For the month of December, the Fund returned 5.90% relative to the category peer average of 8.66%, with The Rand appreciating by 0.96% against the US Dollar. Relative to the third quarter, we increased our exposure to locally listed equity, property and warrants that have offshore revenue streams. For the year, the Fund returned -23.61% relative to the benchmark of -0.19%, while the Rand depreciated by -6.96% against the Dollar. In 2021, the Fund ranked in the top 2 of Regulation 28 compliant funds available in South Africa over a 3-year period according to the ASISA Multi-Asset High Equity category, only to become one of the worst performers over a 3-year period ending December 2022. Given the Fund’s highly differentiated proposition, we do not expect to perform in-line with our peers and hope we can provide some consolation for the poor performance last year.

As a house, we have adopted the view that the Rand that depreciates over time versus developed currencies, and despite volatility, that came to fruition over the course of the year. Driven by offshore inuences, the Dollar had a year of unprecedented strength as spiralling ination and the Fed’s hawkish sentiment spurred a risk-off environment.

Locally, South Africa faced further political turmoil after President Cyril Ramaphosa narrowly escaped impeachment proceedings which ultimately allowed him to secure a second term as ANC president. However, investors remain sceptical of the outlook as the country remains plagued with intensifying power cuts, with loadshedding surpassing 200 days in 2022.

Despite the South African economy having a difcult year, locally listed equities held up well with the JSE All Share Index closing up 3.58% for the year. We were pleased with the performance of our Rand-hedge local equity holdings which performed roughly in-line with the local market, buoyed by a weakening Rand. However, the Fund’s mandate to maximise offshore exposure also implies that we were not able to fully benet from a fairly resolute local market.

The Fund’s offshore bias was one of the key detractors for the year. Global equity markets had a torrid year due to the US Federal Reserve’s hawkish stance and intensifying recession fears. The Fed hiked rates by 425bps despite market consensus coming in at 75bps in the beginning of the year.