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MONTHLY INSIGHTSNOVEMBER 2018

1 M 3 M 6 M 1 Y 3 Y 5 Y YTD

FTSE/JSE All Share TR ZAR

FTSE/JSE Top 40 TR ZAR

FTSE/JSE SA Resources TR ZAR

FTSE/JSE Ind/Industrials TR ZAR

FTSE/JSE Financial 15 TR ZAR

FTSE/JSE Top 40 SWIX TR ZAR

FTSE/JSE Mid Cap TR ZAR

FTSE/JSE Small Cap TR ZAR

Beassa ALBI TR ZAR

STeFI Composite ZAR

MSCI ACWI Ex USA NR USD

3.10 13.81 8.84 13.62 1.58 5.16 12.48

3.17 12.56 8.25 12.56 2.30 5.51 12.26

11.50 14.12 5.26 2.40 16.10 2.32 2.86

2.78 6.05 5.69 7.64 4.29 3.44 13.80

1.40 4.33 4.48 8.53 4.46 5.90 12.67

2.59 3.51 0.35 3.99 4.62 10.15 5.27

3.28 8.14 11.66 10.53 0.79 4.57 13.86

0.07 12.44 8.04 15.68 0.82 5.83 14.71

3.87 2.40 1.71 13.05 8.31 7.82 7.00

0.58 1.76 3.55 7.25 7.37 6.88 6.61

0.95 6.84 8.37 8.12 5.43 1.79 10.13

South African Indices

American Indices

1 M 3 M 6 M 1 Y 3 Y 5 Y YTD

DJ Industrial Average TR USD

S&P 500 TR USD

NASDAQ Composite TR USD

US Dollar

CBOE Market Vola�lity (VIX)

2.11 1.07 5.84 7.62 15.77 12.39 5.59

2.04 4.40 3.02 6.27 12.16 11.12 5.11

0.49 9.36 0.99 7.75 14.07 13.85 7.24

0.15 2.24 3.50 4.54 0.95 3.81 5.59

14.88 40.51 17.11 60.20 3.86 5.69 63.68

European Indices

World Index (USD)

1 M 3 M 6 M 1 Y 3 Y 5 Y YTD

FTSE 100 TR GBP

FSE DAX TR EUR

Euronext Paris CAC 40 PR EUR


1.60 5.26 7.20 0.67 7.41 4.94 5.43

1.66 8.95 10.69 13.57 0.37 3.66 12.85

1.76 7.45 7.31 6.87 0.31 3.10 5.81

0.95 6.84 8.37 8.12 5.43 1.79 10.13

1 M 3 M 6 M 1 Y 3 Y 5 Y YTD

MSCI ACWI NR USD 4.72 10.78 6.58 0.64 7.16 12.95 9.15

World Index (ZAR)

1 M 3 M 6 M 1 Y 3 Y 5 Y YTD

MSCI ACWI NR USD 1.46 5.73 2.66 0.98 8.57 6.16 2.55

Time Period: 2018/09/01 to 2018/11/30

2018/09 2018/10 2018/1185.0

87.5

90.0

92.5

95.0

97.5

100.0

102.5

105.0

FTSE/JSE All Share TR ZAR DJ Shanghai PR CNY S&P 500 TR USD

FTSE 100 TR GBP

Global Indices Performance

Global Indices Cumula�ve Performance YTD

1 M YTD25.00

22.50

20.00

17.50

15.00

12.50

10.00

7.50

5.00

2.50

0.00

2.50

5.00

7.50

10.00

3.17

12.26

0.68

21.06

0.60

7.19

2.04

5.11

1.60

5.43

FTSE/JSE All Share TR ZAR DJ Shanghai PR CNY S&P GSCI Gold TR

S&P 500 TR USD FTSE 100 TR GBP

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November 2017 Page 1

JSE Top 40 Holdings

JSE Top 40 Return per annum

2014 2014 2015 2016 YTD5.0

0.0

5.0

10.0

15.0

20.0

25.0

9.27.5

1.6

23.1

7.7

FTSE/JSE Top 40 TR ZAR

Re

turn

South African Headlines

Early in the month, SA equi�es benefited from the fourth quarter GDP report that was published by Stats SA, sugges�ng the

economy performed be�er than market expecta�ons. The local equity market struggled to find direc�on during the first

half of the month, but ended March 2018 decisively weaker.

In local markets, the SA equity market was not spared the vola�lity and weakness. The All Share index fell 4.2%, led by the

Industrial index, which ended down 5.5%, followed by the financial index, which fell 3.1% and the Basic Material index,

down 2.1%. The top40 Index, mid, and small cap indices fell 4.3%, 3.4%, and 1.3% respec�vely. Naspers con�nued to trade

under pressure. Despite listening to ac�vist efforts and selling 2% of its Tencent stake, the share con�nued to perform

poorly. Management failed to give a firm undertaking to buy back shares which many par�cipants were looking for. Further

weakness in the Technology landscape post the Facebook scandal weighed on Tencent during the period. Although current

market uncertainty exists, we con�nue to believe that the counter offers good value and excellent exposure to a set of

quality growth assets.

At the start of the month, new Mineral Resources Minister, Gwede Mantashe, promised the new version of the Mining

Charter would be finalised by no later than June 2018. Parliament confirmed the Mining Charter would not be completely

overhauled, but rather amendments would be considered. Two task teams have been set up and are expected to report

back in late April 2018.

The recent reduc�on in official interest rates and posi�ve global bond markets added to the sen�ment, resul�ng in the All

Bond index ending the month 2.0% higher. The la�er has risen 8.1% so far this year, while the rand has firmed 5.1% over the

same period; the global bond market, by way of contrast, has risen by 0.4% during this period.

Stock Informa�on

Sappi

South African paper and pulp maker Sappi said during November that its profit for the full year

fell 4.4% as it ramped up investment to modernise plants and shi� produc�on to more

profitable products. The Johannesburgbased company, whose European and North American

opera�ons contribute 51% and 25% of Sappi’s sales respec�vely, said profit fell to $323 million

from $338 million.

