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August 2012

We are very impressed with the 3.24% of XMF FoF and XMB FoF for the month, mainly in bond funds. Although this is not as good as the 4.04% of equities, it is much safer and almost two times better than the Money Market.


We are also very glad to see a YTD of 7.05%. If it continues like this, we will see more than 10% for the year, by the end of December 2012.


Although equities have been doing quite well over the past few weeks, we are not confident enough to switch the unit trust fund of funds under our management to equities. In our opinion, the underlying reasons for the good growth of equities are not fundamentally sound and to invest client’s pension money and even voluntary money into growth funds, with a long term view, would be like gambling with other people’s money.


There is a view amongst certain economists, which we call the eternal optimists, that with continued quantitative easing, from America and Germany, the fundamental credit problems of the first world, will slowly but surely go away. We would be so happy if that happens, but until we have seen the evidence, we would not feel comfortable to switch to growth funds.


As long as we get newspaper headlines “Poor Greek Figures Fan Concern” and “the likelihood of some sort of intervention to stimulate economies, is supporting the market”, according to Christopher Bellew at Jefreys Bache in London, we are not comfortable at all with that type of support.


Andre Delport
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