Foord Balanced Fund

Monthly Commentary – September 2021

• Global equities (-4.1% in US dollars) fell after seven straight months of gains—slowing global economic growth amid growing uncertainties around new COVID-19 variants, Evergrande contagion, energy supply issues in Europe and China, and global supply chain difficulties giving rise to higher inflation all dampened enthusiasm
• Developed market bond yields rose on worries that rising global inflation may not be as transitory as first believed—while Chairman Powell continues to walk a fine monetary policy line, it is becoming increasingly probable the US Fed will begin its bond tapering program within the next two months and we continue to expect a lift-off in rates sometime in 2022
• The FTSE/JSE Capped All Share Index (-3.1% in rands) was dragged lower by another sharp fall in the resources sector (-9.3%) on lower industrial and precious metals prices—industrials (-0.8%) also finished lower with financials (+1.7%) pulled up by select banks and life insurance companies
• Domestic equity was the largest contributor to fund returns with longstanding holding in Aspen (+39.5%) sharply higher and meaningful contributions from mid-cap industrial Omnia (+20.1%) and preferred bank FirstRand (+4.2%)—BHP Group (-9.2%) was the largest detractor although the fund maintains a relatively low allocation to the cyclical resource sector
• The All Bond Index (-2.1%) fell as yields across the curve moved higher in line with rising global bond yields—the core holding in the short and medium-term sector (-0.6%) outperformed as longer dated maturities suffered steeper losses
• Foreign assets (-0.2% in rands) detracted marginally with the fall in global equities offset by the weakening currency—the US S&P 500 market index hedges provided some protection while resources stocks and the fund’s Chinese holdings detracted
• The rand (-3.8% vs the US dollar) weakened on broad-based dollar strength and negative emerging market sentiment with investors now more actively positioning for a moderation of the prevailing accommodative US monetary policy and the subsequent rise in interest rates—the currency remains vulnerable as the short-term platinum group metals price terms of trade bonus starts to dissipate

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