The company said projects in its European and North American paper facili�es as well as the

revamping of some South African pulp plants increased capital expenditure. The investment is

part of a “further shi� in the product mix of the group away from the tradi�onal graphic paper

business towards higher margin and growth,” Sappi said in a statement.

Capital expenditure was $146 million dollars, the bulk of which was contributed by projects

undertaken at the Ngodwana and Saiccor pulp mills in South Africa. “We are feeling pre�y

sa�sfied despite the fact that we have come in flat despite all of those produc�on stoppages,”

Group Chief Execu�ve Stephen Binnie said in an interview.

Earnings before interest, tax, deprecia�on and amor�sa�on, which excludes special items, fell to

$762 million from $785 million in 2017. Fourth quarter profit was up 4.9% while annual sales

rose to $5.8 million. A final dividend of $17 cents was declared

PSG

A�er 23 years at the helm, PSG founder Jannie Mouton is stepping down as nonexecu�ve chair

and director of investment holding company PSG and subsidiaries PSG Financial Services and

Zeder. Famously fired a few months before his 50th birthday – by his partners at the

stockbroking firm he cofounded (And Then They Fired Me by Jannie Mouton with Carié Maas,

Tafelberg, 2011) – Mouton went on to found PSG.

Today the group’s investment por�olio covers private educa�on (Curro and Stadio), banking

(Capitec), agribusiness (Pioneer Foods) and financial services (PSG Konsult).

In a note to shareholders in May, Mouton announced that he had been diagnosed with an early

form of demen�a.

1 M YTD37.50

30.00

22.50

15.00

7.50

0.00

7.50

15.00

22.50

3.10

12.48

2.650.30

5.161.82

20.67

6.73

6.74

FTSE/JSE Top 40 TR ZAR Fairtree Select Equity (Daily Track) (ASISA) South African EQ Financial

(ASISA) South African EQ Industrial (ASISA) South African EQ Resources

Re

turn

Local Indices Performance

Time Period: 2017/12/01 to 2018/11/30

2018/05 2018/11

85.0

90.0

95.0

100.0

105.0

FTSE/JSE Top 40 TR ZAR 86.4

JSE Top 40 Index


US equi�es closed higher in November. Shares climbed early in the month before giving up much of the

gain in the second half. Economic data remained encouraging and the labour market remains especially

strong. US payrolls added 250,000 jobs in October, more than consensus expecta�ons. The gain also

suggests that the employment trends remain solid, and that the weakness registered in September was

only temporary.

The US economy grew at an annualized rate of 3.5% during Q3 rela�ve to Q2. Downward revisions to

consumer growth from the first es�mate were offset by upward revisions to infrastructure spending and

inventories. The annual rate of headline infla�on in October rose from 2.3% to 2.5%, largely due to fuel

oil and gasoline price increases. Core infla�on declined from 2.2% to 2.1%. Given the drama�c decline in

the oil price during November, it is likely that US headline infla�on will decline below 2.0% next year.

Annual retail sales increased from 4.2% to 4.6% in October, indica�ng that the consumer is s�ll in good

shape. Durable goods orders, excluding the vola�le transport series, rose 0.1% monthonmonth,

following September’s 0.6% decline.

In equity markets the weakness was not confined to mid and smallcap companies; many of the large

caps suffered, too. Monthly declines of some of the giants, for example, include Facebook, which

tumbled 13.3% from its October peak to its trough (but off 39.5% from its all�me highs reached in this

year), numerous large oil giants on the back of the collapse in the oil price, and many suppliers to Apple,

too, as word spread of it scaling back on orders. The most notable casualty was also the largest of them

all, namely Apple, which declined 25.7% from its intramonth peak to trough. Since Apple peaked in early

October, it has shed around $300bn of market cap, while Microso� has shed ‘only’ $60bn.

American Headlines S&P 500

Time Period: 2018/11/01 to 2018/11/30

2018/11

97.0

98.0

99.0

100.0

101.0

102.0

103.0

104.0

S&P 500 TR USD 102.0

NASDAQ

Time Period: 2018/11/01 to 2018/11/30

2018/11

94.0

96.0

98.0

100.0

102.0

104.0

NASDAQ Composite TR USD 100.5

DJ INDUSTRIAL AVE

Time Period: 2018/11/01 to 2018/11/30

2018/11

96.0

97.0

98.0

99.0

100.0

101.0

102.0

103.0

104.0

105.0

DJ Industrial Average TR USD 102.1

1 M 3 M 6 M 1 Y 3 Y 5 Y YTD

DJ Industrial Average TR USD

S&P 500 TR USD

NASDAQ Composite TR USD

2.04 4.40 3.02 6.27 12.16 11.12 5.11

0.49 9.36 0.99 7.75 14.08 13.84 7.24

2.11 1.07 5.84 7.62 15.78 12.39 5.59

American Indices

Asian Indices

European Indices

Eurozone equi�es experienced another disappoin�ng month. The MSCI EMU index returned 0.9%.

Worries around the sustainability of global growth, trade wars and corporate profits con�nued to build.

Economically sensi�ve sectors such as materials and informa�on technology were among the worst

performers while defensive sectors – such as communica�on services, u�li�es and consumer staples –

registered the best returns.

Economic data within the eurozone con�nued to indicate slower growth. The flash composite purchasing

managers’ index for November came in at 52.4, a 47month low. Data showed the German economy

contracted by 0.2% in the third quarter of 2018, largely due to a trade slowdown as car manufacturers

struggled to prove that vehicles met new emissions standards.

The dispute over Italy’s 2019 budget con�nued. The European Commission rejected the dra� plans and

recommended pu�ng disciplinary procedures in place, which could lead to Italy being fined for non

compliance with budget rules. Brexit remained an important poli�cal focus. The EU approved the dra�

Withdrawal Agreement nego�ated with the UK. However, uncertainty remains as the deal could be

rejected by the UK parliament in a vote planned for 11 December.

