Foord Flexible Fund of Funds

Monthly Commentary – September 2021

• Global equities (-4.1%) 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
• Industrial commodities iron ore (-24.9%) and copper (-6.2%) fell on concerns of a slowdown in Chinese economic growth compounded by Chinese power supply constraints as oil (+7.6%), gas (+87.5%) and coal (+53.4%) rose sharply as alternatives—precious metals platinum (-4.8%), palladium (-22.6%), silver (-10.5%) and gold (-3.3%) moved lower on US dollar strength, with palladium impacted by continued auto production problems
• Foreign assets (-0.3% in rands) detracted marginally as the fall in global equities was offset by the weakening currency—the US S&P 500 market index hedges provided some protection while resources stocks such as Freeport McMoran (-10.6% in dollars) and the fund’s Chinese holdings detracted
• The FTSE/JSE Capped All Share Index (-3.1% in rands) was dragged lower by the resources sector (-9.3%) and industrials (-0.8%) with financials (+1.7%) pulled up by select banks and life insurance companies—healthcare company Aspen (+39.5%) contributed meaningfully as the company continued to re-rate from an oversold position
• 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
• 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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