GTC Trendline – March 2014
Salient Points from the Budget Speech
“So the new economic order we seek cannot just be a pact amongst elites, a coalition amongst stakeholders with vested interests. Nor can it be built on populist slogans or unrealistic promises. Our history tells us that progress has to be built on a vision and strategy shared by leaders and the people- A vision founded on realism and evidence” – Pravin Gordhan, Budget Speech 2014.
This philosophy espoused in the preamble to this year’s budget signalled the intention of the fiscus to address once again the serious problem of the gross inequality within the South African economy. It heralded a budget, which while fairly mundane, was nevertheless squarely directed to benefit the less fortunate in our population.
Market Commentary
The quarter was characterized by a market roller coaster ride alternating from risk-on to risk-off and vice versa as both domestic and global scenarios unfolded. The negative trend established towards the end of 2013 continued into the new year with significant outflows from the bond market impacting negatively on the Rand.
GTC Fund Performances
The GTC Fixed Income Fund has delivered outperformance against the Cash Index (SteFI) and Bond Index (ALBI 1-3 year) benchmarks over most periods. This month saw strong positive returns delivered by the Bond market, while Cash delivered its consistent positive return.
The GTC Wealth Accumulator FoF has captured a significant portion of the strong positive returns delivered by the equity market while maintaining a defensive position should the markets sell off. The cost of protection within the Prescient Protected Equity portion will reduce over the coming months benefitting the Fund further. This cost reduces over time due to the nature of the derivatives used. March saw a return of foreign investors to the local equity market driven by the ‘risk-on’ environment in the latter half of the month.