Several markets in the European region experienced a tough November. The Swiss, German and Swedish

economies all declined by 0.2% during Q3 when compared to Q2. While some of the slowdown can be

ascribed to the automobile sector, which is experiencing its own unique set of challenges at present, it is

nevertheless indica�ve of a general slowdown we have seen during Q3 across Europe. German annual

infla�on during October totalled 2.4%, while unemployment in the UK rose marginally to 4.1%.

European Headlines FTSE 100

Time Period: 2018/11/01 to 2018/11/30

2018/1197.5

98.0

98.5

99.0

99.5

100.0

100.5

FTSE 100 TR GBP 98.4

DAX

Time Period: 2018/11/01 to 2018/11/30

2018/1196.3

97.0

97.8

98.5

99.3

100.0

100.8

101.5

FSE DAX TR EUR 98.3

CAC 40

Time Period: 2018/11/01 to 2018/11/30

2018/1196.3

97.0

97.8

98.5

99.3

100.0

100.8

101.5

Euronext Paris CAC 40 PR EUR 98.2

1 M 3 M 6 M 1 Y 3 Y 5 Y YTD

FTSE 100 TR GBP

FSE DAX TR EUR

Euronext Paris CAC 40 PR EUR


1.60 5.26 7.20 0.67 7.41 4.94 5.43

1.66 8.95 10.69 13.57 0.37 3.66 12.85

1.76 7.45 7.31 6.87 0.31 3.10 5.81

0.95 — — — — — —

Asian Headlines

The trade war, ini�ated by the US but primarily between the US and China, has been a dominant feature

in and determinant of equity markets this year and has developed to such an extent that it now

dominates investment markets’ direc�on and outlook, and it has been around long enough to start

assessing its effects. If one only reads US President Trump’s tweets, or listens to his spokespeople, one

can be forgiven for believing that China is on its knees already and suffering greatly as a result of the

tariffs that Trump has already imposed. The facts are that history shows tariffs to be economically

destruc�ve for all par�cipants – there are no winners in this war. Harm is suffered on both sides and the

consequences of the war o�en emerge in places one would least expect – such is the complexity of the

world in which we live, in global trade and global supply chain terms.

In Markets, November was characterized by a slight recovery in the Hong Kong market, gaining 6.1%,

which prior to November had declined 16.5% so far this year. In China, annual headline infla�on remains

steady at 2.5% in October. Annual core infla�on rose from a twoyear low of 1.7% in September to 1.8%

in October – refer to Chart 2. Producer infla�on con�nues to subside, falling to 3.3% in October from

September’s 3.6% refer to Chart 3. The decline in the oil price bodes well for a con�nua�on of this

declining trend in Chinese producer infla�on.

NIKKEI

Time Period: 2018/11/01 to 2018/11/30

2018/1198.0

99.0

100.0

101.0

102.0

103.0

Nikkei 225 Average TR JPY 102.0

HANG SENG

Time Period: 2018/11/01 to 2018/11/30

2018/11100.0

102.0

104.0

106.0

108.0

Hang Seng HSI TR HKD 106.2

SHANGAI

Time Period: 2018/11/01 to 2018/11/30

2018/1198.0

100.0

102.0

104.0

106.0

DJ Shanghai PR CNY 100.7

1 M 3 M 6 M 1 Y 3 Y 5 Y YTD

Nikkei 225 Average TR JPY

Hang Seng HSI TR HKD

DJ Shanghai PR CNY

2.03 6.44 13.01 7.68 9.28 5.51 12.91

2.68 4.62 1.39 3.25 5.58 8.66 7.04

3.29 4.74 15.06 21.85 8.95 4.40 23.57


Commodity Headlines

Oil prices halted their gains a�er rising more than 20% this year to over $86/bbl. Crude declined

the most since mid2016 as a rout in global equity markets raised concerns about economic

growth and energy demand. Petroleum products followed crude lower, while natural gas rose as

earlyseason cold weather drove demand across much of the U.S. Base metals resumed their

decline amid general riskoff sen�ment, weak macro data and a stronger dollar. Heightened

vola�lity across financial markets brought out buyers for precious metals over the month, with

pla�num outperforming gold and silver. The Bloomberg Commodity index fell 2.4% during the

month, reflec�ng the 8.5% decline in the oil price.

Commodi�es

November 2018

Japan

Equity markets con�nued to be vola�le in November, but a late rally le� the Japanese stock

market 1.3% higher for the month. There were no strong trends in major currencies, with the

yen weakening slightly against the dollar. Sector performance was very mixed. Financial stocks,

including banks, underperformed sharply, returning to the rela�ve lows seen in June. Value

stocks more broadly also underperformed, reversing the upward move seen in the previous

month.

Markets were somewhat direc�onless in the first part of the month. There was then a more

consistent rally into monthend, as some change was detected in the likely pa�ern of US interest

rate rises. Economic data released in November clearly showed a rebound from the previous

month’s weakness, which was largely related to a succession of natural disasters. There are now

some signs that the rate of improvement in the labour market may be peaking. The economy

has effec�vely been opera�ng at full employment for some �me, and we con�nue to see

evidence of this flowing through to higher wage growth.

On the corporate front, Nissan grabbed the headlines following the arrest of Carlos Ghosn and

his subsequent removal from his posi�on as chairman of the company. Away from the spotlight,

however, Japanese companies announced record levels of share buybacks in the wake of their

interim results, as the trend towards be�er shareholder returns con�nues. A buyback, also

known as a share repurchase, is when a company buys its own outstanding shares to reduce the

number of shares available on the open market.

