In August our average prudential balanced portfolio returned 2.3% (July 2.37%). Top performer is Namibia Asset Management/Coronation (3.04%), Old Mutual (1.8%) takes bottom spot.

Economic stimulus measures taken by the ECB and more recently once again by the US Fed, will continue for quite a while and are likely to lead to further repo rate reductions by the SA Reserve Bank and a further decline in general interest rates. Despite the latest US stimulus package, we believe that inflow of foreign capital both into equities and bonds is likely to ebb, which should lead to a weaker Rand. As the result our equity markets are unlikely to show any significant growth over the next year or even longer but should still produce inflation hedging returns. Stocks that will benefit from a weakening Rand such as industrials and Rand hedge companies should outperform the Alsi. With our expectation of a further decline in interest rates, bonds should benefit in the medium term, while cash returns will be zero, more likely negative in real terms. Property under current circumstances is also likely to produce respectable returns for the medium term.