward pressure on inflation becoming a little more evident. Namibian economy still grapples with recession although there are some signs of improvement. Nigeria s inflation continues its downward trajectory however Central Bank decision is still unclear.

4 Gerbrand Smit Chief Investment Officer 3 BBA, MBA MANAGER COMMENTS Value Index relative to the Growth Index Value outperforms Growth Growth outperforms Value The graph depicts the JSE Value Index versus the JSE Growth Index from 2006/04/14 up to the most recent data point of 2018/06/29. It is clear that growth stocks have outperformed value stocks since 2012 and we have reason to believe that the tide is turning towards value. Gerbrand Smit explains why we think this is the case in the writing below. '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 ' Value on the Horizon We are currently of the view that global assets are trading at elevated levels. This is most definitely true for develop market bonds and in-favour developed market equities. Long-term asset class performance needs to be seen in the context of the 30- year bull market that is likely approaching its end. Thus, the extraordinarily low-interest rate environment and unconventional monetary stimulus might well be something of the past and has been very favourable for long duration assets such as equities and long dated bonds. Going forward we believe that Index returns from these levels will be disappointing compared to the returns South African investors have become accustomed to over the last 15 years. Fewer opportunities exist globally to purchase undervalued loved businesses at a margin of safety that we feel comfortable with. This being said maybe it s the right time to invest in active funds for the next decade. We continue to highlight the dispersions in valuations within global equity markets, especially between the prices paid for favoured businesses that dominate indices versus the cheap, out of favour businesses. This is especially prevalent within our market and in the graph above as we see that the JSE Growth Index, which represent the most favoured shares, has significantly outperformed the JSE Value Index, which represent the most out of favour shares, since The graph increases our confidence about the long-term returns that can be derived from the uncrowded value opportunities within our market and the rest of our investment universe. The following opportunities have presented themselves: Emerging markets equities and bonds have been out of favour for the last few years especially in the last few months with the so-called trade war at the forefront. We prefer emerging market bonds and equities within the global context. The recent sell-off in local bonds which came after the first quarter Ramaphoria effect has given us the chance to add more local bonds to our funds as we have increased confidence about South Africa s outlook compared to November Local property share prices has come down by over 30% from the beginning of This has given us the opportunity to add property shares to our funds. Although still underweight we view this as a significant change in our view going forward. There are certain equities that present significant upside given current valuations and we are continuing our selective buying within the local as well as offshore markets.

5 4 QUOTE OF THE MONTH Seth A. Klaarman, from Margin of Safety I believe that over time value investors will outperform the market and that choosing to match it is both lazy and shortsighted. DISCLAIMER Collective Investment Schemes (CIS) or Unit Trusts are generally medium to long-term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. Collective Investments are traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are calculated on a net asset value basis, which is the total value of all assets in the portfolio including any income accrual and less any permissible deductions from the portfolio. Portfolio performance is calculated on a NAV to NAV basis and does not take any initial fees into account. Income is reinvested on the ex-dividend date. Total return performances are published. The source is FactSet, Bloomberg and MoneyMate. Actual investment performance will differ based on the initial fees applicable, the actual investment date and the date reinvestment of income. A schedule of fees and charges and maximum commissions is available from the manager / scheme. Commission and incentives may be paid and if so, would be included in the overall costs. Forward pricing is used. The following charges are levied against the portfolio: Brokerage, auditor s fees, bank charges and trustee fees. Commissions and incentives may be paid and if so, are included in the overall costs. A schedule of fees and charges and maximum commissions is available on request from N-e-FG Fund Management. Forward pricing is used. N-e-FG Fund Management is a member of the Association for Savings and investment South Africa (ASISA). Please note: Past Performances is not a good indication to future performances.