Something Interes�ng

Time Period: 2018/11/01 to 2018/11/30

2018/11

75.0

80.0

85.0

90.0

95.0

100.0

105.0

S&P GSCI Gold TR 100.6 Oil Price Brent Crude PR 77.8

Currency Headlines

The U.S. dollar ended the month 1.9% stronger against its G10 counterparts, supported by

strong economic data in the U.S. and so� growth momentum in the rest of the world. The euro

fell 2.5% against the dollar on weakerthanexpected economic data and Italian budget

concerns. The Bri�sh pound dropped 2%, weighed down by the lack of a breakthrough in Brexit

talks. However, as risk markets fell, “safehaven” flows strengthened the Japanese yen 0.6%.

Emerging market (EM) currencies came under pressure in October, although there were notable

excep�ons: The Argen�ne peso and Turkish lira strengthened by over 15% and 8%, respec�vely,

and the Brazilian real rose as the marketfriendly candidate prevailed in the presiden�al

elec�on.

The rand was under pressure throughout the month, even more so a�er the disappoin�ng

Medium Term Budget Policy Statement late in the month. It declined 4.2% against a firm dollar;

it has now declined 16.2% against the dollar so far this year. The All Bond index lost 1.7%, which

seemed a reasonable return given the dollar strength and bond market weakness elsewhere in

global markets.

Time Period: 2018/11/01 to 2018/11/30

2018/1112.9

13.4

13.9

14.4

Currency EUR 13.5

Time Period: 2018/11/01 to 2018/11/30

2018/11

15.4

15.9

16.4

16.9

Currency GBP 15.9

GBP/ZAR

Time Period: 2018/11/01 to 2018/11/30

2018/1112.2

12.7

13.2

13.7

Currency USD 12.9

USD/ZAR

Page 4

EUR/ZAR

Monthly Returns FTSE/JSE All share Monthly Returns FTSE/JSE SA Listed Property

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year

2018

2017

2016

2015

2014

2013

0.10 1.97 4.18 5.37 3.48 2.78 0.25 2.34 4.17 5.76 3.17

4.31 3.11 2.68 3.64 0.42 3.49 7.03 2.65 0.87 6.26 1.46 0.34

2.99 0.59 6.44 1.70 1.84 3.02 1.16 0.26 0.93 2.49 0.55 0.97

3.08 4.07 1.33 4.70 3.95 0.76 0.52 3.55 0.95 7.61 3.86 1.72

2.36 4.88 1.83 2.65 1.60 2.77 0.93 0.46 2.58 1.01 0.54 0.19

3.23 1.89 1.19 2.49 8.51 5.70 4.41 2.58 5.08 3.61 1.10 2.98

8.53

20.95

2.63

5.13

10.88

21.43


2018

2017

2016

2015

2014

2013

9.91 9.90 0.96 7.68 5.92 3.45 0.50 2.15 2.60 1.69 1.29

1.63 0.36 0.11 0.51 0.11 0.29 3.70 0.76 1.19 1.99 1.92 4.21

2.98 3.65 9.48 1.95 3.47 1.17 3.26 4.89 1.09 0.50 3.34 4.24

7.38 3.16 2.64 0.04 5.93 0.36 5.14 0.22 0.82 2.08 0.50 6.12

7.13 4.66 4.76 2.32 1.26 3.37 1.91 2.96 2.18 6.84 2.83 1.11

0.99 4.64 3.28 7.37 11.09 4.38 4.19 3.47 6.71 3.04 2.96 1.00

25.26

17.15

10.20

7.99

26.64

8.39

Monthly Returns MSCI World (ZAR) Monthly Returns MSCI World (USD)


2018

2017

2016

2015

2014

2013

1.32 4.76 1.77 6.37 1.58 7.64 1.55 12.73 2.99 3.47 4.72

1.27 0.25 3.77 1.37 0.70 0.18 3.51 1.11 5.89 6.91 1.66 7.79

3.58 1.41 0.08 2.16 11.05 7.45 1.26 6.50 5.97 3.62 4.82 0.40

1.03 5.77 2.36 1.54 1.64 2.60 4.85 2.08 0.47 7.69 3.58 5.52

2.37 0.82 1.65 1.08 2.64 2.41 0.49 1.44 2.79 1.54 1.67 2.71

10.14 0.43 4.12 0.70 11.69 4.20 4.60 1.19 3.35 3.42 3.05 4.80

5.25

12.23

4.81

30.78

15.05

51.60


2018

2017

2016

2015

2014

2013

5.64 4.20 2.14 0.95 0.12 0.54 3.02 0.79 0.44 7.49 1.46

2.73 2.81 1.22 1.56 2.21 0.45 2.79 0.38 1.93 2.08 1.94 1.61

6.03 0.69 7.41 1.48 0.13 0.61 4.31 0.34 0.61 1.70 0.76 2.16

1.56 5.57 1.55 2.90 0.13 2.35 0.87 6.86 3.62 7.85 0.83 1.80

4.00 4.83 0.44 0.95 2.13 1.88 1.21 2.21 3.24 0.70 1.67 1.93

4.61 0.02 1.83 2.86 0.27 2.92 4.79 2.08 5.17 4.02 1.42 1.73

9.42

23.97

7.86

2.36

4.16

22.80

Beassa ALBI SA CPI Synthe�c (Headline)


