Page 174 - Profile's Unit Trusts & Collective Investments - March 2025

CHAPTER 9

Starting the year with a current fund yield of 11.2% (gross of fees), investors can expect returns
broadly in line with this figure over the next two to three years (annualised), barring any major
disruptions. This remains our base case, with potential upside and well-managed downside
scenarios.
Which asset classes do you expect will give the best total rates of return over the next few
years?
Crystal ball gazing is a real challenge when you don’t have one, however there are fundamental
data points which can inform a mosaic, a blurry one at the very least. Both global and domestic
equity are not particularly expensive, they trade within an historic fair-value range. A special
comment on US equities; they are optimistically priced but can continue to outperform the rest of
the world simply because investor sentiment has placed a significant premium on US-based
earnings. This momentum trade does however provide the potential for deeper drawdowns.
Looking at the domestic scene, government bonds provide an attractive real return of 6-8% at
the time of writing. That is not normal, but entirely to the investors benefit. We are aware that SA
Bonds have been the best performing asset class over the past 10 years but expect risk-adjusted
returns (and perhaps absolute returns) to continue to outpace other domestic assets.

Please give your views regarding interest rate trends and the yield curve over the next 1 to 2
years. What interest rates can investors expect? Do you anticipate further repo rate cuts?
We expect interest rates to trend lower over the next 12 to 24 months, driven by declining
inflation and a more accommodative monetary policy stance. The South African Reserve Bank has
maintained a cautious approach, but as inflation remains contained and global central banks
continue easing, gradual repo rate cuts are likely.
The South African yield curve is currently very steep, reflecting high term premia. As rate cuts
materialise, we anticipate some flattening, particularly in the longer dated part of the curve,
offering attractive opportunities for duration exposure.
This outlook, however, is contingent on global inflation remaining under control. Risks such as
tariffs, supply chain disruptions, or geopolitical shocks could reintroduce inflationary pressures,
delaying rate cuts or causing renewed volatility in bond markets.

Rozendal Global Prescient Feeder Fund

Sector: Global–Multi Asset–Flexible
Portfolio managers: Paul Whitburn and Wilhelm Hertzog
Benchmark: FTSE Global All Cap index converted to ZAR

Returns to investors 1 year 3 years
Rozendal Global Prescient Feeder Fund -0.84% 12.08%
Sector Average 10.69% 6.52%
Inflation (CPI) 3.02% 5.10%
ProfileData performance stats to 31 December 2024: CAGR with dividends reinvested

Please describe your investment universe.
The fund is a flexible global equity fund. The focus will typically be on global equities but the
flexible mandate allows us to include a range of assets in order to achieve our objective. These can
include fixed interest securities, money market instruments, cash deposits, derivatives, exchange
traded funds, collective investment schemes and convertible bonds.
Please comment on your investment year (January - December 2024) from a fund manager’s
point of view.
We give a comprehensive overview of the fund’s returns in our bi-annual investor letters that
can be found on our website: www.rozendal.com.

172 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts