Page 189 - Profile's Unit Trusts & Collective Investments - September 2025

Fund manager interviews Chapter 9

performance in the medium term. Nevertheless, a sustained rally in commodity markets could
provide a positive counterbalance, potentially supporting the performance of South African equities.

Are equity markets in general overpriced? Do you anticipate a significant correction?
The current market appears slightly overvalued, with the recent rally primarily driven by the
resources sector, particularly precious metals. Share price increases have been underpinned by
robust company-specific fundamentals. However, we are concerned about the potential impact of
tariffs in the short to medium term, which could adversely affect specific sectors of the South African
domestic market.

As a passive fund, what advantages, in your view, does the underlying index you track offer
investors?
The FTSE/JSE Top 40 Index offers several key advantages over other local equity indices:
„ Broad representation: Representing over 80% of the JSE’s total market capitalisation, the
index serves as a reliable proxy for the broader market while maintaining low management
and trading costs.
„ High liquidity: The index exclusively comprises highly liquid stocks, ensuring ease of trading
while remaining broadly representative.
„ Sectoral diversification: The index spans major local sectors, including resources, financials,
and industrials, reducing the risk of significant losses due to downturns in any single industry.
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Truffle SCI Income Plus Fund

Sector: South African–Interest Bearing–Short Term
Portfolio managers: Hannes van der Westhuyzen and Raihan Allie
Benchmark: STeFI Composite Index
Returns to investors 1 year 3 years
Truffle SCI Income Plus Fund 10.93% 10.68%
Sector Average 9.52% 8.98%
Inflation (CPI) 3.02% 4.49%
ProfileData performance stats to 30 June 2025: CAGR with dividends reinvested

Describe your investment universe
Starting with the entire fixed-income market, Truffle employs a disciplined, multi-stage approach
to identify the most suitable investments. The process begins by applying mandate and prudential
limits – essentially the guardrails that ensure investments align with regulatory requirements and
risk parameters. Liquidity constraints are then carefully evaluated to ensure the portfolio can meet
redemption needs without difficulty. Our research team combines significant experience and skill,
in conducting deep analysis to identify the most compelling opportunities. Environmental, social,
and governance (ESG) factors are also integrated into the selection process, reflecting investment
principles that consider sustainability alongside financial returns. This systematic approach
ultimately results in a carefully curated “investment universe” that includes sovereign bonds,
corporate bonds, structured products, and other debt instruments - each selected not just for their
potential returns, but for how well they fit within a comprehensive risk-managed portfolio designed
to meet investors’ income and capital preservation objectives.

Comment on your investment year (July 2024 – June 2025) from a fund manager’s point of view
The investment year from July 2024 to June 2025 was once again characterised by significant
global uncertainty and we maintained a disciplined defensive positioning that delivered consistent
outperformance despite significant market volatility. The fund generated a net return of 10.9%
versus the STEFI benchmark’s 8.1%, achieving 2.8% active outperformance. Our strategy focused
on zero duration exposure combined with high-quality credit. This approach proved particularly

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