There can be no doubt that we live in a time of continuous and unpredictable change. Economic and political changes are evident worldwide and that can sometimes be unsettling. Ongoing Brexit negotiations; missile tests in North Korea; the latest Trump Bump news, to name just a few headline markers. It’s so easy then to lose sight of the bigger picture and get caught up in all the noise out there. Therefore it is important for us to focus on structural long term drivers and building diversified portfolios for our clients.

It has been a good quarter for global equity markets with economic data pointing to a healthy global economic outlook. The US Federal Reserve announced that they will start the process of ''quantitative tightening'' and also suggested another rate rise is possible for December. Meanwhile, the European Central Bank might announce a further slowdown in the pace of its quantitative easing programme and even the Bank of England suggested a raise in interest rates before year end.

Emerging markets have performed very well this year. China’s growth spurt has contributed, as has the weakness of the US dollar. South Africa has officially exited the recession in the second quarter and easing inflation offers a small window for the South African Reserve Bank to cut rates. However, SA is in a structural growth slowdown currently. Slow growth, the possibility of further credit rating downgrades and political and policy uncertainty are local factors that are likely to keep market uncertainty levels elevated until the ANC election in December.

The JSE All Share Index ended this quarter positive 8.91%. Local bonds and local listed property recovered well with the All Bond Index generating 3.66% and the property index ended up 5.73% over this period. Local short dated fixed income assets continued to perform well as credit markets remained constructive and yields remained reasonable with the STeFi Composite generating a return of 1.88%.

Portfolio Activity
The Ampersand Sanlam Collective Investments Flexible Property Income Fund gained 6.07% for the quarter against the benchmark (33% cash, 67% SA Listed Property) performance of 4.47%. Local listed property ended the quarter up 5.73%. We remain comfortable with the balance and allocation of the portfolio.

Portfolio Positioning
Our key positions across the portfolios have remained consistent for the majority of the past 12 months.

The last six months have been another period of prosperity for investors, with equity markets making several new all-time highs and volatility remaining low apart from a couple of short spikes. We remain concerned with market valuations and risk, however structurally we need to retain growth assets in the portfolio to ensure we achieve our longer term objectives. Asset allocation and diversification therefore remain key to ensuring downside risk management while continuing to achieve our inflation-based returns. We continue to focus our attention on consistently applying our philosophy and process to ensure we meet our investment objectives over the long term (a time horizon of at least 3 years, and longer for the more risk-orientated portfolios).

We urge investors to remain patient and committed to their chosen investment strategy as negative surprises are possible. We are continuously looking for ways to increase the certainty of cash flow while remaining cognisant of our longer term capital preservation objectives.

Portfolio Manager
Tom Barlow

The fund switched Management Company from Momentum Collective Investments Limited to Sanlam Collective Investments (RF) (Pty) Ltd. on 1 July 2017 and renamed to Ampersand SCI Flexible Property Income Fund

The fund changed sectors from South African--Multi Asset--Flexible to South African--Real Estate--General on 31 May 2014.