2018

2017

2016

2015

2014

2013

1.86 3.93 2.07 0.70 1.95 1.17 2.42 1.87 0.30 1.71 3.87

1.36 0.71 0.40 1.42 1.03 0.95 1.50 1.03 1.11 2.30 0.97 5.66

4.57 0.72 2.63 1.85 1.47 4.04 2.19 1.72 2.98 0.64 1.83 1.54

6.47 2.77 0.51 0.49 0.76 0.15 1.04 0.14 0.07 1.30 1.02 6.67

3.24 2.44 1.79 0.32 1.14 0.97 1.02 2.80 1.57 3.41 2.36 1.51

0.07 0.66 0.20 4.09 4.64 1.56 0.62 1.32 3.92 0.39 1.37 1.13

7.69

10.24

15.42

3.93

10.15

0.64


2018

2017

2016

2015

2014

2013

0.48 0.29 0.76 0.38 0.75 0.19 0.37 0.84 0.09 0.46 0.46

0.40 0.60 1.09 0.59 0.10 0.29 0.19 0.29 0.10 0.48 0.29 0.10

0.32 0.75 1.38 0.73 0.83 0.21 0.51 0.82 0.10 0.20 0.51 0.30

0.22 0.11 0.56 1.45 0.88 0.22 0.44 1.09 0.00 0.00 0.21 0.11

0.24 0.71 1.06 1.40 0.46 0.11 0.34 0.80 0.34 0.00 0.22 0.00

0.25 0.25 1.00 1.23 0.36 0.24 0.24 1.09 0.24 0.48 0.24 0.12

5.18

4.62

6.64

4.71

5.81

5.38

STeFI FTSE/JSE Ind/Industrials


2018

2017

2016

2015

2014

2013

0.60 0.54 0.60 0.58 0.59 0.55 0.61 0.59 0.57 0.59 0.58

0.65 0.57 0.63 0.61 0.63 0.61 0.62 0.62 0.59 0.61 0.58 0.60

0.56 0.51 0.61 0.58 0.61 0.59 0.62 0.62 0.60 0.63 0.61 0.61

0.52 0.48 0.53 0.51 0.53 0.51 0.53 0.54 0.52 0.54 0.52 0.55

0.44 0.41 0.46 0.46 0.48 0.47 0.50 0.50 0.49 0.51 0.50 0.52

0.43 0.39 0.43 0.41 0.43 0.41 0.43 0.43 0.42 0.43 0.42 0.44

7.25

7.56

7.37

6.47

5.91

5.19


2018

2017

2016

2015

2014

2013

5.76 2.27 4.90 3.55 10.20 2.52 0.45 2.52 6.42 2.33 2.78

2.25 0.73 2.12 2.82 0.04 3.73 1.91 4.57 2.37 3.64 4.13 7.15

1.79 2.02 7.84 1.98 0.03 2.96 5.68 2.08 1.22 0.03 0.83 6.12

3.14 0.63 1.70 0.53 4.46 0.13 0.31 0.69 2.07 6.81 5.03 5.62

6.73 0.34 5.55 4.26 1.55 0.13 1.35 1.08 4.19 5.40 1.16 0.17

1.70 5.23 3.31 2.40 5.42 2.85 0.36 0.74 4.25 3.99 1.34 2.39

15.56

14.73

21.55

10.07

6.99

21.50

FTSE/JSE Financial 15 FTSE/JSE SA Resources


2018

2017

2016

2015

2014

2013

2.31 5.11 3.66 3.01 6.71 2.84 6.56 0.26 1.96 4.07 2.59

0.99 0.10 0.87 4.09 1.63 2.07 5.58 2.93 2.38 2.58 5.89 9.77

3.45 2.87 12.41 1.26 2.18 2.80 2.85 2.88 1.52 1.37 1.34 3.23

4.57 3.39 2.26 4.93 6.76 0.54 3.46 4.04 2.19 7.31 3.96 6.13

7.13 8.38 6.38 3.84 1.94 2.70 0.56 0.70 1.75 6.98 2.98 0.18

3.61 1.01 2.81 0.08 2.08 4.18 2.37 0.75 6.54 7.54 3.05 2.87

4.09

24.38

3.55

1.06

27.83

19.83


2018

2017

2016

2015

2014

2013

3.18 4.82 2.08 8.55 4.01 5.96 1.40 5.59 1.05 3.96 11.50

10.74 9.91 2.91 0.01 4.11 3.08 13.32 5.10 1.07 7.06 1.60 0.45

2.72 15.57 5.08 13.45 3.81 2.47 4.33 0.85 4.48 3.41 6.11 3.60

1.16 8.38 8.94 7.96 5.19 7.07 8.45 0.38 9.96 5.93 20.66 3.87

5.92 4.44 0.05 3.97 4.32 3.45 4.75 5.44 6.26 9.90 6.06 4.66

3.32 6.51 2.64 9.00 12.15 13.60 9.15 7.55 1.96 2.76 2.22 1.66

15.55

17.90

34.24

36.99

14.74

1.38

Page 5November 2018

Cau�ous Mul�-Managed Por�olioThe Fairtree Cau�ous Mul� Managed Por�olio was down 1.52% for the month of November. The All Share Index con�nued its downward slope and ended the month down 3.17%. We introduced the Fairtree Worldwide Mul�Strategy

Prescient fund. The fund brings a level of diversifica�on within the model and serves as a core to the por�olio. The mul� strategy allows for proven long term asset alloca�on, combined with managers that have proven to get the tac�cal

�l�ng right over �me. The current equity alloca�on has come down to 36.19%, of which 16.70% is offshore alloca�on, which was unchanged since October. The current environment us very uncertain and we see this play out in the

tac�cal managers’ down weight of growth assets. The por�olio has managed to outperform its peer group over any rolling 12 month period.

High Yield IncomeThe diversified skills of the different asset managers and house views has served the por�olio well thus far. As the income por�olios are a game of small margins and less vola�lity, every few basis points really does make a difference.

The last month the por�olio was up by +1.04% and stands at +7.35% for the year. The biggest contrib utor for the month was the Fairtree Albi Plus Prescient fund, being up +3.08% for the month. The Corona�on Income fund was also up

+0.45% for the month. The All Bond Index was up 3.87% for the month and up +7.00% for the year to date. The Por�olio has managed to stand firm within the recent changes and delivered a return of +9.24% for the last 12 months.

