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January 20, 2022

Global Inflation – 4th Quarter 2021

Global inflation signals have persisted as elevated levels of consumer spending continue to collide with supply shortages across the world. It is likely that inflation will abate to some extent in 2022 as we expect supply side disruptions to be resolved to some extent. Inflation is the continuous increase in prices over time. This represents the increase in the price of goods and services offered by a country. As inflation increases it conversely erodes the purchasing power of a country’s currency. There are generally two types of inflation, cost-push, and demand-pull inflation. Cost-push inflation (decrease in aggregate supply) can occur from shortage of supply or due to increase in production cost (i.e., increase in wages or energy). Demand-pull inflation (increase in aggregate demand) is the result of increase in overall demand which can be generated from an increase in money...
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Local property market – 4th Quarter 2021

Listed property performed exceptionally well over the quarter returning 8.4% and 36.9% for the year ending 2021. However, it is important to note the considerable base effect at play within the sector, which still has a negative 3 and 5-year annualised return. The property sector faces a systemic shift in demand amid rising online sales activity, and as more companies permanently adopt a work-from-home approach. As demand requirements for the post-pandemic era become clearer, so too should the outlook for the property sector. The GTC Real Estate Fund handily outperformed the South African listed property index for Quarter 4 of 2021 (10% vs. 8.4%). This was a strong performance for a passive, rules-based portfolio and so far, confirms that the underlying investment strategy – the risk parity approach – is working well.   GTC Real Estate Portfolio As at Dec...
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The Rand – 4th Quarter 2021

The rand weakened (-6.2%) over the quarter, in line with the weaker global emerging market sentiment. Over the longer term and on a simplistic basis, the South African rand seems to be slightly above fair value relative to the US dollar as indicated below.   USD/ZAR Monthly Exchange rate – 1 January 2000 to 31 December 2021         Global foreign exchange rates – Currencies against the US dollar, YTD change  

Local Equity Market – 4th Quarter 2021

The local equity market (+8.7%) outperformed both developed (+7.8%) and emerging markets (-1.3%) peers in base currencies. This was driven primarily by strong performances from Resources (+22.2%) and Industrials (+16.1%). The GTC Flexible Fund exactly tracked the Capped Swix Index on a net of fee basis for Quarter 4 of 2021 and outperformed the Index for the calendar year with a pleasing 28.8% return. GTC Flexible Fund As at 31 Dec 2021 3M 6M 1YR 2YR Since common inception GTC Flexible 8.69 12.15 28.56 12.61 10.19 Industry Peer 1 7.98 11.45 26.18 12.50 9.80 Industry Peer 2 8.51 11.82 26.51 12.40 9.59 Industry Peer 3 8.68 12.15 26.72 12.50 9.95 Industry Peer 4 8.49 11.58 25.78 11.81 8.96 FTSE/JSE Capped SWIX All Share Index 8.68 12.15 27.08 13.05 10.20 All returns are net of fees. Returns longer than 1 year...
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