Note: Given this fund’s objective, the manager recommends a minimum time horizon of six years for it to achieve its strategic objective.

The H4 Growth Fund (‘the fund’) delivered 1% in Q3-2019, and has delivered 5.2% over the past 12 months. In terms of the major asset classes to which the fund was exposed during the quarter, the local equity market (measured by the FTSE/JSE All Share Index) was down 4.6%, outperforming the FTSE/ JSE Capped Top 40 Index (to which the fund is exposed) which lost 6.1%. Local bond prices (All Bond Index) gained 0.8% during this risk-off phase in global financial markets; while the local listed property market (FTSE/JSE SA Listed Property Index) ended down 4.4%. Global equities (MSCI All Country World Index in US dollars) ended the quarter flat, while global listed property (MSCI World REITs Index in US dollars) gained a stellar 6.2% on the back of a further decline in global bond yields amid concerns about the global economic growth outlook. During the quarter, the rand weakened 7.5% versus the US dollar; supporting the performance of global assets when measured in rand terms.

One of the stated primary objectives of the fund is to achieve capital appreciation over the medium to long term at a risk level that is somewhat lower than that of a pure equity investment. When measured over the past one and three year periods, the fund’s standard deviation (which is a generally accepted measure of risk/volatility) was 8.9% and 9.1% respectively. This compares well with the local equity market’s standard deviation of 12.8% over one year and 11.4% over three years, and global equity measured in rand’s standard deviation of roughly 27.9% over one year and 22.4% over three years. There were no marked asset allocation changes in the fund in recent months. However, the manager did trim the fund’s offshore listed property exposure into strength, while net inflows were used to top up the fund’s SA equity and global equity exposures. In terms of foreign currency exposure, the manager initiated another zero cost currency hedge during August on a portion of the fund’s offshore exposure in order to protect it from possible marked rand strength. This protection is in place until mid-December 2019 and supplemented the early May 2019 decision where, prior to the domestic national election, the manager bought a zero cost currency hedge to protect a limited portion of the fund’s offshore assets against the risk of a possible postelection rand rally. The options that were bought in May have expired in mid-September. At quarter-end, the fund held a relatively diversified mix of assets which the manager deems appropriate for the current investment climate. Sizeable asset class exposures included global and domestic equity (of which a small portion was allocated to protected equity), along with local and global listed property.

The fund continues to adhere to its policy.

Note: Given this fund’s objective, the manager recommends a minimum time horizon of six years for it to achieve its strategic objective.

The H4 Growth Fund (‘the fund’) was up 3% during Q2-2019, and has delivered 7.1% versus 10.8% for its SA CPI +6% p.a. benchmark over the past 12 months. In terms of the asset classes to which the fund was exposed during the quarter, the local equity market (measured by the FTSE/JSE All Share Index) gained 3.9%, lagging the FTSE/JSE Capped Top 40 Index (to which the fund is exposed) which was up 4.9%. Local bond prices (the All Bond Index) increased by 3.7%, while the local listed property market (the FTSE/JSE SA Listed Property Index) ended up 4.5%. Global equities (the MSCI All Country World Index in US dollars) delivered 3.6%, while global listed property (the MSCI World REITs Index in US dollars) gained 2.2%. During the month, the rand strengthened 2.3% versus the US dollar; suppressing the performance of global assets when measured in rand terms.

One of the stated primary objectives of the fund is to achieve capital appreciation over the medium to long term at a risk level that is somewhat lower than that of a pure equity investment. When measured over the past one and three year periods, the fund’s standard deviation (which is a generally accepted measure of risk/volatility) was 10.4% and 9.6% respectively. This compares well with the local equity market’s standard deviation of 12.6% over one year and 11.4% over three years, and global equity measured in rand’s standard deviation of 30.4% over one year and 23.3% over three years.

During early May, prior to the domestic national election, the manager bought a zero cost currency hedge to protect a limited portion of the fund’s offshore asset against the risk of a possible post-election rand rally. These options expire in September 2019. In addition, in recent months, net inflows were allocated towards SA and US protected equity. The manager also took some profit in global real estate, which has delivered stellar returns over the past year. At quarter-end, the fund held a relatively diversified mix of assets which the manager deems appropriate for the current investment climate. Sizeable asset class exposures included global equity, domestic equity (of which a small portion was allocated to protected equity), along with local and global listed property.

The fund continues to adhere to its policy.