Commentary

Correla�on Matrix

Time Period: 2016/12/01 to 2018/11/30

1 2 3 4 5 6 7

1.00

0.81 1.00

0.86 0.99 1.00

0.78 0.94 0.93 1.00

0.81 0.98 0.96 0.95 1.00

0.88 0.96 0.96 0.96 0.97 1.00

0.02 0.31 0.25 0.24 0.32 0.16 1.00

1 FTSE/JSE All Share TR ZAR

2 Fairtree Cau�ous Mul�Managed Por�olio (Momentum)

3 Fairtree Cau�ous Mul�Managed Por�olio (Investec, Stanlib & Glacier)

4 Fairtree Stable Por�olio (PPS)

5 Fairtree Cau�ous Mul�Managed Por�olio (Allan Gray)

6 (ASISA) South African MA Low Equity

7 Fairtree High Yield Income Por�olio

Posi�vely Correlated Nega�vely Correlated

Fairtree Cau�ous Por�ollio (PPS)

November 2018

Fairtree Cau�ous Mul�Managed Por�olio (Allan Gray)

Page 6

Fairtree Cau�ous Mul�Managed Por�olio

(Momentum)

Fairtree High Yield Income (Investec & Glacier) Fairtree Cau�ous Mul�Managed Por�olio

(Investec, Stanlib & Glacier)

Wrap / House View 1 M 3 M 6 M 1 Y 3 Y 5 Y YTD

Fairtree Cau�ous Mul�Managed Por�olio (Momentum)

Fairtree Cau�ous Mul�Managed Por�olio (Investec, Stanlib & Glacier)

Fairtree Stable Por�olio (PPS)

Fairtree Cau�ous Mul�Managed Por�olio (Allan Gray)

(ASISA) South African MA Low Equity

Fairtree High Yield Income Por�olio

1.88 4.05 2.13 0.77 5.52 7.32 1.56

1.52 3.58 2.51 1.90 6.19 7.92 2.15

0.81 2.94 3.14 4.48 6.01 7.78 5.33

0.95 3.55 0.68 0.21 4.17 6.00 0.77

1.48 3.99 1.54 0.55 5.61 8.28 1.67

1.04 1.96 3.53 9.24 8.93 8.85 7.35

Trailing Returns

REGULATION 28 SOLUTIONS: CAUTIOUS PORTFOLIOS

Time Period: 2016/12/01 to 2018/11/30

1 2 3 4 5 6 7

1.00

0.91 1.00

0.90 1.00 1.00

0.85 0.96 0.96 1.00

0.86 0.96 0.95 0.93 1.00

0.86 0.95 0.96 0.93 0.87 1.00

0.91 0.97 0.98 0.95 0.90 0.99 1.00


2 Fairtree Balanced Mul�Managed Por�olio (Investec, Stanlib & Glacier)

3 Fairtree Balanced Mul�Managed Por�olio (Momentum)

4 Fairtree Moderate Por�olio (PPS)

5 Fairtree Smart Beta Balanced Por�olio (Investec)

6 Fairtree Balanced Mul�Managed Por�olio (Allan Gray)

7 (ASISA) South African MA Medium Equity


Correla�on Matrix


Fairtree Balanced Mul�Managed Por�olio Por�olio (Momentum)

Fairtree Balanced Mul�Managed Por�olio (Investec, Stanlib & Glacier)

Fairtree Moderate Por�olio (PPS)

Fairtree Smart Beta Balanced Por�olio (Investec)

Fairtree Balanced Mul�Managed Por�olio (Allan Gray)

(ASISA) South African MA Medium Equity

1.95 4.80 1.26 2.96 6.33 9.38 1.40

2.42 7.55 1.03 5.53 3.21 7.38 2.92

1.70 6.21 0.84 3.67 2.70 5.36 2.22

2.05 5.74 1.19 0.88 5.73 7.86 0.48

2.05 5.69 0.90 1.31 5.15 7.30 0.67

1.58 5.33 1.59 3.17 6.59 8.50 3.58

Trailing Returns

Balanced Mul�-Managed Por�olioThe Fairtree Balanced Mul�Managed Por�olio was down 2.05% for the month of November. The local equity market con�nued its downward spiral the month and ended down 3.17%. The Rand

strengthened about 6.19%, which made the offshore exposure of the por�olio struggle in Rand returns. We introduced the Fairtree Worldwide Mul�Strategy Flexible Prescient fun during the previous

month. This will bring a layer of diversifica�on to the por�olio, making use of long term strategic asset alloca�on, partnered with tac�cal �l�ng over the shorter term allows for downside protec�on in

severe market circumstances. Playing to the strengths of proven asset managers, has worked well for us and this is an even more efficient way of doing so within the core of the por�olio. Currently the

por�olio has a 52.72% equity alloca�on.

Smart Beta Balanced The Fairtree Smart Beta Balanced Por�olio was down 1.95% for the month of November. The por�olio stands at 1.40% for the year to date. The por�olio currently holds a total of 52.71% equi�es and

a close to 30% total offshore alloca�on. The All Share Index was down 3.17%, while the main equity component of the por�olio, the Fairtree Smart Beta Prescient fund was only down 1.66%

delivering alpha of 1.51%. This sort of downside protec�on has served the por�olio really well, it helped the por�olio to deliver an outperformance of 3.62% for the year to date, against its peer group.

The current biggest holding of the fund is s�ll the Fairtree Smart Beta Prescient fund at 36%. The recent emerging market pressure has dampened any returns within local equi�es, which together with

very slow economic growth in South African has marked this year as a rather tough one.

