NAV on 2019/08/20
|NAV on 2019/08/19
|52 week high on 2019/06/28
|52 week low on 2018/10/04
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
Absa Fund Managers (RF) (Pty) Ltd.
South African--Multi Asset--Low Equity
CPI Inflation plus 3%
Absa Inflation Beater comment - Mar 19
South African equities started the year strong ending 1Q19 in positive territory relative to 1Q18, the JSE All Share index printed a total return of 8.0% in 1Q19. The strong performance was from resources and industrials while financials were flat. The property sector started the year strong delivering a total return of 9.2% in January 2019, this was the sectors best monthly total return since March 2016, to ending the quarter 1.5% up. Cash returned 1.7% and bonds around 3.8% for the quarter.
Global markets rebounded in 1Q19 as the trade tensions between the US and China eased and the US FED put rate hikes were put on pause. Towards the end of the quarter there were signs that a temporary deal was possible between the US and China. However, it is clear that the US is looking to change the relationship and the treatment of intellectual property. We should assume that things will get worse before they get better in this process, this will probably not bode well for the other Asian economies. The US FED has put rate hikes on pause as they see inflation as being under control. There are concerns that US growth will be slowing in 2019 even a possibility that the economy could end up in recession. The tax cuts will normalize in 2019 but the continued decline in unemployment means there are still legs in the economy, we should expect a slowdown rather than a recession. BREXIT will continue to be a headline for 2019.
The equity markets have started 2019 strong but there are some headwinds in the South African economy for the remainder of the year. The country has entered an election year which the outcome will have consequences for the macro landscape. We have avoided the Moody's downgrade but the rating agency will be knocking at our doors post elections. There are still concerns surrounding Eskom and their ability to keep the lights on; the impact load shedding will have on the economy. Inflation is expected to remain within the band meaning we should not expect pressure from the SARB. It should be noted that there is always a risk of the oil price increasing and the currency depreciating to the assumption of subdued inflation. Even though all these factors are there the Absa Inflation Beater Fund performed in line with expectation meeting its target of CPI+3% for all periods since inception. The focus remains portfolio optimization to deliver CPI+3% while minimizing risk of capital loss.
The fund aims to offer investors a consistent return of 3% above inflation as measured by the SA Consumer Price Index over rolling 36 month periods. The fund invests in shares, income bearing instruments and fixed interest instruments, with major exposure to inflation linked bonds. Shares are limited to a maximum of 20% of the portfolio.