TRANSCRIPT

The third quarter of the year was challenging for financial markets across the globe, as widespread interest rate hikes and recessionary fears continued to drive risk of sentiment.

Apart from cash, local assets struggled over the quarter with equity and property posting negative returns. Fortunately, global asset costs produced a positive return in rand due to the large depreciation of the rand against the US dollar.

If we look at the performance of the range, the portfolios did relatively well versus industry peers. The flexible income portfolio returned 1.3%, stable growth 1.1%, moderate growth 0.8%, high growth 0.3%, and interestingly the flexible growth portfolio posted quite a high 2%.

So why did this portfolio do so well versus industry peers during a tough quarter?

Well, it was its high global exposure which benefited due to the depreciation of the rand over the quarter.

If we look at some of the managers in the portfolio:

• Truffle was one of the top performing managers. Good stock selection helped Truffle. ABSA, one of their top picks, was up 18.5%. Also, Glencore, Exxaro and the rallying Thungela
• The 1Invest MSCI World Index Feeder Fund benefited from rand depreciation as well as its developed market exposure
• M&G's Inflation Plus and Balanced portfolios came under pressure. That was because of their high SA Equity exposure as well as high SA bond exposure. It also didn't help that they held Sasol, one of the big losers over the quarter
• 36One also had a challenging quarter compared to industry peers. That said, 36One has been one of the top performing managers for the models over the last number of quarters

In terms of the outlook, we really think local assets are attractively priced with very good upside potential for patient investors. Global equity markets have been a nerve wrecking, but the table presented shows the major S&P 500 drawdown periods historically of over 25% or more, and subsequent returns. 

The key message from this historical data is that by being invested after large drawdown, the market is likely to produce an outsized return in subsequent years and we think the range is well positioned for this opportunity. Thanks for watching and thanks for your support during a tough quarter.