In October 2022, the average prudential balanced portfolio returned 4.4% (September 2022: -2.3%). The top performer is NAM Coronation Balanced Plus Fund with 5.7%, while Hangala Prescient Absolute Balanced Fund with 2.3% takes the bottom spot. For the 3-months Allan Gray Balanced Fund takes the top spot, outperforming the 'average' by roughly 2.1%. Stanlib Managed Fund underperformed the 'average' by 1.8% on the other end of the scale. Note that these returns are before (gross of) asset management fees.

The Monthly Review of Portfolio Performance to 31 October 2022  provides a full review of portfolio performances and other insightful analyses. 

Investment markets have not normalised yet!

Since the global financial crisis in 2008, the US Federal Reserve has expanded its balance sheet from US$ 1 trillion to US$ 9 trillion by March 2022. Since then, it started its quantitative tightening and intends to runoff its balance sheet by between US$ 2.2 and US$ 3 trillion over the next three years and by selling off treasuries and mortgage-backed securities of up to US$ 95 billion per month

Graph 6.1 – Fed balance sheet

While the Fed expanded its balance sheet 9-fold since 2008, it dropped its policy rate from 5.25% to 0.25%. As of March 2022, it started to raise the policy rate to 4%. The real Fed rate, net of inflation, was an average of 1.8% over 20 years until November 2007, the onset of the global financial crisis. Since then, the real Fed rate averaged minus 1.3% until February 2022 and was minus 3.75% in October 2022.

One may say that we had normal market conditions until the global financial crisis. From then until February 2022, we had artificial markets resulting from the Fed's quantitative easing and zero interest rate policies. These policies were aimed at supporting the US economy and achieved colossal asset price inflation.

The Monthly Review of Portfolio Performance to 31 October 2022  provides a full review of portfolio performances and other insightful analyses.