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ANNUAL INVESTOR COMMUNICATION 2019

The financial year ended August 2019 has been characterised by a profound tension between globally synchronised, stimulative and market supporting monetary policy, and heightened geopolitical risks, notably US/China. These two opposing forces combined poorly with a market, which, due to being late-cycle and flows-driven (passive, quants etc.), was very sensitive to changes in sentiment and newsflow. Risks are high as correlations rise in a market sell-off, and given South Africa is an emerging market, foreign selling of bonds correlates with the falling equity market. The reverse happens on short-term good news. This resulted in a sideways and volatile market.

Given the risks, Rezco’s funds were positioned cautiously, generally lagging on the upswing but outperforming when markets fell. We are pleased that for the year ended August 2019, the funds outperformed peers and their benchmarks, but in the low return environment, returns were lower than the long-term targets of inflation beating returns. The Rezco Equity Fund’s return for the year was 1.8% compared to peers at -6.1% and the market index at -2.6%. The Rezco Stable Fund also had a good year with performance of 6.6% beating peers at 2.9%, but slightly lower than inflation plus returns needed over the longer term. The performance of the balanced funds, the Rezco Value Trend Fund at -1.6% and the Rezco Managed Plus Fund at 0.2% compares with peers at -1.6% and the All Share Index at -2.6%.

More information is available here: Rezco Asset Management – Annual Investor Communication 2019