2009/04/07 00:00:00

The PPS Conservative Fund of Funds underperformed its CPIX+2% benchmark by 1.28% over the quarter. This is mainly attributable to your fund's underperformance in October which was characterised by a very challenging investment environment. For the months of November and December the fund outperformed its benchmark. Cash delivered 2.95% and the bond market rallied to deliver 11.35% in the past quarter. Thus, your fund's exposure to cash and bonds contributed positively to overall performance. The local equity market remains very volatile and vulnerable to negative sentiment on emerging markets. Globally, volatility has reached historic highs with the VIX volatility index at very high levels. In the circumstances, our equity exposure detracted from optimal performance. While the future outlook is quite bleak given expectations of a recession globally and inflation still in double digits, we continue to expect the PPS Conservative Fund of Funds to match its objectives over rolling 3-year periods. Going forward, we will be increasing our exposure to cash and (slightly) to local equities, to take some advantage of attractive valuations, while maintaining our generally cautious approach.