In September our average prudential balanced portfolio returned 0.56% (August minus 0.2%). Top performer once again is Allan Gray (3.57%), while longer term log leader Stanlib (minus 1.24%) takes bottom spot.

Participating employers who are invested in the Benchmark default portfolio will be aware that we have raised the risk profile of the default portfolio since the beginning of 2011 by replacing Metropolitan Absolute Return Fund with Allan Gray. With this combination, its risk profile is still considerably lower than that of the average prudential balanced portfolio. We would therefore expect the default portfolio to sacrifice around 1% for the benefit of lower volatility, thus an expected real return before management fees (typically 0.75%), of around 5% per year. Since this change was effected at the beginning of this year, the default portfolio returned 7.5% compared to 2.5% for the average prudential balanced portfolio.

Financial markets particularly in Europe are still in great turmoil and will remain so until a viable solution can be worked out that removes all uncertainty. In the mean time it appears that things are starting to look up in the US. As the result, there appears to be a de-coupling of consumer sentiment between the US on the one side and Europe on the other side. It appears US economic indicators and sentiment is turning up while sentiment in Europe appears to take the opposite direction. Global inflation appears to have peaked for the time being, that of the US for July year-on-year standing at 3.5% (August 3.8%), Euroland at 3% (August 2.5%), China at 6.1% (August 5.3%), SA at 5.7% (August 5.3%) and Namibia at 5.3% (August 5.4%). We do believe though, that this is a short-term lull and that inflation will pick up again as consumption starts gaining steam.