Market Overview – April 2024

April was a largely disappointing month for global investment returns as forecasts for interest rate cuts in the US were pushed back further into 2024, weighing on both equity and bond returns. Some profit-taking also emerged in developed equity markets after the good gains of previous months, particularly in Japan, while Chinese equities experienced a rebound following sharp losses earlier in the year. Emerging equity markets posted mixed returns, broadly managing to outperform their developed counterparts, with South Africa’s All Share Index delivering 3.0%. This was driven largely by a 7.1% return from the Resources sector primarily on the back of the resources giant BHP’s bid for rival Anglo American, and smaller gains from Financials. SA bonds were also in positive territory with a 1.4% return, and the rand managed to appreciate between 0.6% - 1.2% against the major global currencies. Again, the diverse market moves highlighted the benefits of a strongly and carefully diversified investment portfolio.

Our SA client portfolios with global exposure benefited from our overweight positioning in Chinese equities, including our overweight exposure to Naspers and Prosus, while we had reduced our exposure to Japanese equities by taking profits ahead of the month’s weakness. Our house-view portfolios also saw value added from our continuing overweight in SA banks and the rally in Anglo American shares. Meanwhile, our asset allocation positioning changed little in April, although we did trim our small exposure to African equities (ex-South Africa) somewhat on the back of deteriorating liquidity conditions in Nigeria and Egypt. It remains a stock-picker’s market given the dispersion in performance and valuations across geographies, sectors and even within sectors.  

In fixed income, there was little change in our positioning as SA bond yields stayed elevated compared to other SA assets and their own history -- investors continued to demand high premiums ahead of the 29 May national election and generally higher risk perceptions. We remain slightly overweight and confident that patient investors will be well rewarded for their SA bond holdings over time: the 10-year government bond’s real yield of about 7% currently is more than double our expected long-term average real return of about 3% from this asset class. Also in fixed income, M&G’s income funds such as the M&G Bond Fund and M&G Enhanced Income Fund extended their strong performance for 2024, retaining their top-quartile performances in their respective ASISA categories.

Bolstering M&G’s teams

We are pleased to announce some recent important appointments to both the M&G Distribution and Operations teams. First, we have bolstered our distribution capabilities with the appointment of Saleem Sonday as our new Head of Retail, effective 1 May 2024. Saleem brings with him a wealth of knowledge and experience garnered over 18 years in the industry, particularly in Retail Distribution and Group Savings and Investments. Saleem reports to Heidi Dreyer, who has been promoted to Head of Distribution, having served as our Head of Corporate Sales since 2007. She now takes on the responsibility for M&G's overall distribution efforts in South Africa, spanning the Retail, Corporate/DFM, and Institutional Markets. With her extensive industry knowledge, Heidi brings exceptional talent and expertise to this role. She will be a member of Exco and report to CEO Marius Botha.

At the same time, Marco Cianfanelli has joined M&G as the new Head of Operations, effective 1 May 2024. In his role, Marco will be responsible for leading M&G's Operations team, overseeing various aspects such as retail client services and operations, institutional operations, and service provider management. With a remarkable background, Marco joins M&G from Sygnia, where he held the position of Head of Operations for the Institutional business starting in 2020. Prior to this, Marco garnered 22 years of experience at Alexander Forbes Investments, serving in senior operations roles like Head of Operations Due Diligence and Head of Investment Operations, among other management roles throughout the business. Marco reports to Daryl van Zyl, Chief Operating Officer.

Please join us in congratulating Heidi on her well-deserved promotion. Equally, we are excited about welcoming Saleem and Marco to our business. As highly skilled and seasoned professionals, we are confident that they will all add considerable value to our teams as we continue to focus on the delivery of excellent client service and optimal investment outcomes for our clients.