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Balanced, Real Return and AGOF had returns of 18.5%, 18.4% and 19.0% for period 1 Jan 2023 – 31 Dec 2023, respectively. For most of the year, our funds were overweight offshore equities and Namibian bonds which contributed to the stellar returns for the year. In addition to this, our allocation to certain primary listed stocks in Namibia contributed meaningfully to our performance during the year.
The Arysteq SA Equity fund - while it had a positive return of 7.5% for the year, we saw significant volatility in JSE equities last year. The JSE All Share Index was up at all-time highs in the first quarter of 2023 but most of these gains were reversed during the latter part of the year. SA continues to be under pressure with the likes of Eskom and Transnet burdens weighing on sentiment, which is further exacerbated by the upcoming elections and corruption. This led to benign GDP growth of 0.7% in 2023 with an expectation for 1.4% in 2024.
Global stock markets displayed a non-representative basket of returns, as 75% of the returns in 2023 was derived from the top 10 in the index. This disproportionate weighting was driven by the AI hype that led to a rally in a handful of companies, namely the magnificent 7. The MSCI displayed volatile returns throughout the year, but the dovish sentiment from the FED and AI hype supported a 16% rally in the last two months of the year leaving the index up 24.44% in USD terms.
Nambian bonds outperformed most asset classes in 2023, marking the first time that yields on government bonds in Namibia were lower than South Africa. South African bonds underperformed relative to Nambian bonds, which was as a result of yields increasing which was mostly driven by the negative sentiment towards South Africa.
Many commodities retreated from the highs seen in 2022. As global supply chain challenges started to ease and inflation started coming down, the world adapted to the supply shock that resulted from the Russia-Ukraine war. The price of natural gas in particular declined 40%, owing to the European winter being milder than anticipated and countries holding larger gas reserves in 2023 than in the previous year. Precious metals were largely driven by the 11% rise in the price of gold over the course of 2023, as investors flocked towards safe haven assets in the face of economic uncertainty.
Markets remain in uncertain territory as the direction thereof will mainly be driven by the FEDs decision going forward. There are no indicators strong enough that are pointing to cuts at this stage so we can expect rates to remain at this level for longer. While fears of a global recession are still looming, the timing thereof is uncertain. We therefore remain cautious in our investment decisions going into the new year and have positioned our portfolios accordingly.
