It is getting late in the year to say this, but all the best for 2019! Let’s hope this is a better year than 2018 on many fronts.
Although we are only half-way through the first month, the macro environment and market performance have already thrown up numerous challenges for the year ahead…..
The good
- The Fed has turned dovish, which should be good for EM, hunt for yield
- Valuations have become more attractive, particularly on equities
- The rand oil price has dropped sharply, with another petrol price cut in February in the offing
- Polling points to a comfortable ANC win in the elections, which would give Ramaphosa a clear mandate to reform
The bad
- The Brexit process continues, with markets putting a higher probability on a soft Brexit, but there is still a lot that could go wrong
- Global trade volumes are falling that is traditionally not good for EM
- There is as yet no resolution to the trade tensions despite the truce between the US and China
- Trump wants his wall, triggering a government shutdown and potentially a national emergency
The ugly
- Eskom’s blackouts in late 2018, higher tariffs, lower sales, ratings risk, cost overruns, cash shortfalls, a bloated wage bill, surging debt – R45 billion in interest over the next few years alone
That said, in recent years January to February have been good months for local bonds and currency (ZAR) performance, with 2019 off to a similar start. This might be due to light foreign investor positioning as the year turns, and some FOMO despite elevated uncertainty. Whatever the reason for the improvement in risk appetite, let’s hope the trend continues.
Headline Information of the Matrix Funds
LONG FUNDS: (Inception date 1 June 2014)
- 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 5 if one compares it against all funds in the General Equity space (125 funds) since inception with annualised performance of 6.5% and 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 8.5%.
- 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 8.1% 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 and it should be in 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 14 months.
HEDGE FUNDS:
- Matrix NCIS Fixed Income Retail Hedge Fund has returned 15.9% since inception. The fund achieved a performance of 6% in 2018 in tough market conditions.
- Matrix NCIS Multi Strategy Retail Hedge Fund has returned 11.7% 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 either myself or Patsy patsy@matrixfm.co.za
