Lubabalo Khenyane

Domestic assets have performed well this year, supported by, among other things, higher commodity prices and a stronger rand that has kept inflation low. While the rally in local assets may continue, given the magnitude of the outperformance relative to global assets, our managers took profits from domestic equities and bonds in Q2 and used the proceeds to increase offshore exposure. The rally in the local currency also gave them good entry points to global assets.

The offshore overweights are in equities and fixed income. The uncertainty brought by trade wars and geopolitics has increased opportunities for stock pickers, and our managers are taking full advantage of this. In fixed income, the US Fed is expected to continue cutting interest rates in its October and December meetings, and our managers are locking in the higher rates that are currently on offer.

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