In February the average prudential balanced portfolio returned -0.64% (January: 1.32%). Top performer is Metropolitan (-0.16%); while Momentum (-1.06%) takes the bottom spot. For the 3 month period Old Mutual Pinnacle Profile, takes top spot, outperforming the ‘average’ by roughly 1.0%. On the other end of the scale Momentum underperformed the ‘average’ by 1.4%.

Where are markets heading?

It is always interesting to study the movement of indices over time and in particular it is interesting to study relationships between different indices in an effort to get a feeling for where markets are likely to head. In this commentary we will be looking at a few interesting relationships.

Firstly, graph 1 has been indicating to us for a long time that the Rand was undervalued and the recent movement corroborates this assertion. The graph indicates that the Rand is currently fairly valued at 11.23, it being at 12.45 at the time of writing this article. The Rand now only requires a further appreciation of 10% to get to fair value by our measure. This graph also shows that the Rand tends to significantly overshoot only in one direction, probably as the result of overly negative sentiment towards the currency from time to time with 3 severe bouts of undervaluation.