The much-anticipated national elections are over and, thankfully, we will now be spared the vigorous marketing and campaigning by political parties. As anticipated, the ANC won a comfortable majority, albeit less than in the previous election. Yet beyond the ANC there were notable shifts: the EFF gained enough to become the official opposition in three provinces (Limpopo, Mpumalanga, and North-West); the DA lost ground following in-fighting and policy confusion (at a national level and in the Western Cape) with the unexpected spill-over to the FF+ that increased its share to 2.4%. The ANC will now have to show what the people voted for – the pressure (and responsibility) of being in charge…
South Africa’s financial markets were banking on a strong ANC victory to send a clear mandate to President Ramaphosa and they got what they wanted. Things looked rosy on Friday as bond yields rallied, USD/ZAR got as low as 14.15, and stocks extended their year-to-date rally. Unfortunately, this was all trumped by the re-escalating trade war between the US and China. President Trump increased the tariff from 10% to 25% on $200bn worth of imports from China with the potential for more to come. China has retaliated by slapping more of their own tariffs on US imports. This has sent risk assets into a downward spiral.
The US stock market is down 5% in the last week, the rand has given up gains and is once again trading at pre-election levels, and bond yields are on the rise, except for the UST 10-year yield that is benefiting from safe-haven demand. This proves that being in a small open emerging economy you will always be beholden to what happens around the globe.
Let’s hope that the stars align for President Ramaphosa to fulfil the hopes of the faithful that voted for him and that the super powers (US and China) come to their senses in some way or another.
Headline Information of the Matrix Funds
LONG FUNDS:
- Matrix NCIS Equity Fund has SWIX TR as a benchmark and continues to do well against peers as well as the benchmark index. The fund ranks number 3 if one compares it against all funds in the General Equity space (123 funds) since inception with annualised performance of 8.6% achieving Swix +2% over this period.
- Sanlam Select Defensive Balanced Fund achieved a return of CPI+3.5% since inception exceeding investment objectives (CPI+3%). The fund is ranked number 1 out of 91 funds since its inception with annualised performance of 8.3%.
- Sanlam Select Bond Plus Fund has outperformed the ALBI since inception by 0.2% per annum. The fund is ranked number 7 out of a universe of 27 funds over the same period with annualised performance of 8.5% since inception.
- Sanlam Select Absolute Fund has a very short track record under management of Matrix Fund Managers. We took over the management of this fund in October 2017. The supplemental deed of the fund is being changed to the Medium Equity category. Comparing the short track record against peers shows a promising start. If you were to look in Morningstar, for example, the fund has a longer track record but we are only responsible for the last 18 months.
HEDGE FUNDS:
- Matrix NCIS Fixed Income Retail Hedge Fund has returned 15.7% since inception. The fund achieved annualised returns of performance of 11% over the last 3 years outperforming Equities with no correlation.
- Matrix NCIS Multi Strategy Retail Hedge Fund has returned 11.8% since inception. Over time the fund has no correlation to the equity market, low correlation to bonds, and performs well against both asset classes since inception.
If you would like further information please feel free to contact us.