Commentary

Fairtree Balanced Mul�Managed Por�olio (Momentum) Fairtree Balanced Mul�Managed Por�olio (Investec, Stanlib & Glacier)

Fairtree Balanced Mul�Managed Por�olio (Allan Gray) Fairtree Smart Beta Balanced Por�olio (Investec)Fairtree Balanced Por�olio (PPS)


REGULATION 28 SOLUTIONS: BALANCED PORTFOLIOS

Time Period: 2016/12/01 to 2018/11/30

1 2 3 4 5 6 7

1.00

0.93 1.00

0.93 1.00 1.00

0.86 0.94 0.95 1.00

0.87 0.92 0.92 0.90 1.00

0.87 0.94 0.94 0.91 0.80 1.00

0.93 0.96 0.97 0.94 0.86 0.98 1.00


2 Fairtree Growth Mul�Maanged Por�olio (Momentum)

3 Fairtree Growth Mul�Managed Por�olio (Investec, Stanlib & Glacier)

4 Fairtree Balanced Por�olio (PPS)

5 Fairtree Smart Beta Growth (Investec)

6 Fairtree Growth Mul�Managed Por�olio (Allan Gray)

7 (ASISA) South African MA High Equity


Correla�on Matrix


Fairtree Growth Mul�Managed Por�olio (Momentum)

Fairtree Growth Mul�Managed Por�olio (Investec, Stanlib & Glacier)

Fairtree Balanced Por�olio (PPS)

Fairtree Smart Beta Growth (Investec)

Fairtree Growth Mul�Managed Por�olio (Allan Gray)

(ASISA) South African MA High Equity

2.51 7.44 0.24 3.39 5.07 7.76 2.97

2.15 6.93 0.74 1.64 5.66 8.17 2.15

2.07 7.53 2.00 5.79 2.16 5.20 4.11

2.97 7.78 0.13 3.81 4.86 7.55 3.39

2.38 6.27 0.37 1.57 5.78 9.68 1.18

2.76 8.55 1.72 7.47 2.39 7.06 4.31

Trailing Returns

Growth Mul�-Managed Por�olioThe Fairtree Growth Mul�Managed Por�olio was down 2.51%, more or less the same than last month’s 2.46%. The growth assets within the por�olio has been struggling as the local equity market is

under some emerging market pressure. The local share index was down 3.17% for the last month. The Rand was stronger, which also put pressure on offshore returns. The por�olio saw the

introduc�on of the Fairtree Worldwide Mul�Strategy Flexible Prescient fund. A welldiversified fund with long term strategic asset alloca�on, combined with short term tac�cal �l�ng. Bothe these

views being allocated to proven long term track record asset managers. The fund forms part of the core of the por�olio and brings another layer of diversifica�on to the por�olio. The current equity

alloca�on is at 66.67%.

Smart Beta GrowthThe Fairtree Smart Beta Growth Por�olio was down 2.37% for the month of November. The Por�olio is doing well in capital preserva�on. The por�olio has done well in the 1 year, 3 year and 5 year

returns against its peers as well as the All Share Index. If you were exposed 100% to the All Share Index you would have lost 3.17% for the past month. The current asset alloca�on is dominated by

equi�es at a total of 68.97%. The local equity exposure sits at 48.23%, while the total offshore exposure is hovering at the 30% level. The main driver of returns in equi�es have really been struggling

under emerging market pressure. The value of the factor based investment styl has come through throughout the year and we believe it will do so for the remainder of the year as well.

Commentary

Fairtree Growth Mul�Managed Por�olio (Momentum) Fairtree Growth Mul�Managed Por�olio (Investec, Stanlib & Glacier)

Fairtree Growth Por�olio (PPS)

November 2018

Fairtree Growth Mul�Managed Por�olio (Allan Gray) Fairtree Smart Beta Growth Por�olio (Investec)

Page 8

REGULATION 28 SOLUTIONS: GROWTH PORTFOLIOS

Trailing Returns

Time Period: 2016/12/01 to 2018/11/30

1 2 3 4 5

1.00

0.85 1.00

0.81 0.95 1.00

0.85 0.94 0.87 1.00

0.48 0.71 0.68 0.74 1.00


2 Fairtree High Growth Mul�Managed Por�olio (Momentum & Glacier)

3 Fairtree High Growth Por�olio (PPS)

4 Fairtree Tax Free Savings Mul�Managed Por�olio (Investec)

5 Fairtree Property Por�olio


Correla�on Matrix


Fairtree High Growth Mul�Managed Por�olio (Momentum & Glacier)

Fairtree High Growth Por�olio (PPS)

Fairtree Tax Free Savings Mul�Managed Por�olio (Investec)

FTSE/JSE All Share TR ZAR

Fairtree Property Por�olio

3.17 12.56 8.25 12.56 2.30 5.51 12.26

2.89 8.32 0.70 5.32 3.51 8.08 1.06

2.93 8.27 0.75 2.41 4.63 9.05 1.21

3.96 6.49 3.16 12.31 0.10 11.31 9.53

3.24 8.19 0.62 2.41 3.41 3.41

Commentary

High Growth

The Fairtree High Growth Wrap Por�olio has a current foreign equity alloca�on of 31.78% against a local equity alloca�on of 243.09%. The overweight offshore alloca�on has detracted, together with

the lagging local equity market in the past month. Taking local market performance into considera�o n the por�olio has been doing well, with a year to date return of 1.21%, against the All Share Index

of 12.26%. There might be some emerging market risk coming through in the la�er part of this year, we feel the offshore exposure if the por�olio will serve it well in such a �me. The por�olio is doing

well in mi�ga�ng risk and par�cipa�ng in the general market, both offshore and locally. The current market circumstances seems to provide some upside growth in the near future, but we will keep a

close eye on the changes in sen�ment and interest rates globally. We believe there is s�ll some growth in local and global equity markets to the la�er part of this year.

TFSA

The Fairtree Tax Free Savings Mul� Managed Por�olio was down 3.24% for the month of November. The Rand strengthened, meaning that the overweight offshore exposure also came under some

presscure as the local equity market struggled. The factor based investment philosophy has worked excep�onally well in the beginning stages of this this year and has outperformed the market. The

view in the future will always be an overweight offshore alloca�on to growth assets, mainly through foreign equi�es and foreign proper�es. The current largest asset class holding is local equi�es at

52.71%. The por�olio has a strong alloca�on to growth asset classes in terms of equi�es and proper�es both local and offshore. Heading into the rest of the year, we feel that the investment

philosophy and factor based investment style will serve us well in growth and downside risk management.

Property Por�olio

The Fairtree Property Por�olio was down 3.96% for the month of November. The Rand strengthening meant that the global property exposure of the por�olio detracted. The Fairtree Global Real

Estate Prescient fund was down 5.11% for the month. The local property market was down as well with the SA Listed Property Index being down 1.29%. The last year has not been a great year for the

property market in general, with many ques�on marks surrounding the industry. We feel that the more valuable contribu�on will come from offshore property with a s light weakening of the Rand to

help things along as well. ...

Fairtree High Growth Por�olio (PPS)

Fairtree Property Por�olio (Glacier)

Fairtree High Growth MM Por�olio (Mom Glacier & Investec) Fairtree TaxFree Savings MM Por�olio (Investec)


NONREGULATION 28 SOLUTIONS: HIGH GROWTH PORTFOLIOS

The All Share Index fell 3.17% in November, while the rand strengthened a�er a tough month in October, with the FX closing at R13.71. Emerging markets assets outperformed developed markets over

the month as sen�ment improved. Locally economic data remains weak, while concerns around fiscal and reform policies have grown. Renewed opera�onal and financial challenges around Eskom and

uncertainty around land policies con�nue to weigh on investor confidence and the country’s credit ra�ng. A�er two quarters of nega�ve growth South Africa recorded stronger than expected growth

over Q3 of 2.2% annualised supported by manufacturing, retail ac�vity, financial services and agriculture.

Early in the month the US midterm elec�ons produced a split congress with the Republicans retaining the Senate but losing the House to the Democrats. These results dampened expecta�ons of a

fresh round of tax cuts and raised expecta�ons of a cease fire on the trade conflict between the US and China. This backdrop along with so�er incoming US data gave the Fed some scope to dial back

on their hawkish narra�ve. The market responded by reducing the number of hikes expected by the Fed during 2019, from two to one and the real rate dropped taking US 10 year bond yields from a

3.25% peak to below 3%. Lower rates and so�er outlook for the US has also added pressure on the US dollar to weaken. Other factors suppor�ng emerging markets has been 30% drop in oil price over

the last two months and policy makers in China announcing measures to support the consumer via lower taxes.

The RMB Por�olios were under some pressure as the long only funds came under some pressure. The hedge fund exposure which the por�olios hold did well under the market circumstance, which

meant that the por�olios as a whole at least ended the month on a posi�ve note.

The por�olios benefi�ed from the upside of the outperformance of the hedge funds over the market. From a year to date perspec�ve the por�olio has been performing excep�onally. The main driver

of these returns are the hedge funds, as the local equity market has been lagging significantly.

Locally economic data remains weak, while concerns around fiscal and reform policies have grown. Renewed opera�onal and financial challenges around Eskom and uncertainty around land policies

con�nue to weigh on investor confidence and the country’s credit ra�ng. A�er two quarters of nega�ve growth South Africa recorded stronger than expected growth over Q3 of 2.2% annualised

supported by manufacturing, retail ac�vity, financial services and agriculture. The SARB decided to hike rates to 6.75% earlier in the month, no�ng that the risks to infla�on have increased enough to

act. No men�on was made about future hikes.

Commentary

Correla�on Matrix

Time Period: 2016/12/01 to 2018/11/30

1 2 3 4 5 6 7 8 9 10

1.00

0.76 1.00

0.48 0.65 1.00

0.69 0.91 0.79 1.00

0.88 0.83 0.77 0.80 1.00

0.68 0.92 0.63 0.82 0.80 1.00

0.73 0.90 0.83 0.95 0.87 0.79 1.00

0.93 0.83 0.51 0.70 0.92 0.76 0.78 1.00

0.71 0.86 0.86 0.89 0.90 0.81 0.95 0.77 1.00

0.64 0.80 0.94 0.90 0.85 0.74 0.95 0.67 0.95 1.00


2 Fairtree Balanced Mul� Manager

3 Fairtree Capital Guarantee

4 Fairtree Cau�ous Mul� Manager

5 Fairtree Equity Index + Alpha

6 Fairtree Global

7 Fairtree Growth Mul� Manager

8 Fairtree Select Equity

9 Fairtree Empress Por�olio

10 Fairtree Juniper Por�olio


Fairtree Cau�ous Mul� Manager Fairtree Balanced Mul� Manager


Fairtree Balanced Mul� Manager

Fairtree Capital Guarantee

Fairtree Cau�ous Mul� Manager

Fairtree Equity Index + Alpha

Fairtree Global

Fairtree Growth Mul� Manager

Fairtree Select Equity

Fairtree Empress Por�olio

Fairtree Juniper Por�olio

0.93 0.87 8.67 7.81 4.32 8.46 6.58

5.53 11.37 7.29 5.56 1.38 8.57 2.09

2.28 12.94 2.06 7.89 1.02 4.81 7.71

0.81 0.43 7.87 6.75 5.60 7.65 7.70

0.76 3.67 7.16 3.68 5.38 8.81 6.21

2.07 12.17 2.47 5.15 3.81 11.35 3.67

0.21 1.51 8.12 6.89 4.45 5.60

0.72 4.68 7.51 2.26 3.22 1.75

0.62 3.57 10.01 3.33 2.26 7.10 3.67

Trailing Returns


NONREGULATION 28 SOLUTIONS: RMB NOTE STRUCTURE

Fairtree Global Por�olio

Fairtree Equity Index plus Alpha

Fairtree Empress

Fairtree Capital Guarantee

November 2018

Fairtree Juniper

Page 11

Fairtree Select Balanced

NONREGULATION 28 SOLUTIONS: RMB NOTE STRUCTURE con�nued

Fairtree Select EquityFairtree Growth Mul� Manager

www.fairtreeprivateclient.com

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